90% Political Kabuki: Is There a Hidden Agenda?

Is there a hidden agenda behind the 90 percent tax on the AIG bonuses?

That's what Larry Kudlow is wondering. Kudlow not only is an economist, he plays one on TV as well (CNBC, "Kudlow & Company).

Note that the $250,000 cut-off point for the tax is the same line drawn in the sand in Obama’s budget for tax hikes on investors and successful earners. The president is proposing a tax rate of 40 percent, not 90 percent. But connecting the dots between Speaker Pelosi and Pres. Obama, it will be interesting to see if the president dares sign this bill.

And even though the 90 percent tax is a reaction to the AIG bonus fiasco, you have to wonder if the very-liberal-left House Democrats have a much broader agenda: to completely overturn the supply-side tax cuts of Ronald Reagan and John F. Kennedy.

Kudlow explains past American tax history. Most people have only a vague idea of how high tax rates were for decades.

Following WWI, the Harding-Coolidge-Mellon Republicans returned the country to tax normalcy by reducing Woodrow Wilson’s 75 percent wartime tax to 25 percent — thus triggering the roaring growth of the 1920s. Then came the Depression, spawned in large part by Herbert Hoover and FDR, who raised the top tax rate to 63 percent, 70 percent, and finally 94 percent.

The Robert Taft Republican Congress elected in 1946 lowered those tax rates, but they later bounced back to 91 percent, where they held until JFK proposed sweeping tax reform in the 1960s. The top tax rate was reduced to 70 percent, igniting the 1960s boom — until it was undone by the inflationary Fed and Nixon’s de-linking of the dollar from gold. But Pres. Reagan slashed the top tax rate all the way down to 28 percent. This launched a multi-decade boom, with the top rate not straying far from Reagan’s vision.

So is AIG the excuse the liberals were looking for to launch the first stage of their tax-reform rocket? After all, more evidence is emerging that the Obama administration and Congressional Democrats -- knew of the bonus program weeks, if not months, ago. Certainly Treasury Secretary Tim Geithner, who helped write the AIG rules last year when he was at the Fed in New York, should have known.

If there was no real surprise, and no real hurry since any tax hike doesn't get collected until 2010 anyway, doesn't this all seem like political kabuki? We are being driven into a populist uproar so that progressives have an excuse to punish "the rich."

Please, if you value your bank account, read Kudlow's piece and think about it.