A High-Stakes Dinner in Washington
On September 13, 1974, Donald Rumsfeld and Dick Cheney met economist Arthur Laffer and journalist Jude Wanniski at the Two Continents restaurant. They were seeking solutions for President Gerald Ford’s struggling economy. Laffer opposed Ford’s plan to raise taxes, arguing that higher taxes could reduce government revenue.
The Birth of the Laffer Curve
To illustrate his point, Laffer grabbed a napkin and drew a curve showing that at both 0% and 100% tax rates, revenue would be zero. Somewhere in between lay an optimal tax rate that maximized revenue. Wanniski took the napkin, and the idea later became known as the Laffer Curve.
Reagan’s Economic Shift
The theory gained traction in 1978 when Wanniski published a book on supply-side economics. Ronald Reagan adopted it, leading to massive tax cuts during his presidency. While the economy grew, the federal deficit also skyrocketed.
The Napkin’s Legacy
Decades later, historians doubted whether the napkin existed—until it resurfaced in 2015 at the Smithsonian Museum of American History, proving its lasting impact.
In 1974, amid an economic crisis, Donald Rumsfeld and Dick Cheney met economist Arthur Laffer and journalist Jude Wanniski at a Washington restaurant. Seeking to rescue President Ford’s economy, they didn’t expect a simple napkin sketch to reshape U.S. economic policy.🧵👇 pic.twitter.com/xKgUtujpyD
— Detective Tiger's Stories (@TigerDetective) February 27, 2025