StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Reagan's Tax Increases

06 Apr 2010
Posted by Bruce Bartlett

I see that former Senator Alan Simpson, co-chair of the deficit reduction commission, is angry with anti-tax fanatics for saying that he supported tax increases while in the Senate. Without checking his voting record, I think it's reasonable to assume that Simpson, like almost all Republicans in the Senate in the 1980s, probably voted for the many tax increases supported and signed into law by Ronald Reagan, which eventually took back half of the 1981 tax cut (see below).

It may come as a surprise to some people that once upon a time in the not-too-distant past Republicans actually cared enough about budget deficits that they thought raising taxes was necessary to bring them down. Today, Republicans believe that deficits are nothing more than something to ignore when they are in power and to bludgeon Democrats with when they are out of power.

Legislated Tax Changes by Ronald Reagan as of 1988
Tax Cuts
Billions of Dollars
Economic Recovery Tax Act of 1981
Interest and Dividends Tax Compliance Act of 1983
Federal Employees’ Retirement System Act of 1986
Tax Reform Act of 1986
Total cumulative tax cuts
Tax Increases
Billions of Dollars
Tax Equity and Fiscal Responsibility Act of 1982
Highway Revenue Act of 1982
Social Security Amendments of 1983
Railroad Retirement Revenue Act of 1983
Deficit Reduction Act of 1984
Consolidated Omnibus Budget Reconciliation Act of 1985
Omnibus Budget Reconciliation Act of 1985
Superfund Amendments and Reauthorization Act of 1986
Continuing Resolution for 1987
Omnibus Budget Reconciliation Act of 1987
Continuing Resolution for 1988
Total cumulative tax increases
 Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year 1990 (Washington: U.S. Government Printing Office, 1989), p. 4-4.

Reagan and the black guy...

It's a damn good thing for the republicans that a democratic president came along when he did.

Instead of crucifying Obama, they should be clicking their heels because he, like Bill Clinton before him, will help straighten up some of the crap they screwed up.

It is funny to talk (try to talk more like it) to 'true' republicans (teabaggers) about how Obama didn't cause the mess, Bush's 6 year spending binge caused the current problem and the democratic parties limp resistance during the next 2 years wasn't a good sign either...

Does anyone in congress really want to FIX the problem or do the parties feel that smearing it on each other is so much more constructive...

Whose fault is the national debt?

Mr. Bartlett, I am a fan and admire your courage to speak the truth in today's environment.

I'd like to see you post graphs/discuss which programs and actions in the past have made up our total debt, and from which administrations.

Aside from Social Security and Medicare, which amazingly the GOP now suddenly refuses to discuss cutting, I believe most of our current debt comes from Bush II and Reagan. No?

GOP & Taxes

The only form of tax increases that I'll support are taxes on EVERYBODY: right down to those who pay no taxes receiving "refunds" and the retirees living on their pensions.

Anything else is delusional, because the while the Congress has no appetite for new taxes, it's appetite for cutting spending is far less.

i really don't understand the

i really don't understand the logic of this comment. While it is certainly true that Congress has little appetite for either raising taxes or cutting spending I don't see how it follows that any potential tax increase should or must be imposed on "Everybody". Presumably this includes the most economically vulnerable among us.

Tax sanity

Bravo! It's about time somebody reminded the folks that Reagan was for HUGE tax increases. I urge you to finish this analysis by showing the tax increases by GHWBush (which helped him lose his fan base) and the moderate tax increases under Clinton that helped right the fiscal ship of state leading to balanced budgets. Reality is always more useful than myth.

Do the math. Reaganomics comes out ahead.

So what your chart points out is that while Reagan made $132.7 billion in tax increases, he also made $275.3 billion in tax cuts, or a net reduction of $142.6 billion dollars over his 2 terms in office, and reduced the size of government excess during a period of time in which the country was in an economic recession, to successfully bring it back to become the longest and strongest economy in decades.

And you are comparing that achievement to Obama spending trillions in his first year in office. So your point is?

Reaganomics didn't fix the economy, the Volcker Rule did!

Paul Volcker fixed the economy during Carter's administration. The fruits of that work were realized during the early '80s and Reagan used the momentum to deregulate and set up a cyclic boom/bust economic trainwreck that has lasted 30 years.

Reagonomics Reagan's two administrations resulted in the highest levels of federal spending as a percentage of GDP since 1962, or in the 20 following years.

Furthermore, Reagan's budgets tripled the annual deficit, necessitating tax increases by both Reagan and Bush, costing Bush re-election. Debt as a percentage of GDP soared under both Reagan and Bush, only to decline under Clinton.

So, no.

Classically wrong again, genius

Wild Mountain Man not very smart. All Bruce is showing was that there were both tax cuts and tax increases during Reagan -- he is not writing about the trillion-dollar missle defense defense build up that broke the Soviet bank (and ours too, if you want to be honest about it). Reagan's budget deficits were huge compared to anything before him going back to WWII and postwar WWII. They were 5 to 10 times the size of Carter's largest deficit (in his last year). Bush 41's was a huge deficit spender also. Clinton passed his first budget bill over the nay vote of every GOP member in both houses of congress, with Al Gore breaking a tie in the Senate -- and that turned hufe Reagan Bush deficits into surpluses over 8 years (and did not destroy life as we know it, contrary to the fears being stoked by the GOP at that time. Bush 43 was without doubt the most fiscally irreswponsible President ever -- launching 2 wars and 2 huge tax cuts, and than a huge pre=election Medicare expansion without paying for any of it -- and he left Obama with at least 80% of the current deficit (derived from 2 wars, 2 huge tax cuts, the diminished tax revenue thatnks to a deep 2-year recession, and interest on the alomst $4 trillion in national debt created during his 8 years in office. That's the fact, Jack. Read it and weep, but the ONLY time teh GOP has cared about deficits in the last 30 years is when Democrats have been in charge.

Obama spent trillions? Which

Obama spent trillions? Which trillions?

Whose Fault is it?

Bruce is correct. Republicans don't care about deficit spending anymore. But if they did, how many more seats would they capture in the Senate and the House?

BTW, is there a single Democrat officeholder or member of a left-of-center think thank that has outlined anything remotely similar to the exercise Representative Paul Ryan performed when he developed his Roadmap? I've yet to read any courageous Democrats who propose cuts to Medicare, Medicaid, and Social Security that would be required to stop the flow of red ink.

For that matter, what has Bruce Bartlett offered as a possible grand compromise that could be used as a model for the National Commission on Fiscal Responsibility and Reform?

Let's acknowledge some facts. The great welfare policies of the Democrats (Social Security, Medicare, Medicaid, and now Obamacare) are sucking huge expenditures and driving the future insolvency of this nation. The Democrats own these programs so let them propose the taxes necessary to fully finance them, or work with Paul Ryan to make them affordable instead of ridiculing him.

Why should Republicans take ownership of these programs and their fundamental Ponzi-scheme-like insolvency? Starving the beast works because rising interest expenses will ultimately force the Democrats to make the hard choices to cut these benefits or foist ridiculous tax increases upon the population.

Courage requires actual votes

The President's budget cuts spending in the medium term faster than Ryan's "roadmap." To do anything more will require political cover for politicians on either side, which is the point of deficit comission. Too bad Republicans filibustered their own idea.

Social Security is solvent until 2037. That money was collected. It was paid for. Unfortunately, 30 years of "tax cuts" has blown that money. But it wasn't Social Security's fault.

Medicare and Medicaid are another problem, but at least they're being addressed. As Republicans remind us at every opportunity, the ACA "cuts" Medicare by over $400 billion. As I recall, a lot of Democrats voted for that. I wonder how many courageous Republicans are going to campaign for their dream of privitizing Medicare and Social Security this fall? Not many, I suspect.

Of course, "cutting" Medicare around the edges does not solve the problem of out-of-control healthcare inflation, nor does throwing seniors into the invidual market as Ryan's plan does. The new Medicare Commission is the strongest tool in the ACA to reduce Medicare spending. Watch in the coming months and years as Republicans demogogue the issue, painting it as a death panel loaded with those "government bureacrats."

1.5 Trillion

Yes, but nobody borrowed $1 to $1.5 trillion dollars a year on a regular basis. Only Obama. And he projects an average of 1 trillion per year over the next decade. Let's keep in mind that our debt is now $13 trillion, and our GDP is only $14 trillion.

Seems to me....

That this is a net $140+ M tax CUT.

Thank you, Mr. Bartlett

Again you supply the facts to support your position.

Not platitudes. Not talking points. Most assuredly not some sort of Milton Friedman-Ayn Rand folly.

It's a pity that far too many people and a number of very vocal people choose to ignore this data. Not just Limbaugh and his ilk - but the entire D.C.-Big Apple-Hamptons media complex that's living well and does not want a suitable mix of taxation, spending cuts, and regulation to rain on its endless parade.


I appreciate you continuing to bang this drum. I finally tired of the folks who took over the GOP and have left, so I admire those who continue to fight to make it a reality based party again.

In fairness the Democrats have their own version of this idiocy. They promise painless spending rather than painless tax cuts. Same lie different constituency.

This is why Bartlett has

This is why Bartlett has credibility. He makes arguments based on data instead of slogans.

Why can't the public discussion be more like that?

Largest Tax Increase in History

Those are annual figures so since the GDP was $5.1 trillion in 1988 that means that Reagan's tax increases came to 2.6% of GDP. TEFRA alone at 1.1% of GDP was the largest tax increase in peacetime history.

This is no longer 1789

The US has 300 Million people, and is far more complex ethically, economically, technologically, and on and on. We may be destroying planet Earth, we have WMDs that can render it inhabitable for centuries that might fall into the hands of extremists, we are on the brink of medical and technological developments that will literally blow our minds, and one of our political parties basically rejects science in favor of religious dogma, and its political leaaders and representatives in the Congress are among the most extreme and idiotic among them. As long as that continues to be the case, there will be no place for true fiscally conservative, socially moderate and pragmatic, generally favor limited government but understand that the complexity of the world makes that impossible sometimes, in some areas. Where do they go? The Tea Party offers them nothing. They are not democrats -- but they are a progressive form of Republican now finds itself homeless.

"Reganomics" has become a pejorative

Reagan was following an economic theory. Temporarily run large counter-cyclic deficit spending and tax cuts to goose the economy during a recession. After the recession, when we where flush, taxes were raised to bring down the deficit.

The problem today is we are running secular mega-deficits with no end in sight.

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