Former Attorney General Edwin Meese III says the prospects of Reagan-style recovery seem remote, despite President Barack Obama's professed admiration for President Ronald Reagan.
"Rather than learning pro-growth lessons from President Reagan, he is creating another 1982 moment, seeking to lure Republicans into accepting another tax increase for illusory spending cuts," Meese and Heritage Foundation CEO Michael Needham writes in USA Today.
"Taxing our way to prosperity isn't the answer. It never has been."
"If our children and grandchildren are to live in a free and prosperous America, congressional Republicans must not negotiate and accept a deal that raises taxes."
(Associated Press photo)
Reagan got his tax-rate cuts through Congress in late 1981, Meese and Needham note. But because they were being phased in gradually, the economic pain they were designed to alleviate lingered well into 1982.
“High deficits persisted, and he faced enormous pressure to raise taxes,” they say. “The president had no interest in increasing taxes, but he agreed to consider some kind of compromise with Congress.”
The ratio in the final deal was $3 in spending cuts for every $1 in tax increases. The tax increases were promptly enacted but the promised budget cuts never materialized.
In fact, spending for fiscal year 1983 was some $48 billion higher than the budget targets, no progress was made in lowering the deficit and tax receipts for that year went down.
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However, as the individual income tax-rate reductions passed the year before took effect, the economy began to turnaround, and the recovery of 1982-83 took place.
According to The Washington Times, the top tax rate in America was 70 percent when Reagan took office in 1981. In 1982, it dropped to 50 percent, then to 38.5 percent in 1987, and finally to 28 percent in 1998.
Unemployment dropped from 9.2 percent (exactly what it is today) to 5.3 percent and inflation plummeted from 13.5 percent to 4 percent. At the same time, real income for Americans grew by an average $4,000.
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