Republican Myth Exploded: Taxes and Reagan Edition
Take the time to read this article in Forbes magazine by Bruce Bartlett. I am serious, you need to read this before you fall prey to another Republican myth. How many times can they be proven wrong on the exact same issue before people wise up?
Bartlett’s conclusion, after his analysis (READ IT!) has laid bare the truth:
…When Republicans claim that higher taxes will destroy the economy, they should be reminded that they made the same argument in 1982 and 1993 and that the actual economic results were the opposite of what they predicted. And when they denounce Obama’s health plan for expanding the size of government, they should be asked how they voted on the Medicare bill in 2003.
On Reagan and taxes:
Reagan signed into law major tax increases every year of his presidency after the first. By the end of his presidency, he took back half of the 1981 tax cut in the form of higher taxes. And it should also be noted that when confronted with a crisis in Social Security in 1983, Reagan endorsed a rescue plan drafted by Alan Greenspan that consisted almost entirely of higher taxes.
Tags: economics, GOP myths, Ronald Reagan, taxes
I have always said I was not a Reagan fan solely based on the deletion of the credit card interest deduction under his reign. I never understood that. So many other things could have been left alone…(I’m only talking about personal taxes). Any insight on that one?
I remember well that Social Security payroll taxes almost doubled overnight.
Automobile loan interest went at the same time as credit card interest, I believe.
I have always said I was not a Reagan fan solely based on the deletion of the credit card interest deduction under his reign. I never understood that.
That was one smart thing Reagan did. Before Reagan, credit cards were hard to get and were not widely used to finance consumer purchases.
I know Repubs like to blame inflation on Carter, but Reagan’s first term featured plenty of inflation and I believe inflation actually peaked during Reagan’s term. And one of the effects of inflation is that it encourages people to go out and spend their money on goods immediately, because money loses value in your pocket. Not only that, inflation encourages you to take on debt, since you will be paying it off in cheaper dollars. In Reagan’s time, credit cards first became popular for consumer purchases, which was at the time a novel use of debt. And in that environment it made no sense to subsidize credit card purchases with a tax exemption.
What makes less sense is Reagan taxing Social Security and unemployment benefits.
Bruce Bartlett is one of the few conservatives I look forward to reading. He is much less yoked to ideology that the usual suspects and seems to genuinely be looking for ideas and solutions that maintain some conservative principles but also contribute to successful governing. I get a sense that he is something of a pariah in conservative circles, but I don’t know that.
That said, I think that Barlett is rewriting abit of history here too. Reagan was busily spending his way to the end of the Cold War (with a Dem congress) and some of these taxes he eventually signed were more about horsetrading for votes than a real commitment to pragmatism. Brad DeLong has a small bit of detail. That said, though, what Reagan could do was set some priorities for himself and live with not getting it all, unlike the adolescents running his party now.
I hope Bartlett is like a “Nixon goes to China” moment for conservatives but I fear he’s just another Republican who won’t pass their purity test. (These days, I doubt Reagan would pass their purity test)
Yes, conservatives – Reagan made the greatest tax increase in history by raising payroll taxes. In fact, if conservatives have their way and we got rid of social security they’ll be making a liar out of Reagan since the reasoning behind the raise was to make a trust fund to cover the baby boomers’ retirement.
Also folks, Obama just gave us the biggest tax cut, but all Republicans except Snowe, Collins and Specter, voted against it.
Speaking of Brad DeLong, he had an excellent blog post a couple of weeks backs with quotes by conservatives about how the Clinton tax increase on the wealthy was going to bankrupt the country. They sound remarkably similar to what Republicans are saying today!
Speaking of Republican myths, Jindal admits his Katrina story is false.
Regan = Tax increases AND union busting.
(UI’s link) Is it my imagination or is the Bobster’s nose longer in the second pix 😉
UI,
HA! Thanks for that. I guess Booby’s face will be coming down from Dave’s “Wall of Lame.”
I thought you had to be a grade-A liar just be on it. Isn’t Jindal simply earning his place there?
Refuting your silly arguments won’t take long.
Regan focused on reducing high personal income taxes to include the marginal tax rate, the rate you pay on the last dollar you earn. Revenues from personal income tax went up through the 1980’s.
Raising taxes. Yes, Reagan raised some taxes and in 1986 with Sen Bradley worked hard to close the many loopholes in the tax code, most abused by businesses. In the end the tax burden went down.
Higher taxes will indeed destroy the economy if Obama has any plans to repay the trillions of dollars we are throwing around. The faulty stimulus bill was 25% the size of the federal budget, throw in TARP and you get another 25% to be followed by $634 Billion for a health care plan which is misguided and you have another 18%.
You are asking us to beleive that adding these staggering numbers to the debt doesn’t amount to anything to be worried about?
Social Security. The Commission was enacted because Congress under Carter messed up their ‘bailout’ and in 1983 they had to accelerate the increases. Social Security rates did not double overnight although there have been 19 tax increases over the life of the program.
The big mistake was to take SS “off budget” effectively making it an accounting drill with to assets.
Dress it however you want, Protack, Reagan passed the largest tax increase in history. Your arguments that he closed tax loopholes for businesses won’t help your case because your fellow Republicans will be fighting those changes the hardest.
Apparently Protack’s more worried about debt then the total collapse of the economy. I suppose he’d rather have no job.
Protacks pension was greatly reduced through Republican pro business policies
“I know Repubs like to blame inflation on Carter”
Inflation was a problem throughout the 70s. Ford had the slogan “whip inflation now” and had buttons that said “WIN” on them. Alan Greenspan at the time commented that it was a ridiculous campaign. Inflation started in the early 70s under Nixon. It’s one of the reasons we got off the gold standard.
Volker fixed inflation by putting the country in recession starting in 79-82. The horrible recessions of the early 80s were to fight inflation. They weren’t caused by Carter.
Reagan raised taxes on the lower earners and increased the size of government. He cut social programs that meant the states had to pick them up. When you combine state and federal taxes, almost everyone but the very rich saw a tax hike under Reagan. He basically shifted the tax burden from the wealthy to the rest of the country. The economy did well under Reagan simply because Volker cut interest rates in 83 and kept inflation under control. Reaganomics gets more credit than it deserves. We also had a huge number of bank failures under Reagan. Check out the FDIC site for a history of bank failures under Reagan. What you will find is that most of the financial problems we have now, we had in the 80s. It is just worse now because of mark to market accounting and technology. They were able to cover it up better in the 80s since they had even less transparency.
http://www.fdic.gov/bank/historical/history/vol1.html