Arthur Laffer Sketches Curve on Napkin with Rumsfeld and Cheney, Creating Supply-Side Icon

Arthur Laffer, University of Chicago professor, sketches a curve on a napkin during dinner with Jude Wanniski (Wall Street Journal associate editor), Donald Rumsfeld, and Dick Cheney, creating the iconic diagram that will justify massive tax cuts for the wealthy and become the intellectual foundation of supply-side economics. During discussion of President Ford’s tax proposals, Laffer illustrates the theoretical trade-off between tax rates and tax revenues, arguing that reducing taxes can increase government revenue by stimulating economic growth - a claim that will be repeatedly disproven but will dominate conservative economic policy for five decades. Wanniski, who will later name it the “Laffer Curve” in his 1978 Public Interest article and promote it in his 1978 book “The Way the World Works,” transforms Laffer’s simple sketch into the ideological justification for shifting tax burden from wealthy to working class. The timing - concurrent with Heritage Foundation’s early operations, ALEC’s establishment, and conservative infrastructure building - demonstrates how academic economics (Chicago School), think tank policy (Heritage), and political networks (Rumsfeld, Cheney) coordinate to advance corporate-friendly ideology. Laffer’s work connects University of Chicago economic theory to practical Republican politics, providing intellectual veneer for policies that redistribute wealth upward while claiming to benefit all. By 1980, Reagan embraces supply-side economics in his presidential campaign, and the Laffer Curve becomes Republican orthodoxy despite lack of empirical support.