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- Apr 5, 2009
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Mitt Romney: "If you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5 percent. That is by definition throwing us into recession or depression,"
"So I'm not going to do that, of course."
Reagans Deal With Democrats for Tax Increases Paired With Spending Cuts Is a Myth
Dec 5, 2012
<snip>
So the Reagan administration failed to deliver on more than $110 billion of cuts it had promised. On nondefense spending, Congress delivered most of what it had committed to, including in Medicare. The actual ratio between tax increases and spending cuts, which Reagan accepted, came out closer to 1-to-1. Failure to do more was entirely the responsibility of the Reagan administration.
And what happened in the real world while Washington worked on the problem? On Aug. 17, 1982, while a House-Senate conference committee was working out final details with White House support, and it became clear that the tax bill would become law, the Dow Jones industrial average responded with its single biggest one-day leap evera 4.9 percent gain, the equivalent of a 600 point gain today. (The actual gain was 38.81 points, pushing the Dow Jones above the 800 mark to 831.24. And it marked the beginning of the bull market.
In sum, the claim that Democrats never delivered on promised cuts is pure myth. The cuts Reagan promised (and that the Democrats agreed to) were in large measure illusory. Also, the economy did not initially respond to the Reagan tax cuts. It came to life only after a major tax increase. These facts are indisputable. This is not to say the tax cuts played no role in economic growth. Instead, it highlights a truth that is obvious but bears repeating: the linkage between tax policy and growth is far more complex than Republicans care to admit.
.
Mitt Romney: "If you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5 percent. That is by definition throwing us into recession or depression,"
"So I'm not going to do that, of course."
Reagans Deal With Democrats for Tax Increases Paired With Spending Cuts Is a Myth
Dec 5, 2012
<snip>
So the Reagan administration failed to deliver on more than $110 billion of cuts it had promised. On nondefense spending, Congress delivered most of what it had committed to, including in Medicare. The actual ratio between tax increases and spending cuts, which Reagan accepted, came out closer to 1-to-1. Failure to do more was entirely the responsibility of the Reagan administration.
And what happened in the real world while Washington worked on the problem? On Aug. 17, 1982, while a House-Senate conference committee was working out final details with White House support, and it became clear that the tax bill would become law, the Dow Jones industrial average responded with its single biggest one-day leap evera 4.9 percent gain, the equivalent of a 600 point gain today. (The actual gain was 38.81 points, pushing the Dow Jones above the 800 mark to 831.24. And it marked the beginning of the bull market.
Reagan signed the tax increase on Sept. 3, 1982.
A few months later the economy roared to life as well.
A few months later the economy roared to life as well.
In sum, the claim that Democrats never delivered on promised cuts is pure myth. The cuts Reagan promised (and that the Democrats agreed to) were in large measure illusory. Also, the economy did not initially respond to the Reagan tax cuts. It came to life only after a major tax increase. These facts are indisputable. This is not to say the tax cuts played no role in economic growth. Instead, it highlights a truth that is obvious but bears repeating: the linkage between tax policy and growth is far more complex than Republicans care to admit.
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