Economics

Distorting Reagan's Record

Did Ronald Reagan raise taxes or cut them?

|

Remember the big Reagan tax increase of 1982?

Well, certain elements of the press do, all of a sudden, and, lo and behold, after years of demonizing Ronald Reagan as a fiscally irresponsible tax-cutter, they are now trying to resurrect the Gipper as a tax increaser.

Here's Albert Hunt, the executive editor for Washington at Bloomberg News, writing in his Bloomberg column: "The political hero for these conservatives is Reagan, who did slash taxes his first year as president. What the Eric Cantors of the world don't know or ignore is that in 1982—in the midst of what was then the worst economic downturn since the Depression—Reagan approved the largest peacetime tax increase in history. On Sept. 3, 1982, the day he signed the tax hike, the jobless rate was 10.1 percent. In today's dollars, TEFRA (The Tax Equity and Fiscal Responsibilities Act) and an accompanying small increase in gas taxes would have raised the equivalent of almost $1 trillion dollars over 10 years. The result: the economy boomed in 1983 and 1984."

Here's David Brooks in his New York Times column: "the people in my group (you might call us conservatives)… We look at the tax increase of 1982 and do not see a ruinous disaster."

Vice President Biden, beware. Next thing you know, President Obama is going to try to get Reagan as his running mate for 2012. Imagine the commercials: "Ronald Reagan—vote for him and his running mate President Obama in gratitude for that 1982 tax increase, 30 years later.")

It's so absurd it's almost funny. If ordinary Americans remember President Reagan as a tax-cutter rather than a tax-raiser, it's not because they are victims of some kind of elaborate deception perpetrated by the Great Communicator. It's because President Reagan, well, cut tax rates.

Even the left-leaning web site Slate didn't buy the 1982-biggest-peacetime-tax-increase in history line when it was used against one of its congressional creators, Sen. Robert Dole, in the 1996 presidential campaign. Slate said, "most of Dole's tax increase was actually the partial repeal of future tax cuts that had been enacted in 1981 but had not yet taken place. Despite Dole's bill, taxpayers received more than $375 billion in tax cuts over the following three years… Almost $50 billion of Dole's 1982 projected revenue was supposed to come from cracking down on tax cheats, by adding staff to the IRS, and requiring financial institutions to withhold interest and dividends the way employers withhold wages. (This provision was repealed the next year, before it could take effect.) Is getting people to pay taxes they already owe but would otherwise escape a 'tax increase'?"

As for President Reagan himself, on the weekend he was supposedly signing the biggest peacetime tax increase in American history, his only public comment on the tax question came in a radio address from Rancho del Cielo. And that speech wasn't exactly one in which he patted himself on the back for doing the supposedly fiscally responsible thing, bucking his party's base, and raising taxes. "I'm convinced that in these last few decades the increased intervention by government in the marketplace, tax policies that took too great a percentage of overall earnings, plus burdensome and unnecessary regulations reduced economic growth and kept us from creating new jobs for newcomers entering the job market," the president said.

"Our economic recovery program" Reagan said, "marks a decided turnaround from government tax-and-spend policies of the past four decades—deliberately so."

If there's a message from 1982 that's relevant to our present situation, that's the one.

Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

NEXT: Silly Young Person Wants "Social Network Neutrality"

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. The Gipper was a Cutter, not an Increaser.

    And the Interwebs are a Uniter, not a Divider.

    Whatever.

    1. PS Al Hunt….heeheeheeheehee….David Brooks….pfffftt…..”Slate”…ppffffff….
      BAAAAAAAAAAHAHAHAHAHAHAHA!

      Oh, boy…..good one!

  2. Reagan is boring. Let’s talk Global Warming

    http://www.salon.com/news/scie….._interview

    I’m guessing that skeptics of global warming have willfully ignored this research.

    They have, and to our great peril. The fact that the sun has kept global warming down over the last 10 years has given some people an excuse to declare that it simply doesn’t exist.

    1. Re: kinnath,

      They have, and to our great peril. The fact that the sun has kept global warming down over the last 10 years has given some people an excuse to declare that it simply doesn’t exist.

      Yeah… an ‘excuse.’

    2. global warming down over the last 10 years

      it simply doesn’t exist

      Bizarre conclusion, indeed.

    3. It is settled science AGW is real!

      1. Actually, I just said that so that the left would take me seriously and listen to me when I introduce market solutions to AGW.

        And my plan has worked so well.

    4. The Sun is a Denier?

      1. Re: Pro Libertate,

        The Sun is a Denier?

        No, it just refuses to cooperate.

        1. The sun is clearly a heretic to the environmental movement. It must be crucified.

    5. sun has kept global warming down

      Who gets to decide what the optimal “sun keeping” is?

      1. WE DO!!

    6. I believe you, the sun has no role to play in earths climate.

    7. Your modern attempt at a state sponsored religion is heresy. The state should adopt the one true religion of Liberta. All evil in this world is caused by my hand.

      I am not a cruel god, however. All I ask is that you donate 10% of your income until you’re 65 years old, after which point I’ll give you a paltry sum to live on monthly. In the meantime I will spend all the money you give me on booze & women. What could possibly go wrong?

    8. So, the sun is responsible for the cooling, but not the warming?

  3. Seems like Jack Kemp thought it was a tax boost.

    “This did not deter Dole’s supply-side critics, led by Jack Kemp, from characterizing his bill as a record-setting tax boost.”

  4. Reason can do better than this. Reagan agreed that the big cuts he had pushed through the year before were too big, just as the Bush tax cuts are too big. Reagan also agreed to major increases in Social Security taxes, along with a variety of other “revenue enhancements” during the remainder of his presidency. Reading Stoll, you’d think that Reagan was only president from 1981 to 1982.

    1. Just stick to reviewing The Reagans, Alan.

      1. Facts — Damn! — I got nothin’

    2. Stoll screwed up. He accidentally let slip a piece of information which only he, and three other surviving people, are privy to: that Ronald Reagan was only president from 1981-1982.

      After that date, he was replaced by an organic artifical lifeform, affectionately referred to in the secret service as “RoboReagan” or “RonBot”.

      1. And how do we know that all the presidents following Reagan were also not robots ?

        1. Because in order to be artificial intelligence, the subsequent occupiers of the white house would need intelligence.

          1. Maybe they have been the Japanese sexbot variety?

            Minuscule CPU module, barely rudimentary speech synthesis, crude unappealing orifice…

      2. “Morbo congratulates our gargantuan cyborg president. May death come quickly to his enemies.”

    3. I just came into this thread to see if Alan Vanneman could resist posting in a thread with “Reagan” in the title.

      I wasn’t disappointed. Works every time; like moths to the flame…

  5. There is no more odious font of inside the Beltway, incestuous, bland, vanilla, conventional wisdom than Al Hunt, unless it is David Brooks aka Cokie Roberts.

    1. And Hunt ain’t gonna let up either. From his article in Bloomberg yesterday:
      “Both Ronald Reagan and Bill Clinton engineered big tax increases that were followed by robust economic gains. Politically, however, tax cuts are the glue that holds together the Republican coalition. It used to be anti-communism, until the Berlin Wall came down.”

      Yes, it is the revisionist narrative that keeps on giving! Just repeat as if it is taken for granted by EVERYONE and maybe someday it will be. What a fucking hack.

  6. http://www.lewrockwell.com/rot…..ard60.html

    Just thought I’d post this. Reagan was not a president Libertarians should look back on fondly. He talked the talk, but that was it

    1. I don’t think most of the people here have anything nice to say about Reagan. I know I don’t. Well, except that John Milius made Red Dawn while Reagan was president. What does that have to do with anything? Nothing. Nothing at all.

      AVENGE ME

      1. I can’t wait until the remake craps all over your fond memories of Harry Dean Stanton.

        1. When Harry yelled that out in the first movie, he found his motivation by meaning it about an inevitable remake.

          I have to say that it’s not screaming “awful” at me yet, by virtue of the fact that no one awful is attached to it, especially Bay or Bruckheimer. And they were making the Chinese the villains until the Chinese complained and MGM made them change it, so that shows some balls.

          We’ll see. It will probably suck, but there are as of yet no immediate neon signs of super-suckage.

          1. While Red Dawn was insanely stupid, it does have the redeeming quality of being one of the ten thousand films in which Harry Dean Stanton appeared.

            1. Epi love the remake. He loooooooooooves it. There’s nothing ballsy about capitulation. And they’re missing a key ingredient that made the original awesome (which is what I assume you meant by “insanely stupid” there). Apologies to George Kirk, but no one puts Swayze in a corner.

            2. Even when Milius is being stupid, he’s still awesome. Conan and Red Dawn are all the proof you need of that.

              What they really should have done for the remake is make the invasion be by the Canadians. That would have been amazing.

              1. I’ll say it right now: Conan the Barbarian is a good movie. Hard stop.

                1. I’ll say it right now: Conan the Barbarian is a good movie. Hard stop.

                  It was better than expected, but then I didn’t expect much.

                2. I’ve said this before, but Conan the Barbarian is one of the greatest movies ever–here’s a story of a guy who kicks ass, nails any bitch he wants, works hard for his shit, and doesn’t ever apologize for anything.

      2. He said some libertarian stuff a few times. I think he meant it, but all of those beliefs came a distant second to staving off the commies.

        1. and Nancy’s astrologer

      3. Eh, although there are certainly a number of reasons not to like the guy much, there are a few positives to his administration. First, he was about as judicious in the use of force as any president since. Yeah, Libya and Grenada, but all in all, one was a quick bombing, one was a quick in and out invasion. The contra thing I’m not tripping over either. At least he let proxies do the dirty work and kept our boys the hell outta there. Second, he lowered tax rates dramatically. I wish he would’ve got some bigger spending cuts, reformed entitlements, etc, but I’m happy that I’ve never known a greater than 50% tax burden in my working life so far. And he at least brought the rhetoric of limited govt into play. I realize that the GOP has still been playing more to the rhetoric than the results, but limited govt rhetoric was sorely lacking since Coolidge with only a brief Goldwater surge, so even if he was woefully inadequate at bringing results on that front, I can appreciate his role in making it at least a talking point again.

      4. Threadjack:

        Tom Coburn shows Paul Ryan how it’s done:

        http://hosted.ap.org/dynamic/s…..TE=DEFAULT

    2. Awful article.

      Fuck Reagan. Any libertarian who praises him is a confused conservative

  7. Ira, you told us what Reagan’s COMMENT was on that weekend, but you didn’t say whether or not he signed a tax increase. He did. The bill increased FUTA rates and tripled telephone excise taxes. Is that what they call a regressive tax? By the way, what was Reagan’s record on deficit spending?

    1. By today’s standards, Reagan’s deficits were surpluses.

    2. telephone excise taxes….bwahahahaa

  8. Once again, in the right place.

    Threadjack:

    Tom Coburn shows Paul Ryan how it’s done:

    http://hosted.ap.org/dynamic/s…..TE=DEFAULT

    1. All in all, not a horrible plan. Albeit one with a snowball’s chance in hell of getting anywhere. And I do think its not as gamechanging as Ryan’s plan. Coburn wants to tinker at the edges of the entitlement state; Paul wants to redefine it.

  9. I was never a big fan of RR’s, but I’m always amazed at how people who spent his entire political career ridiculing his beliefs and intelligence now–that he’s safely buried–have so much good to say about him.

    1. That’s because he was generally popular. People–especially political people–are scared to attack the popular.

  10. Reagan has a legacy so distorted by the Conservative idolization of him that we may never have a clear picture of the real man behind the television. Did he rid the world of commie scum? Check out my portrait of The Gipper in commemoration of his 100th birthday at http://dregstudiosart.blogspot…..ipper.html

  11. Fuck The Reagan Administration.

  12. Glad I’m not the first to acknowledge this article as lying propagandistic drivel.

    Whatever Reagan was or was not, it’s certain that he’s more useful as a false idol for the right than as a policymaker. He was a right-wing fanatic for his time but would be rejected by the current GOP on any number of counts including his tax increases.

    1. Re: Tony,

      He was a right-wing fanatic for his time[…]

      Anybody who says “Government is the problem” must be a right-wing ‘fanatic.’

      At least in the mind of a left-wing fanatic!

      1. Why don’t you spend time defending more Republicans, OM.

        1. That clinches it!! If Tony the doucher is against it, I am for it!! LONG LIVE THE REAGAN REVOLUTION!! VIVA LA RON!!!!

          1. “but would be rejected by the current GOP on any number of counts including his tax increases.”

            Keep that revisionist narrative going, Goebbels…er, I mean, Tony.

    2. naive comparison. you are assuming Reagan would make the same compromises today that he made back then. The country is much more conservative now. Reagan came in soon after the liberal consensus. And had to deal with the rockefeller wing in his own party.

  13. Can’t say I give two shits what a hack like Hunt thinks, but Rothbard had Raygun’s number in real time:

    http://www.lewrockwell.com/rot…..ard60.html

    Eight years, eight dreary, miserable, mind-numbing years, the years of the Age of Reagan, are at long last coming to an end. These years have surely left an ominous legacy for the future: we shall undoubtedly suffer from the after-shocks of Reaganism for years to come…

    There was no “Reagan Revolution.” Any “revolution” in the direction of liberty (in Ronnie’s words “to get government off our backs”) would reduce the total level of government spending. And that means reduce in absolute terms, not as proportion of the gross national product, or corrected for inflation, or anything else. There is no divine commandment that the federal government must always be at least as great a proportion of the national product as it was in 1980. If the government was a monstrous swollen Leviathan in 1980, as libertarians were surely convinced, as the inchoate American masses were apparently convinced and as Reagan and his cadre claimed to believe, then cutting government spending was in order. At the very least, federal government spending should have been frozen, in absolute terms, so that the rest of the economy would be allowed to grow in contrast. Instead, Ronald Reagan cut nothing, even in the heady first year, 1981…

    The much-heralded 1981 tax cut was more than offset by two tax increases that year. One was “bracket creep,” by which just inflation wafted people into higher tax brackets, so that with the same real income (in terms of purchasing power) people found themselves paying a higher proportion of their income in taxes, even though the official tax rate went down. The other was the usual whopping increase in Social Security taxes which, however, don’t count, in the perverse semantics of our time, as “taxes”; they are only “insurance premiums.” In the ensuing years the Reagan Administration has constantly raised taxes ? to punish us for the fake tax cut of 1981 ? beginning in 1982 with the largest single tax increase in American history, costing taxpayers $100 billion.

    Creative semantics is the way in which Ronnie was able to keep his pledge never to raise taxes while raising them all the time…

    How about deregulation? Didn’t Ronnie at least deregulate the regulation-ridden economy inherited from the evil Carter? Just the opposite. The outstanding measures of deregulation were all passed by the Carter Administration, and, as is typical of that luckless President, the deregulation was phased in to take effect during the early Reagan years, so that the Gipper could claim the credit.Such was the story with oil and gas deregulation (which the Gipper did advance from September to January of 1981); airline deregulation and the actual abolition of the Civil Aeronautics Board, and deregulation of trucking. That was it.

    The Gipper deregulated nothing, abolished nothing. Instead of keeping his pledge to abolish the Departments of Energy and Education, he strengthened them, and even wound up his years in office adding a new Cabinet post, the Secretary of Veterans Affairs. Overall, the quantity and degree of government regulation of the economy was greatly increased and intensified during the Reagan years. The hated OSHA, the scourge of small business and at the time the second most-hated agency of federal government (surely you need not ask which is the first most-hated), was not only not abolished; it too was strengthened and reinforced. Environmentalist restrictions were greatly accelerated, especially after the heady early years when selling off some public lands was briefly mentioned, and the proponents of actually using and developing locked-up government resources (James Watt, Anne Burford, Rita Lavelle) were disgraced and sent packing as a warning to any future “anti-environmentalists.”

    The Reagan Administration, supposedly the champion of free trade, has been the most protectionist in American history, raising tariffs, imposing import quotas, and ? as another neat bit of creative semantics ? twisting the arms of the Japanese to impose “voluntary” export quotas on automobiles and microchips. It has made the farm program the most abysmal of this century: boosting price supports and production quotas, and paying many more billions of taxpayer money to farmers so that they can produce less and raise prices to consumers.

    And we should never forget a disastrous and despotic program that has received
    unanimous support from the media and from the envious American public: the massive witch hunt and reign of terror against the victimless non-crime of “insider trading.” In a country where real criminals ? muggers, rapists, and “inside” thieves ? are allowed to run rampant, massive resources and publicity are directed toward outlawing the use of one’s superior knowledge and insight in order to make profits on the market…

    Foreign aid, a vast racket by which American taxpayers are mulcted in order to subsidize American export firms and foreign governments (mostly dictatorships), has been vastly expanded under Reagan. The Administration also encouraged the nation’s banks to inflate and pour money down Third World rat-holes; then bailed out the banks and tin-pot socialist dictatorships at the expense of U.S. taxpayers (via tax increases) and consumers (via inflation)…

    I am convinced that the historic function of Ronald Reagan was to co-opt, eviscerate and ultimately destroy the substantial wave of anti-governmental, and quasi-libertarian, sentiment that erupted in the U.S. during the 1970s.

    If this looks familiar, Robert Wenzel quoted it in a beat down of Client #9, Eliot Spencer’s ludicrous new diatribe against libertarianism that you can read here.

    http://www.economicpolicyjourn…..ck-on.html

    1. blarg! — Spitzer, damn it. Must be some deep, ugly psychologically traumatic reason behind why I flubbed that goon’s name.

    2. The first two sentences of that are eerily prescient.

    1. Shhhh! Let’s keep that our little secret, bot.

  14. And let us not forget that under the Reagan regime Nixon’s drug war got turned up to VOLCANO HEAT.

    Reagan won me over with his radio shows, enough at least to vote for him in 1980. I was not impressed by his first term and voted LP in 1984.

    … Hobbit

  15. Reagan won me over with his radio shows, enough at least to vote for him in 1980. I was not impressed by his first term and voted LP in 1984.

    http://intel-server-cpu.com

  16. The point is it is a purely regressive tax – that has much in common with today’s “fiscal conservatives” – take it all out of the lower end.

    The last 30 years don’t exactly reveal a primary correlation between income tax rates, economic growth and deficits.

  17. At least as far as individual income tax rates go, this has been the silliest and, to me, the most historically distorted and jaw-dropping debate on the internet over the past year. I thought only people like Ezra Klein were pushing this, hoping to catch the stampeding jackalopes. The past ten-twenty years, the standard story on the left has been that Reagan ran huge deficits because of supply-side revenue failure and his reduction in the top rates of taxation and the elimination of tax brackets from about fifteen to three in 1986. Anybody who grabs a U.S. Master Tax Guide (get one at your local accounting office) and looks at the individual tax brackets from 1970-1988 can tell you that. The great AMT debacle is one thing (which Tip O’Neill and the Dems certainly grandstanded on, but is indeed one thing nobody even freakin’ mentions!) but that’s a bit of history for the accountants and the capital gains guys to debate.

    This is where punditry and noise are completely useless on both sides, and this article actually has it right.

    Link and pdf for individual historical rates:

    http://www.taxfoundation.org/f…..901021.pdf

  18. Not that facts will change many minds, but rational Reagan-lovers (an oxymoron?) should consider that though taxes were cut on the surface, the burden of his administration’s spending was simply transferred to debt. zfacts.com/p/318.html summarizes it fairly well.

  19. “On Sept. 3, 1982, the day he signed the tax hike, the jobless rate was 10.1 percent.”

    Of course, that’s using the older more accurate way of reporting unemployment. Current unemployment using that method is 17.7 percent.

  20. The future is known, it is the past that keeps changing.

  21. Presidents neither increase nor lower taxes. The only president in history who might be able to do so is Barack Obama if Mitch McConnel’s [whiny voice] “Why can’t the President just do it?” plan goes through.

    It is fair to say that Presidents recommend budgets and tax changes, but those are merely suggestions. And, of course, they have veto power. But ultimately Congress is always responsible for taxes.

    Congress is also responsible for the debt when it comes to everything except wars the President starts. Even then, Congress could defund those if they weren’t such pussies.

  22. Another interesting fact…

    Number of gay men personally murdered by Reagan….0.

    Number of gay men personally murdered by Che….more than 0.

Please to post comments

Comments are closed.