By Paul Craig Roberts
PaulCraigRoberts.org
August 4, 2026
The last time the US economy received a helping hand from policymakers was the Reagan tax rate reductions. The high tax rates on inflated nominal incomes by the "guns and butter" Vietnam War policy reduced the after-tax earnings of labor and new capital investment, and the economy was experiencing the "malaise" of stagflation. The Reagan tax rate reduction, which I drafted and saw through to passage, indexed the tax system for inflation, so that inflation, if properly measured, could not push purely nominal incomes into higher brackets.