Busting the Reagan Myth about Tax Cuts & Increases

 
Reagan Proved Deficits Don’t Matter”
VP Dick Cheney to Treasury Secretary Paul O’Neill in 2002

By JC

Big Ingy, in my previous blog post on the rise of a liberal movement to primary Obama was being coy about the nature of tax increases under Reagan. Actually, coy is a nice word. He was being lazy and didn’t want to pony up any real facts. So being the inquisitive blogger that I am, had to do his homework for him.

Well, now I know why he and every other right winger doesn’t want to talk about the actual Reagan record. Ronnie raised taxes by signing into law $132.7 billion worth of tax increases. During the same period he also cut taxes by signing legislation worth $275.3 billion, for a net decrease of $142.6 billion dollars. But, coupled with his deficit spending, the national debt soared $1.873 trillion during his reign of trickle down economic terror, a tripling of the debt.

The obvious conclusion is that tax cuts don’t prevent deficits (as if we need to be reminded of that after Bush the Second’s raiding of the public coffers for tax breaks for the rich), and grossly inflate the national debt. Trickle down does not work.

Reagan’s Budget Director, David Stockman called trickle down, supply side economics a “trojan horse:”

“Do you realize the greed that came to the forefront?’ Stockman asked with wonder. ‘The hogs were really feeding. The greed level, the level of opportunism, just got out of control.”

Greedy hogs indeed!

Furthermore, unemployment went from 7.6% to 5.5% (with a peak of 9.7% inbetween, higher than anything under Obama) in Reagan’s eight years.

My question to conservatives is this: if you are willing to let a republican president triple the national debt to gain 2.1% points of employment, why not let a democrat do it?

Well, the answer is easy: hypocrisy and politics. Compassionate conservatism is dead.

It is clear that republicans are using economic terrorism to hold the unemployed as a hostage in order to aggregate political power in the next election, and collect the tithes of their overlords. Conservative economist and neomonetarist Scott Sumner called these sorts of political actions “treason”.

I’ve included Reagan’s tax increases and some other info and citations below the fold.

Here is a collection of “insignificant” (as Big Ingy declared) tax increases by Reagan:

—————-
Reagan Tax Increases, Billions of Dollars (all eleven of them)

Tax Equity and Fiscal Responsibility Act of 1982: +57.3
Highway Revenue Act of 1982: +4.9
Social Security Amendments of 1983: +24.6
Railroad Retirement Revenue Act of 1983: +1.2
Deficit Reduction Act of 1984: +25.4
Consolidated Omnibus Budget Reconciliation Act of 1985: +2.9
Omnibus Budget Reconciliation Act of 1985: +2.4
Superfund Amendments and Reauthorization Act of 1986: +0.6
Continuing Resolution for 1987: +2.8
Omnibus Budget Reconciliation Act of 1987: +8.6
Continuing Resolution for 1988: +2.0
Total cumulative tax increases: +$132.7 billion dollars

To put it in perspective, Reagan also signed into law tax cuts of $275.3 billion dollars. But he allowed spending to increase enough through deficit spending to triple the national debt, a $1.873 trillion dollar increase, or 250%! He increased the debt to GDP ratio from 32.5% to 53.1%, an over 20% increase!

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  1. rawr

    Reagonomics didn’t work. He wasn’t that great of a president. Obama sucks more. What’s your point?

    I like how liberals always try to use “greed” when referring to anyone making money. Of course, wanting to make money is all about “greed,” but when the government wants to take your money, or when people want something for “free” from the government…it’s not greed, right? It’s only “greed” if you work for it?

    • working pleeb

      “but when the government wants to take your money”

      Is there anything good the govt. does for you? Or is it all take- take- take? Self made and all you are, I’m sure. Did you drive on a public road today? Re-pay a student loan? Feel safer traveling in our country? Enjoy the lack of pollution? Etc.

      Our nation will figure out what matters to it. To live in a civilized, even business friendly place, public money has to be spent.

      And fella, there is GREED in this world Does explain the squashed housing derivative market nicely.
      You’re living in a dream world, to think there are people that make money for the sole reason of acquiring extreme wealth to control others.

      I believe in the American dream. I believe one can become wealthy if they work hard and are innovative. But, I also believe there are people who have massed so much wealth, not on their ideas, or hard work but off of loopholes and their federal lobbyist. And these people don’t give a FUCK what happens to the pleebs below them… they only care about wondering how to manipulate the working class best to fit their needs.

      How you can defend not the wealthy person, but the GREEDY ASSHOLE that gives not a shit about society, but their own penthouse, yacht, trophy wife, racehorse, island… shows either a mental illness on your part, or extreme metal laziness. I don’t know which, but both are unflattering.

      • rawr

        Yes, the government certainly exists for a good reason. I can certainly agree that public roads, student loans and safe travel are necessary. I don’t find it surprising that you would attempt to demonize me by claiming that I disagree with uses of government funds that are obviously necessary. However, I can’t agree that war after war (and “not-wars” like Libya), crony capitalism (Solyndra), a bought and paid for tax system (General Electric), and thoughtless/strategy-less overspending (stimulus) are good when 40 cents of every dollar the federal government spends is BORROWED. There are billionaires and multinational corporations absolutely screwing the American taxpayer as we speak. Often times, they operate within a tax structure that allows them to avoid paying their “fair share” and it’s sickening. Why not go after tax loopholes rather than demonizing hard working, rule-following Americans? I can’t stand the constant class warfare in this country. To lump a hardworking Montana businessman who grew up in poverty, paid his way through college, employs a couple hundred people, and happens to make a couple hundred thousand dollars a year into the same category as the Waltons, George Soros, Buffet, etc is ridiculous. The fact is, nearly 50% of Americans don’t pay any federal income tax at all. If we’re going to have a progressive tax system, then why can’t everyone pay SOMETHING…even if it’s 5% of their paycheck? Responsibility requires a little “skin in the game” doesn’t it? And why is someone making $379,150/year paying the same tax rate as someone making $100,000,000/year… but someone making $12,150/year is in a different tax bracket than someone making $46,250/year? The argument that billionaires are providing jobs and need a tax cut is ludicrous, but not anymore ludicrous than asking someone making a few hundred thousand dollars a year to pay the same tax rate as someone making several million dollars a year. If we are going to have a progressive tax system, then let’s make it progressive in 2011…not 1935! Get rid of the loopholes, and make it a level playing field for businesses. I get sick of hearing Obama claim that taxes need to be raised on people making $250,000/year (not a TON of money in NYC, LA, SF or a lot of other US cities) while he sits next to Jeff Imelt, who runs the biggest tax dodging company in the US! Give me a break. This president is corrupt and he’d like to balance the budget on the backs of the working wealthy rather than billionaires…even though he tells you differently. Most billionaires make money on capital gains, thus being in a lower tax bracket (although, arguably a double-taxed bracket). Regardless, it’s oppressive to expect anyone to pay higher taxes when the government isn’t willing to take a serious crack at cutting waste. Make the necessary cuts to balance the budget, and raise taxes on billionaires ONLY to pay down the debt over 10 or 15 years.

    • Can you explain Corporate Welfare? The author uses these ‘blanket words’ like ‘always’ so i wonder how rawr will respond.
      The reality is: Capitalism is the form, function and vehicle for GREED by the already wealthy. The Profit/stockholder model lives for degregulation and tax breaks to accumulate more wealth at the expense of the Working Class.
      The Working Class does not make ‘rent’ money or engage in Credit Default Swaps etc ONLY the GREEDY Repugs enabled by Neo-Libs like Obama, Summers, Bernanke, Greenspan etc.

    • JC

      ~ “What’s your point?” ~

      Did you read my post? Here, I’ll repeat my point:

      “It is clear that republicans are using economic terrorism to hold the unemployed as a hostage in order to aggregate political power in the next election, and collect the tithes of their overlords. Conservative economist and neomonetarist Scott Sumner called these sorts of political actions “treason”.”

      And “greed?” I didn’t use the word in my post. I quoted a conservative republican–Reagan’s budget director David Stockman–using it to describe the attitudes of those seeking favor from Reagan.

      As to the rest of your statement about greed, seems mostly like classic resentments built up from listening to too much faux news.

      • rawr

        Don’t you think it’s a little ridiculous to claim that Republicans are using “economic terrorism?” How are we supposed to work towards common goals when you label nearly half the country the same way you’d label Osama bin Laden? Terrorism is a strong word…be careful that you don’t let MSNBC rot your brain into inappropriately using it.

      • rawr

        By the way, deception is a bad color on you. “Greedy hogs indeed!” :)

  2. Ingemar Johansson

    So many misconceptions too numerous to mention.

    I’m tearing down an out building with help for the next few days, I’ll respond over the weekend.

    • Chuck

      Make sure you get a permit… and call in a lead and asbestos abatement company.

      • Ingemar Johansson

        If you need a permit your neighbors are too close.

    • working pleeb

      We all await (with baited breath) your complex, detailed analysis of the subject.
      Will it be 1 or 2 sentences?

      • Steve W

        probably just a phrase and a link, WP. The former Big Swede can’t be bothered. He’s officially unbotherable.

      • Ingemar Johansson

        See below.

        I strung a few together.

  3. I would point out that not all Conservatives believe in “Trickle down”. Bush Senior called it “Voodoo Economics” and many conservatives of the day agreed with him – myself included.

    Reagans success was not because of his economic policies. His success was because he was able to unite a country torn and angry. Sadly, neither Bush Jr. or Obama have been able to accomplish the same feat.

    • JC

      Um, Reagan didn’t unite the country. He may have united conservatives and blue dog Reagan democrats. But everybody left of the blue dogs hated Reagan and his voodoo economics. Those of us on the far left thought that Reagan was evil. I remember a t-shirt that was very popular with a picture of Reagan and Hitler side-by-side with the caption “Spot the Difference” written underneath. My point being that the left’s hate of Reagan is not unlike the right’s hatred of Obama right now.

      Actually, George W (I’m a uniter, not a divider) Bush saw a far more united country after 9/11. There was a singular (though muddled) enemy in bin Laden. Of course Saddam and Iraq changed all of that in the long run. But that unity provided cover for giving Bush legislative victories in other areas.

      With the GOP agenda of wedge issue politics and now their intransigent “No” to all things liberal, it’s no wonder that Obama can’t unite the country in an economic battle against the depression. And have I mentioned he’s only half white?

      In any case, the success of a president depends on your markers. The LGBT coalition probably thinks that Obama is a huge success and uniter with his end to DADT. Business thought Clinton was a success because of the economy. HOw would you define success and unity?

      Personally, I think that in the face of this depression that conflicting ideology and undue corporate influence prevent any form of unity, and I don’t see how Obama–even in his “post-partisan” phase–could do anything about it. Or how any president could do it, for that matter. It took WWII and the dire need to unite to finally overcome all of the obstacles of the Great Depression, and its accompanying political divisions.

      I think that our best bet at national unity will come out of a populist arising against Wall Street and the mega capitalist oligarchs running the country. Watch Elizabeth Warren’s rise as a senate candidate, the inevitable onslaught of attacks from those sectors, and how she sparks a movement. First woman president? Elizabeth Warren would be outstanding… at least as I and many others see her right now. Her brand is to stand up to the oligarchs and plutocrats. If she ceases doing that, she will fade. If she succeeds, she could lead avery successful populist movement.

  4. ladybug

    Presidents are potted plants, policy — neoliberalism — is not phased by which plant blooms in its presence. A new plant won’t change anything.

    • JC

      Do you see the revolution being pre- or post- fall?

      Neoliberalism leads to an inevitable doom. The only question in my mind is whether or not we pick up the pieces after the fall, or if there’s any hope in heading off the implosion?

  5. Ingemar Johansson

    Here goes in three parts.

    The reason I summoned the ghost of Ronnie is because of the similarities between economic factors in the Carter adm.. Lets go to the graph.

    http://mjbehindthecurtain.files.wordpress.com/2011/06/uer_rvo.jpg

    Of course the projection doesn’t account for a double dip recession like many economists now are saying we’re in or are headed for.

    Interesting to note the peak is in the high 10′s the low in the low 7′s. A difference of 3.5+/-.

    As a side note it’s been said that corps are sitting on the sidelines with buckets of cash and not hiring.

    Well, (in Reagans tone) would you be investing in new employees with the coming storm?

    Or maybe its because all you heathens never read your Old Testament.

    http://bible.cc/genesis/41-26.htm

    • JC

      Nobody is going to invest in new employees until demand improves. And demand won’t improve until more people are employed and wages increase.

      Catch 22. HOw are your tax cuts going to help that scenario?

      But none of ghat matters anyhow, because you probably haven’t consulted your Mayan calendar lately.

      • rawr

        The lack of demand is absolutely a barrier to economic growth. However, the lack of credit is currently a much larger barrier. Given that credit is very unlikely to loosen anytime soon, the economy will have to grow on equity rather than debt. How do we get the necessary equity injected into the economy? We return it to the people who will use it for economic growth! You can’t do that with blanket tax cuts, but you can do that with target tax credits to people who expand their businesses and create jobs! Fillings a new position? Tax credit. Building a new factory? Tax credit. Opening a new location? Tax credit. It’s effective and proven, but you can’t get common sense past corruption.

  6. Ingemar Johansson

    Milton Friedman once said that inflation was the cruelest tax of all.

    Why bring up inflation? Doesn’t the government tell us there’s no inflation in Obama’s reign? It depends what goods you count.

    http://www.cnbc.com/id/42551209

    No groceries and gas. Wait a minute, what goods to the poor mostly buy? Could it be groceries and gas? Is the Obama adm telling its base, “Don’t worry, be happy”?

    If they’re not counting g and g what are they counting? The middle aisles at WalMart?

    Carter’s last years inflation rate was over 13%, I’m thinking O’s real inflation will break that record.

    • JC

      A spike in some commodity prices does not high inflation make.

      As we’ve already shown with Eric, oil prices are highly volatile, and gas prices were actually higher under Bush. They may fall again.

      But none of that matters, because the era of cheap of oil,if not over already, is nigh upon us.–no matter how much drilling we do in the U.S. Failure to improve auto efficiency and transition to other energy sources may drive the fatal nail into the inflation coffin sometime down the road, but that time is not yet upon us.

      What is your plan to transition away from oil? Notice I didn’t use the term “global warming” or “climate change.”

      Not that any of this matters, anyways.

  7. Ingemar Johansson

    My “insignificant” comment.

    Yes RR raised taxes, and while I disagree that a CR is a “tax” I’m not going to subtract the piddley amount that it adds to the total $133B.

    $133B is what percentage of the stimulus? How ’bout HC? What’s their relation to GDP?

    Federal budget runs ’bout 4T. 133B runs if for 4 days.

    Ronnie used his political capitol to reduce the marginal tax rates. He also used the same to close loopholes. Any one put a calculator to less loopholes? Since the rich pay a larger share, hire high priced lawyers, could it be the mega wealthy paid more in the 28% bracket?

    And what ’bout cheaters. How many cheaters came forward and claimed up to a “reasonable rate”? I’m sure that contributed to RR’s growing GDP.

    http://danieljmitchell.files.wordpress.com/2010/08/rahn-reagan-obama.jpg

    The Fed printed 600B of ‘funny money” into the economy. One shot, 4.5 times Reagans cumulative tax increases.

    If Obama with the stroke of his pen allow drilling, reduce regulations, reduce the corporate tax rate to comprable countries, eliminate capital gains would our country florish?

    Would corps repatriate? Would the hiring begin? Would shovel ready really mean shovel ready?

    And more importantly would inflation be reduced. The cruelest tax of all landing squarely on the shoulders of the poorest Americans.

    • JC

      If you’re going to compare tax cuts to GDP and the total federal budget, at least be intellectually enough about it to compare Reagan’s tax cuts to the GDP and federal budget in the years he did it.

      Anfd you want to bring the Fed into this? Then compare how much “funny money” they printed during RR’s reign.

      As to your solution, you’re dreaming. But we may get a chance to try it out soon enough. I’m sure republicans will roll on full steam ahead with your wet dream should the tables tilt next year. Will you be ready to recant a year or two into the next republican admin if unemployment isn’t immediately reduced to 5%?

      But then again, if you guys had given half a chance to solutions that were presented by the left in years past, would they have worked? And no, you can’t say “the stimulus didn’t sork.” For how tepid it was, it kept millions employed who otherwise would have lost their jobs.

      Oh, and I have I mentioned none of this matters, anyhow?

      • Ingemar Johansson

        I’ll recant.

        “Kept millions at work”? At what cost? $250K+ a job? And what happens next year? We going to save those jobs again?

      • Ingemar Johansson

        The UTube. Was that for Mark’s benefit?

        • JC

          No, it was for yours. ;-)

    • rawr

      Perhaps if you didn’t hide behind misinformation, you could see clearly. Roll that Obamanomics vs Reaganomics graph out another 4 quarters and you’ll see the big difference. Of course, instead you’ll let your politics shape your reality when your reality should be shaping your politics.

  8. JC

    Sure thing rawr. Here you go. Reaganomics for another 4 quarters:

    What’s your point again about politics vs. reality?




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