Revisionist History Of Reagan Tax Cuts
April 2, 2003
In the past couple of days, there has been some lively discussion regarding the issue of tax cuts on CommonVoice.com. In response to my article "Unjustified Wartime Opposition To Tax Cuts," liberal revisionist readers have tried to argue that the tax cuts implemented by Ronald Reagan in 1981 have had no effect on the American economy. I couldnít disagree more.
Although whoever the occupant of the White House is tends to get the credit for what is happening during his watch, everyone knows that the influence of a President of the United States exists long after he has left office. History shows this is true under both Democrat and Republican presidents.
Just look at the impact still felt today by the entitlement programs begun by Franklin Roosevelt and Lyndon Johnson as clear empirical evidence of this.
Likewise, the tax cuts implemented by Ronald Reagan in 1981 continued to positively affected the economy going strong well into the mid to late 1990's. Of course, the Clinton-Gore administration likes to claim credit for the economic boom that resulted from those Reagan tax cuts.
You might recall that President Reagan inherited a financial mess from his predecessor, Democrat Jimmy Carter. Those of us who were alive back in the late 1970's remember the "misery index" all too well. Inflation was at an an all-time high at that time. And gasoline prices were even higher than they are today (where was the liberal media screaming for Carterís head back then?)!
One of the first things President Reagan did was to cut the top tax rate in half (from 70% to 35%). Also, he got rid of tax shelters that the rich used to avoid paying taxes. And he unabashedly CUT TAXES for all Americans to be able to keep more of the money they earned in their pockets!
The result? The economy grew faster than at any other time in our nation's history during peacetime. Unemployment dropped, inflation slowed down and interest rates dropped. The next 7 years were so prosperous that the liberal media called the 1980's the "decade of greed." Nevertheless, everyone was much better off economically than they were during the Carter years as a result of the Reagan tax cuts!
It wasn't until George H.W. Bush rescinded his "no new taxes" pledge that the economy went into a minor recession. Even still, unemployment was much less than it was under Carter and inflation was stable. Regardless, the liberal media cast the Bush economy as the "worst economic period of the last fifty years." That is exactly what got Bill Clinton elected as President in 1992.
When Slick Willy took office, the recession had already ended and the economy was growing at almost 4% in the final quarter of Bush's presidency. And, the Reagan tax cut legacy was still positively affecting the economy, too. Predictably, the media gave Clinton the credit for it and described the economy under Clinton as the "decade of prosperity."
Liberal Democrats will disagree with me on this, but here are the facts:
- Tax rates under Clinton were less than 40%, which was 30% less than the 70% tax rates that Reagan faced before his tax cuts in 1981.
- The money left after taxes doubled under the Reagan tax cuts. That money has continued to be pumped into the economy year after year as more and more people have been able to keep the money they have earned. This trend was stifled by the Clinton tax INCREASES in the late 90's right before he left office. In fact, the economy was already beginning to be on the downturn when George W. Bush was elected in 2000.
Now, on to the deficit. While Clinton and his liberal apologists like to boast that the federal deficit was eliminated under his watch, it is no coincidence that the deficit didn't begin dropping until Republicans took control of both houses of Congress in the Republican Revolution of 1994.
As for the supposed "Reagan deficits," it is indisputable that the amount of revenue being pumped into the economy grew exponentially during the Reagan administration. At the same time, though, the Democrats controlled both houses of Congress and increased spending to unprecedented levels. And, as hard as it is for Democrats and the liberal media to believe this, the defense budget was NOT the majority of the growth in the budget during the 1980ís. Rather, the largest chunk of the budget was spent on liberal entitlement programs such as Social Security and Medicare, both of which are still problems we are having to deal with in 2003! So much for throwing money at a problem to try to fix it, another popular, but unsuccessful, liberal tactic!
The "tax cuts for the rich" excuse is illegitimate. Actually, you might be surprised to learn that the rich actually paid MORE in taxes under the Reagan tax cuts than any other group. And Reagan got rid of the targeted tax cuts and loopholes (the same ones that Al Gore would later try to reinstate) so that the money would be invested in the economy rather than sheltered from it. As a result, many investors began putting their money into the free market which stimulated the private economy and sent the stock market soaring.
To his credit, Bill Clinton did contribute to the economy by allowing free trade and maintaining stable leadership at the Federal Reserve Board. Yet, if Clinton had not been so severely defeated politically in the 1994 elections, he would have most certainly raised taxes more than he did. And Hillary-care would have nationalized the health care industry in the United States. Neither of these would have been beneficial to the American economy.
What is most sad about the continued success of the Reagan tax cuts is how Bill Clinton and his supporters used the economy as a reason for him to stay in office after he was impeached. You might remember that his supporters were arguing that everyone should forget about what Clinton did in his private life because the economy was doing so well under his care. But the truth is that if it had not been for the Reagan tax cuts, Clinton might have been removed from office swiftly. Slick Willy caught yet another break.
Of course, what I have written here in this article will never be reported by the liberal media or even show up in the revisionary history books found in our public schools. But the lesson learned from the Reagan tax cuts is that they result in unprecedented economic stimulus that was felt for many years after they went into effect.
And that is why the House and Senate need to make sure the entire Bush tax cuts become law as they hammer out the details this week. We need to do it for the sake of our children who will reap the long-term benefits that tax cuts will create. It is the right thing to do, regardless of the revisionist history fed to us by liberal Democrats!