Republican presidential candidates and other right-wing pundits, continue to use the Reagan presidency as the conservative model for fiscal discipline; however, according to his legacy, Reagan served as a poor example for future Republican presidential hopefuls. We all know that Reagan’s massive $749 billion supply-side tax cuts in 1981 quickly produced massive annual budget deficits. Combined with his rapid increase in defense spending, Reagan delivered not the balanced budgets he promised during his campaign, but record-setting debt.
Forced to raise taxes eleven times to avert financial disaster, Reagan, affectionately referred to as “the Gipper,” nonetheless presided over a tripling of the American national debt to nearly $3 trillion. By the time he left office in 1989, Ronald Reagan more than equaled the entire debt burden produced by the previous 200 years of American history. It’s no wonder his former Budget Director, David Stockman, lamented: “[The] debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.” It is clear why the Gipper cited the skyrocketing deficits he bequeathed to America as his greatest regret.
George W. Bush buried the myth of Republican fiscal discipline. Inheriting a 236 Billion Dollar federal budget surplus and CBO forecast for a $5.6 trillion surplus over 10 years, this Republican President quickly set about dismantling the progress made under President Clinton. Bush’s $1.4 trillion tax cut in 2001, followed by a $550 billion second round in 2003, accounted for the bulk of the deep budget deficits he produced. (It is more than a little ironic that Paul Ryan eleven years ago called the tax cuts “too small” because he believed the estimated surplus Bush eviscerated would be even larger.)
Like Reagan, Bush resorted to a rosy state of affairs to claim he would halve the budget deficit by 2009. Before the financial system meltdown in 2008, Bush’s deficit had already reached $490 billion. (And even before the passage of the Wall Street bailout, Bush had presided over a $4 trillion increase in the national debt, a staggering 71% jump.) By January 2009, the mind-numbing deficit figure reached $1.2 trillion, forcing President Bush to raise the debt ceiling to $11.3 trillion.
As it turned out, Congressional Republican majorities voted to raise the U.S. debt ceiling seven times while George W. Bush sat in the Oval Office. “Reagan,” Vice President Dick Cheney famously declared in 2002, “proved deficits don’t matter.” Unless, of course, there is a Democrat in the White House.
It is interesting to note that during the Bush presidency, the current Republican congressional leadership team voted 19 times to increase the debt limit. Fueled by the Bush tax cuts of 2001 and 2003, the Medicare prescription drug plan and the unfunded wars in Iraq and Afghanistan, the US national debt doubled during the Bush presidency. Mitch McConnell and John Boehner voted for all of it and the debt which ensued because, as Orrin Hatch later explained: “It was standard practice not to pay for things.” That Republican intransigence persists despite the complete debunking of two of their favorite myths.
The first tried and untrue Republican talking point is that “tax cuts pay for themselves.” Sadly, that right-wing myth-making is contradicted by the massive Bush deficits, half of which were the result of the Bush tax cuts. As a percentage of the American economy, tax revenues peaked in 2000; before the Bush tax cuts of 2001 and 2003. Despite President Bush’s bogus claim that, “you cut taxes and the tax revenues increase,” Uncle Sam’s cash flow from individual income taxes did not return to its pre-dot com bust level until 2006.
The second Republican fairy tale, as expressed by Republican House Speaker Boehner, is that, “The top one percent of wage earners in the United States…pay forty percent of the income taxes…The people he’s [President Obama] is talking about taxing are the very people that we expect to reinvest in our economy.” If true, the Republican’s so-called “Job Creators” failed to meet those expectations under George W. Bush. After all, the last time the top tax rate was 39.6% during the Clinton administration, the United States enjoyed rising incomes, 23 million new jobs and budget surpluses. Under Bush, not so much.
On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, “Bush on Jobs: the Worst Track Record on Record.” (The Journal’s interactive table quantifies his staggering failure relative to every post-World War II president.) The dismal 3 million jobs created under President Bush didn’t merely pale in comparison to the 23 million produced during Bill Clinton’s tenure. In September 2009, the Congressional Joint Economic Committee charted Bush’s job creation disaster the worst since Hoover:
As David Leonhardt of the New York Times aptly concluded:
“Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7.Ryan Budget Delivers Another Tax Cut Windfall for Wealthy Looking at that dismal performance, Leonhardt rightly asked, “Why should we believe that extending the Bush tax cuts will provide a big lift to growth?” At a time of record income inequality which saw the incomes of the richest 400 Americans taxpayers double even as their tax rates were halved, that’s a fair question to say the least.”
As Ezra Klein, Paul Krugman and Steve Benen among others noted, the House Republicans “Plan for America’s Job Creators” is simply a repackaging of years of previous proposals and GOP bromides. (As Klein pointed out, the 10 page document “looks like the staffer in charge forgot the assignment was due on Thursday rather than Friday, and so cranked the font up to 24 and began dumping clip art to pad out the plan.”) At the center of it is the same plan from the Ryan House passed budget to cut the top individual and corporate tax rates to 25%. The price tag for the Republican proposal is a jaw- dropping $4.2 trillion.
Largely overlooked in the media coverage of the Republican debt ceiling hostage drama last summer is that the 235 House Republicans and 40 GOP Senators who supported Paul Ryan’s 2012 budget bill voted to add $6 trillion to the U.S. national debt over the next decade. As Speaker John Boehner acknowledged, Republicans now and in the future would have to increase the debt ceiling – repeatedly.
“President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying,” the New York Times’ David Leonhardt explained in 2009, adding, “The economic growth under George W. Bush did not generate nearly enough tax revenue to pay for his agenda, which included tax cuts, the Iraq war, and Medicare prescription drug coverage.” That fall, former Reagan Treasury official Bruce Bartlett offered just that kind of honesty to the born again deficit virgins of his Republican Party. Noting that the FY2009 deficit of $1.4 trillion was solely due to lower tax revenues and not increased spending, Bartlett concluded:
“I think there are grounds on which to criticize the Obama administration’s anti-recession actions. But spending too much is not one of them. Indeed, based on this analysis, it is pretty obvious that spending – real spending on things like public works – has been grossly inadequate. The idea that Reagan-style tax cuts would have done anything is just nuts.”
Thanks to the steep recession, as the Congressional Budget Office (CBO) and others have documented time and again, the overall federal tax burden as a percentage of GDP is now down to levels not seen since Harry Truman was in the White House. The two-year tax cut compromise didn’t help any, adding $400 billion to the current deficit. But it’s the Bush tax cuts themselves which Republicans want to make permanent and then (as the Ryan budget mandates) lower further, that will account for much of the revenue drain into the future.
We should be careful not to buy into the “distortions, myths and outright lies” spewed out of the mouth of Republican politicians especially those that are more interested in bringing down this President rather than doing their best for our country, but that’s just my take.
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