Blame it on JFK. Fifty years ago, President Kennedy made a
decision that, with hindsight, ranks as the biggest mistake of
domestic policy since World War II. In many ways, it led
directly to today’s “sequester” debacle. What Kennedy did was
this: In early 1963, he proposed a $13.6 billion tax cut (today:
about $320 billion) even though the economy was not in recession
and the tax cut would enlarge the budget deficit. Kennedy
adopted the theory that government could, by manipulating its
budgets, increase economic growth, reach “full employment” (then
a 4 percent unemployment rate) and reduce — or eliminate —
recessions. It was a disaster. High inflation was the first
shock. An initial boom (by 1969, unemployment was 3.5 percent)
spawned a wage-price spiral. With government seeming to
guarantee 4 percent unemployment, workers and businesses had
little reason to restrain wages and prices. In 1960, inflation
was 1 percent; by 1980, it was 13 percent. The economy became
less stable. From 1969 to 1982, there were f