Steven Hayward has been “astonished” by liberals’ apparent admiration for Ronald Reagan in recent years, including President Obama’s efforts to emulate the 40th president.
In the latest Commentary cover story (subscriber link, Hayward explores the liberal “misappropriation” of Reagan, including Obama’s use of Reagan’s words about “raising revenue from those who are not now paying their fair share.”
Reagan spoke those words about a budget deal struck with Congress before the 1982 elections. That deal, which came to be known as TEFRA (the Tax Equity and Fiscal Responsibility Act), featured what was then, to date, the largest tax hike in American history. TEFRA came a little more than a year after the enactment of the Kemp-Roth bill, which slashed marginal tax rates at every level by 23 percent over three years and was the heart of what came to be known as “Reaganomics.”
Obama’s appropriation was and is disingenuous on every level. When Obama says, “fair share,” he means something very specific: higher marginal income tax rates on the group he calls the rich. This is the polar opposite of Reagan’s policy approach in 1982. All the “tax increases” to which Reagan agreed as part of TEFRA were temporary excise hikes on cigarettes and telephone calls. The bill also featured technical changes in the tax code (such as the elimination of depreciation schedules and the reduction of tax credits and deductions).
Reagan understood that not all taxes are created equal, nor do they have the same effect on economic performance. He believed that his tax cuts needed to be permanent if they were to have a positive effect on the economy (in line with Milton Friedman’s permanent-income hypothesis). Thus, he adamantly refused to consider any changes to the 1981 marginal income tax cuts, even as the revocation of those changes became the chief liberal domestic-policy objective from 1981 onward. Indeed, when the economy tipped into recession in the fall of 1981, leading to the ballooning of the budget deficit, the first and leading demand of Democrats was to cancel the third year of the income tax cut and roll back the elimination of “bracket creep.”
Reagan never budged an inch, then or in the rest of his presidency. And his stubbornness was the cause of outrage so universal among liberals that they deafened themselves to the populist appeal of Reagan’s supply-side policies—so much so that Walter Mondale came to believe it was a sensible strategy to tell the American people in his 1984 acceptance speech at the Democratic National Convention that he was going to raise their taxes.
Hayward offered a Carolina Journal Radio/CarolinaJournal.tv audience interesting insights about Reagan’s real legacy.