Reaganomics = Obamanomics?

In what appeared to be a desperate hope to find someone with an ounce of credibility to help defend his tax-and-spend plans for the country, the President has once again called upon the words of an otherwise ideological enemy. In Monday night’s address to the nation, President Obama quoted the late President Reagan:

“Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment?  And I think I know your answer.”

Sounds pretty convincing. It seems the thousands upon thousands of liberal bloggers floating around in internet-land think the President has stumbled upon the holy grail of proof Reagan wasn’t really a fiscal conservative after all. Not so fast, oh quick-to-publish blogging counterparts of mine. Back away from the keyboards for a moment and read. The quote is found in Reagan’s remarks in Billings, Montana, at a celebration marking the Centennial of Billings and Yellowstone County, on August 11th, 1982. My liberal friends may be interested in a few pieces the President left out.  I’ve highlighted the rather important bits:

“We’re looking into all kinds of ways to get that deficit down. I don’t like giving the Federal Government one penny more than necessary, but I have endorsed the Senate tax bill now before the Congress, because it’s essential to our economic recovery program. It’s essential to saving next July’s 10-percent tax cut and the indexing I mentioned of the tax rates that will follow. For all the commotion surrounding the bill, it will have very little if any effect on the majority of individual taxpayers.

Now some of my friends in the press continue to refer to the tax measure I’ve mentioned — the one that’s now in the conference committee — as the biggest single tax increase in history. It is nothing of the kind. It totals about $99 billion over the next 3 years — ’83 through ’85 — but $31 billion of that isn’t a new or added tax in any way. It is the collection of tax now legitimately owed by some citizens under our present laws and which they have not been paying.

Now, about half the total in the bill is correcting unintended tax advantages which have resulted from sloppiness in some legislation. One example is a technical flaw in a bill passed several years ago which resulted in some corporations getting a 60-percent tax reduction simply because of that technicality which had never been intended in the passing of the bill. It was totally uncalled for that they should continue to get that.

And finally we come to what is new taxes in the bill — less than $1 out of 5 in the 99 billion tax package is a new tax — 17 to 18 billion dollars in all. Our tax cuts, with the 10-percent income tax cut that you will get next July, will save you over those same 3 years $406 [$402 — White House correction] billion that will stay in your pockets and not go to Washington.

Now, this tax program is part of the entire budget process, and it was essential in getting support for further reductions in spending. In order to get $280 billion in reduced outlays over the next 3 years against those deficits, we had to agree to the added revenues of 99 billion. The ratio of reduced spending outlays to revenues is 3 to 1.”

Ronald Reagan was promised $3 in cuts for every $1 raised in a “modest increase in business taxes” (Mike Brownfield) back during the debates for the 1983 budget.  That’s important to remember, because it paints a giant divide between how President Obama portrayed Reagan, and the former President’s one-time position on tax increases.  (Please see Edward Meese III’s full article on the topic here)

Though President Obama quoted him in this way, Reagan wasn’t talking about making the rich pay their fair share. Reagan actually cut taxes for the rich throughout his administration, and noted that it was indeed those who were evading the tax system (thus in effect not paying their “fair share”) that should be addressed. The fact that Obama invoked Reagan as being someone who disliked the so-called rich just as much as he does is comical at best.

Additionally, it must be clearly noted that it was Reagan’s firm belief that it would be the promised spending decreases (not the tax increases) that would take aim at the ballooning deficit. Reagan clearly outlined that he felt that the only way to keep his individual tax cuts, and major spending decreases, was to go with this small, yet still undesirable tax hike.

In the very speech Obama quoted in his address, Reagan expressed his disdain for tax increases.  In actuality, the tax hikes produced no positive effect; in fact, tax revenues  went down. A thorough study of the overall effects of Reaganomics throughout his two administrations shows that tax revenues actually went UP, not down, despite the lower tax rates! Why, you ask? Simple.  Higher tax rates restricts growth, restricts consumption, restricts hiring, etc.  To put it simply, 10% of 200,000 is a great deal more than 20% of 50,000.

The point is simply this: we’ve been down this road of compromise. Reagan tried it, and it did not come through.  Though mainstream political pundits would have us believe Reagan would be knocking Tea Party heads together for not “compromising like he did,” Reagan would have likely stood right alongside them. He came to know first hand what it was like to compromise on this issue. Reagan came the proverbial “halfway,” with his reluctant agreement to increased revenue; meanwhile, the Democrat end of the compromise never materialized. America never saw those $3 in spending cuts for every $1 in taxes raised.

Reagan’s continuous post 1982 record of advocating for and lowering taxes doesn’t exactly portray someone who thought a tax increase worked. If the tax increase worked so well, why not do it again, and again, and again? Why campaign on continuing to lower taxes?

President Obama, before you quote a man whose once successfully held the office you now so desperately try to occupy, you may want to read the whole speech. And just for kicks, a quick peek at Reagan’s full record might not be a bad idea.

Just a thought.

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