“We were promised that if we gave huge tax cuts to the wealthiest Americans, the benefits would trickle down, deficits would disappear and the economy would flourish,” Senate Minority Leader Tom Daschle said recently, comparing the 1981 tax-cut proposal to President Bush's.
“It was a huge mistake,” he continued, without so much as a twitch of shame. “Deficits skyrocketed. The national debt quadrupled. High interest rates choked American industries. Unemployment soared.”
Other Democrats have even tried to claim that Reagan's tax cuts fanned runaway inflation in the '80s.
It's one thing to spin. But this is economic revisionism at its worst. Apparently Democrats — taking a lesson in gall from Bill Clinton — think Americans won't recall basic facts from 20 years ago.
Lest they have forgotten, here's a refresher — gleaned from the historic tables in the back of Clinton's own recent “Economic Report” to Congress:
Fact: Interest rates eased after Reagan slashed tax rates.
The long-bond yield was 13.45 percent in 1981. By the time Reagan left office in 1989, it had dropped to 8.45 percent. Mortgage rates fell from 14.70 percent to 10.13 percent over the same period.
Fact: Inflation cooled.
In the year before Reagan's tax cuts took effect, the annual rate of consumer inflation was 13.5 percent. In the first year of his tax cut, 1981, inflation was 10.3 percent. In the second year, it was 6.2 percent. By the third and final year, 1983, inflation had dropped to 3.2 percent. When Reagan left office, inflation stood at a tame 4.8 percent.
Fact: The economy reached full employment.
Before Reagan's full tax-relief package took effect, the jobless rate hit 9.6 percent. But as tax cuts worked their magic in the economy, unemployment dropped every year after 1983, reaching a low of 5.3 percent in 1989.
Tax cuts benefited minorities, too. The jobless rate among blacks plunged from 19.5 percent in 1983 to 11.4 percent in 1989.
Fact: Government revenues nearly doubled after Reagan's sweeping tax cuts.
Before his 25 percent across-the-board cut in individual income-tax rates went into effect, government receipts from individual income taxes trickled in at $244.1 billion. The year Reagan left office, they totaled $445.7 billion — an 82 percent jump.
In the tax-hiking, supposedly “fiscally responsible” '90s, by comparison, individual tax receipts rose a comparable 86 percent.
More key, individual tax receipts grew at a compound annual rate of 6.9 percent from 1980 to 1989 (compared with a 7.1 percent rate from 1990 to 1999).
Meanwhile, however, federal outlays grew at a faster 7.6 percent compound annual clip from 1980 to 1989, causing the yawning budget gaps.
The problem, you see, was spending, not tax cuts — a distinction the intellectually dishonest redistributionists on the left fail to make when they cluck about the skyrocketing deficits and mounting debt under Reagan.
And for that, Democrats share the blame.
Yes, Reagan ballooned defense spending. But Democrats, who controlled appropriations back then, refused to give him the corresponding cuts in other domestic programs — and instead increased spending.
In fact, the Democrat Congress outspent every one of the nine budgets Reagan proposed, but one.
This is what Treasury Secretary Paul O'Neill meant when he recently said, “we put ourselves in a ditch that was horrendous.”
Daschle, House Minority Leader Dick Gephardt and the other class warriors in their party have taken O'Neill's comments out of context to make it sound like he was bashing the Reagan tax cuts.
In testifying before Congress last month, O'Neill discussed the 1981 budget deal and budget deficits. Here's the full text:
“You know, I was outside the government when all of that transpired, and it was actually clear to me that what was going to happen was in the cards. And maybe you weren't here, but other members were here,” he said, responding to a question from a Democrat.
“This was the year of the famous flying asterisks, when we had $42 billion worth of unidentified budget reductions that no one ever put together,” he added. “And as a consequence of enacting the [tax] side without dealing with the spending side, we put ourselves in a ditch that was horrendous.”
Sounds to me like O'Neill was OK with the tax cuts, so long as they came with corresponding budget cuts.
But Democrats have twisted the quote into a disclaimer of tax cuts by the top financial member of Bush's cabinet.
Speaking of the Reagan tax cuts last month, Daschle said, “It was a huge mistake. As President Bush's own treasury secretary, Paul O'Neill, said recently, it put America 'in a ditch that was horrendous.'”
If there were laws against it, Daschle would be guilty of intellectual malpractice.
It's the height of irresponsibility for an elected official of such high stature to spout such disingenuous and demagogic rhetoric (which, it should be noted, has passed largely undigested through the tax-loving, Reagan-hating Washington media).
In revising history, Daschle is counting on average Americans — who don't have historic data at their fingertips, or don't know where to go to find them — to have short memories.
Politicians who have to go to such lengths to distort the record of an opposing fiscal policy — in this case, supply-side economics and laissez-faire government — must be trying to fool people about the merits of their own policies. This is exactly what the central planners in Moscow did, and what Beijing's planners are still doing.
It's called propaganda. Isn't it funny how those with the worst arguments make the best propagandists?
But, as Reagan said, facts are stubborn things. And they'll survive propaganda.
(This article can also be found on WorldNetDaily.)
