By Bob Maistros, Issues & Insights, April 08, 2025
“Do, do that voodoo that you do so well.” – Cole Porter “… what I call a ‘voodoo economic policy’ …” – George H.W. Bush on the proposed Reagan tax cuts, April 10, 1980
Those of us in the political game back then remember it vividly. The Gipper’s then-primary opponent, representing the once dominant liberal Eastern Republican Establishment, took a swipe at the proposed three-year, 30% tax cut – a gibe now shorthanded as “voodoo economics.”
Bush scoffed that The Great Communicator’s plan would not stimulate growth, but rather further explode Jimmy Carter’s inflation, which had peaked in 1979 at 13.3% but still raged.
Missed it by that much. Or more like: T-H-A-T much.
Yes, America – and Reagan’s popularity – experienced steep slumps amid adjustments to his and legendary Fed Chairman Paul Volcker’s shock therapy. Unemployment surged to a postwar high 10.8%. The S&P 500 plunged 27% between November 1980 and August 1982, and the 40th president’s approval rating bottomed out at 35% a few months later.
But, as the 1960s hit expressed it: ooh-ooh, and then it happened. The “voodoo” tax cuts worked like – wait for it – a charm.
The across-the-board relief was the tip of the spear of “supply-side economics.” That theory posited that pro-production tax policies – combined with disciplined monetary policy, reined-in spending, and a tamed regulatory swamp monster – would not just drive economic expansion but, by flooding markets with new goods and production, extinguish scorching price rises.
And guess what? Inflation plummeted to 3.2% in 1983 even as job-creating growth rocketed to 7.2% the following year – a level not reached since.
Which brings us to one Donald J. Trump and the hyperventilating from the opposition and the wings of his own party, and naturally the media and free-falling markets, over his imposition of both across-the-board and “reciprocal” tariffs.
“Tariffs are taxes/tax hikes.” Uh, huh. From Democrats who never met a tax they didn’t hike. And yeah, tariffs are taxes, all right. Consumption taxes.
Virtuous, simpler taxes that don’t require an intrusive, freedom-sapping Internal Revenue Service (with “service” being a misnomer if there ever was one).
And don’t involve compliance costs of nearly half a trillion dollars due to soul-crushing complexity. Enormous economic distortions. Massive misallocation of resources. Indefensible invasions of privacy. And systematic, intentional overcharges of $3,400 a year to the average household that must implore its own government to refund, at risk of penalties and interest if it begs for the wrong amount.
Your correspondent has noted approvingly on these pages that Trump seems headed overall in the direction of displacing income with consumption taxes. Good on him.
“Donald Trump is starting a trade war.” Puh-leeze. Get all fancy with your insistence that – stop your correspondent if you’ve heard this one in another context – “deficits don’t matter.”
But a country subsidizing the entire world with a trade shortfall of nearly $1 trillion last year, roughly $300 billion with China alone, along with a goods deficit of close to $300 billion with Europe, is starting a war? Seems here like the U.S. is starting to return fire.
Anyway, Dudes, wake up! Because it’s déjà voodoo all over again. The Donald, like Dutch Reagan, is a supply-sider of the first order.
Trump’s tariffs, just like Reagan’s tax cuts, are just part of a broader, potentially Earth-shaking economic package.
Along with his tariffs, President Trump wants to DOGE spending, stifle overregulation, and most important, slash the corporate tax rate for domestic manufacturing to 15%, with an effective rate far lower. Dropping the levy to among the world’s lowest, behind only Hungary and Ireland.
He’d also enact a raft of investment incentives and extend the 2017 tax cuts that, contrary to Democratic disinformation, disproportionately benefited lower- and middle-income taxpayers but also boosted investment and job creation.
The result would be a surge of both domestic and foreign investment and an enormous re-shoring of production (as his policies are already encouraging), along with an overall invigoration of U.S. manufacturing might and supply-side output not seen, perhaps, since the turn of the 20th century.
After all, with this kind of incentive – and the disincentive of tariffs offsetting artificially low pay for slave labor in China, currency manipulation, and foreign subsidies of all shapes and sizes – who wouldn’t rather invest here in American workers?
Cut the long supply lines over land and sea? Remove the sword of Damocles the Chinese hold over our heads?
And end the additional bankrolling from imbalanced trade – on top of trillions over the years in forward defense spending – showered upon the sluggish, selfish, snobbish, stuffy, sneer-down-their-noses-at-America Euro-socialists?
Beside the output-lifting effect of corporate tax cuts, there is the simple truth that corporations don’t pay taxes; people do. The expense, inefficiencies, and distortions of corporate taxation – and more important, tax avoidance – are passed down in the cost of everything you buy.
The removal of much of their straight-out costs – not to mention incentives to invest in armies of blood-sucking tax lawyers and accountants instead of productive capacity – will be reflected in lower consumer costs.
It’s why this commentator has posited that the correct rate of corporate taxation is not 15%, but zero.
Once upon a time, all good conservatives (like your correspondent) were required to be “free-traders.” The problem: America never had free trade. Besides myriad barriers raised to our goods and multiple forms of “dumping” products here, there was a parallel to Milton Friedman’s observation: “You cannot simultaneously have a welfare state and free immigration.”
You also cannot simultaneously have “free” trade and a private sector weighed down by trillions in regulatory costs and an anti-growth tax system.
The message to today’s George Bush-channeling nattering nabobs of negativism in the markets, the media, and especially among members of Congress should be clear: shut up and help The Donald do that supply-side voodoo by pushing through his entire package: including DOGE, the subject of a follow-up article.
‘Cause unlike the “free trade” that hollowed out the world’s once-mightiest economic engine, it’ll be swell.
Bob Maistros, a regular contributor to Issues & Insights, is a messaging and communications strategist, crisis specialist, and former political speechwriter.
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