Editor’s note: A version of this article first appeared at FoxNews.com.
As President Obama and Democrats urge Republicans to increase taxes,
some liberals are curiously invoking the name of Ronald Reagan, the
ultimate tax-cutting Republican. They insist that even Reagan was
willing to compromise with Democrats on tax increases; thus, John Boehner and Republicans should as well. In truth, this is (at best) a false parallel.
It is correct that Ronald Reagan occasionally compromised on certain tax increases, as he did in 1982. He did so in exchange for promised
spending cuts from Democrats that never materialized, to his great
regret. Reagan would constantly point back to this broken promise by
Democrats.
More importantly, however, President Reagan never budged on income
taxes. He flatly refused to increase income taxes, which is what President Obama demands of Republicans right now. Reagan understood that not all taxes, and thus not all tax increases, were equal.
For insight into Ronald Reagan’s thinking, consider what he did in
1981, when faced with a stagnant economy: At his California ranch on
August 13, 1981, Reagan, working with a Democratic House and Republican
Senate, secured a 25 percent across-the-board reduction in income tax
rates over a three-year period beginning in October 1981. Eventually,
through this and later cuts, the upper income-tax rate was slashed from
70 percent to 28 percent.
After a slow start through 1982-83, the stimulus effect
of the tax cuts was extraordinary, sparking a huge peacetime economic
expansion. The “Reagan Boom” produced not only prosperity but—along with
the Soviet collapse that he worked to precipitate—helped generate budget surpluses in the 1990s.
And contrary to the history that liberals continue to rewrite, the
Reagan tax cuts did not decrease the revenue to the U.S. Treasury. To
the contrary, tax revenues under Reagan rose from $599 billion in 1981
to nearly $1 trillion in 1989. The problem was that outlays (i.e., government spending) all along exceeded revenues, soaring from $678 billion in 1981 to $1.143 trillion in 1989.
The cause of the Reagan deficits—bear in mind that Reagan inherited a
chronic deficit—was the decline in revenue from the 1982-83 recession
and (as is always the case) excessive federal spending.
Spending has long been, and still remains, the primary reason for our fiscal crisis. This has been especially true since the massive growth of the federal government begun in the 1960s by LBJ’s Great Society.
Proof of this is as easy as Googling the words “historical tables deficit.” You will see two go-to sources for budget data: “OMB historical tables” and “CBO historical tables.”
“OMB” is Office of Management and Budget. “CBO” is Congressional Budget
Office. To keep it simple, look at the data from OMB, President Obama’s
own budget office. At the OMB link
is Table 1.1, “Summary of Receipts, Outlays, and Surpluses or Deficits:
1789-2016,” an official report of all federal spending since the
founding of the republic.
A close read of that chart offers a stunning display in fiscal
irresponsibility. As the first two columns show, receipts (i.e.,
revenues) and outlays (i.e., expenditures) moved up and down throughout
the first roughly 180 years of our history. In 1965, however, something
historically perverse began: Spending started increasing every single
year, without exception, into the Obama presidency, from 1965-2009. A
slight decrease came only in 2010, but then spending promptly ratcheted
right back up, and remains on a steady upward trajectory through 2017.
There are few constants in the universe: gravity is one, the sun is
another. Add another: spending by Washington; it goes up every year.
Worse, in 2009, President Obama and the Democratic Congress responded
to the slow economy with a gigantic spending infusion: an $800-billion “stimulus” package that further exploded our record deficit/debt. The “stimulus” was a costly waste that continues to bury us.
In short, this is why Republicans should not agree to Democrats’ demands for tax increases. This nation has a spending problem—a grave one—not a tax-revenue problem. Our problem today is reckless big government.
At his 1981 inaugural, Ronald Reagan, referring to the economic
crisis he faced, declared that “government is not the solution …
government is the problem.”
Just days after his inaugural, Barack Obama professed the opposite:
“[A]t this particular moment, the federal government is the only entity
left with the resources to jolt our economy back into life. It is only
government that can break the vicious cycle where lost jobs lead to
people spending less money which leads to even more layoffs.”
To repeat: Ronald Reagan never budged on marginal income-tax rates.
He decreased them, big-time. Barack Obama is demanding that they be
increased. Ronald Reagan,
we suspect, would be fully supportive of current Republicans holding
their ground on tax rates—especially given our federal government’s
unparalleled inability to control its reckless spending.
Dr. Paul Kengor is professor of political science and executive director of The Center for Vision & Values at Grove City College. His books include ”The Crusader: Ronald Reagan and the Fall of Communism.”
Michael Reagan is the
son of President Ronald Reagan. He is a political consultant, founder
and chairman of The Reagan Group, and president of The Reagan Legacy
Foundation. He is the author of ”The New Reagan Revolution.” Visit his website at www.Reagan.com.
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