Tax Cuts & the Poor: Reagan & Now

When Ronald Reagan took office back in 1981, he had three goals: a tax cut to stimulate the economy; cutting back on federal spending and regulations; and building up the American military to a state of preparedness after a post-Vietnam demise.

He accomplished all of those except for the cutback on federal spending. Some blamed his military buildup for that, but the bulk of the increased spending was on the domestic side—Democrats who controlled the House wouldn’t allow any sensible reductions.

The tax cuts were supposed to kill people, according to many Democrats. Reagan was excoriated as a tool of the wealthy at the expense of the poor. That was untrue. Look at these figures comparing how households fared in income during Reagan’s terms:

I won’t try to explain the entire chart (examine it at your leisure), but it shows that of those who were the poorest households in 1979, 85.8% of them were in a higher income bracket by 1988. The re-energized economy of the 1980s helped the poor significantly.

Congress recently passed more tax cuts. Dire predictions emanated once more from Democrats—but as in the 1980s, those predictions are proving to be demonstrably false.

History can show us what worked before and what didn’t. So why are some people so immune from learning those lessons? It has to do with their worldview and the false philosophies that they believe as a result.

This has been your history lesson for today. You’re welcome.

The Latest News Roundup

Republicans have almost accomplished something—almost because the House and the Senate still have to iron out differences—but it looks like a tax cut bill is ready to become reality.

Democrats criticized the Senate version as being cobbled together at the last moment, thereby not giving enough time to study it. Does that concern jog anyone else’s memory?

Yes, they didn’t exhibit this type of concern back in the Obamacare days.

One feature of the bill is something Ted Cruz added to it. I’ll let him explain:

The Senate also voted to adopt my amendment to expand 529 College Savings Plans to include K-12 elementary and secondary school tuition for public, private, and religious schools, including K-12 educational expenses for homeschool students.

I appreciate Cruz’s concern for families, and that it extends to Christian schools and those who choose homeschooling. The Democrats’ reaction to the Republican bill is perhaps best expressed by their Senate leader, Chuck Schumer:

What else has been happening? How about the wheels of justice in a place like San Francisco, where the illegal immigrant who was deported five times and then shot and killed Kate Steinle was acquitted by a jury of San Francisco citizens?

I think most of America has a different verdict to offer to the denizens of that Far Left enclave:

Also, the Mueller probe continues, in which former Trump advisor Michael Flynn has now accepted a guilty plea for lying to the FBI. I don’t condone Flynn’s actions nor his sometimes shady activities, but the glee on the Left reached new heights when ABC reporter (?) Brian Ross, citing a single anonymous source, declared that Flynn was prepared to testify that Donald Trump, as a candidate for president, told him to contact Russians.

The glee turned gloomy when the report turned out to be false. Ross has now been suspended for four weeks and has been informed that he will not be allowed to cover Trump news.

Lest you think everything has been rosy for the president, don’t forget that he tweets. He’s now claiming that the voice on that infamous NBC tape in which he boasted about how he could do pretty much anything he wanted with women due to his celebrity—you know, the tape that almost brought down his candidacy—is not really his voice at all.


We’re supposed to ignore the fact that he acknowledged back then that it was indeed his voice and that he offered somewhat of an apology for those words. I say “somewhat” because apology is not part of his vocabulary.

Even when things go right for Donald Trump, he is capable of ruining good news.

I shouldn’t neglect to mention that North Korea keeps firing missiles. It appears that rogue nation now has the ability to send one directly into the heart of America. What’s the next step for us in response to this threat?

I really hope we come up with something better than that.

Tax Rates: Reagan vs. Obama

Now that we’re talking about taxing the rich more and face the specter of all the Bush tax cuts being eliminated, I thought I’d look up some figures from the 1980s to see what happened when Ronald Reagan lowered the tax rates. How did this affect revenue? An article from the Cato Institute provides the numbers. The author of the article, Richard Rahn, notes that most of the Reagan tax cuts were applied to those in the middle- and lower-income brackets, which is something that may surprise some readers who are used to being told Republicans only give tax breaks to the rich.

According to the Congressional Budget Office (CBO), total tax revenues in the 1980s did fall as a portion of the Gross Domestic Product (GDP), but the reason that percentage went down is because the economy grew at an astounding rate. In real terms, it grew 34.3% from 1982 to 1989, “much faster than the 24.3% rate expected even by economists within the Reagan administration. Thus, by the time President Reagan left office, the economy was generating more tax revenue at a maximum 28% rate than many on the left forecast it to generate at a maximum 70% rate.”

In other words, there is a point at which higher tax rates are counterproductive. More revenue can be obtained with moderate rates than with high ones. Rahn concludes, “The Reagan tax-rate reductions did, in fact, pay for themselves—but it took about seven years.”

When Obama says he will only increase taxes on the rich, he’s talking about those who make more than $200,000 per year. Yet many small businesses fall in that category, and they are the ones who create most of the new jobs and fund new investment. In effect, the president will be declaring war on small businesses, and in the process putting more people in the unemployment lines.

In my opinion, that might be what he wants to do. The more people who are dependent on the government for their sustenance, the more loyalty he will generate for himself and his administration. His ideology is Marxist at its core, and he doesn’t really care to create prosperity via the private sector. He would rather see it shrink and watch the government grow more powerful.

Some may protest: surely he wouldn’t want us to follow the same path as other bankrupt nations, would he? I’m not so sure. An ideologue is an ideologue—it’s what motivates him.

We see the same thing happening in some states. California is a prime example. Gov. Jerry Brown is leading the state into increased spending and higher taxes while the state veers toward insolvency. Fortunately, the damage within a state can be contained, and people have the option to go elsewhere, to states that still grasp the basics of how free enterprise works.

So don’t be fooled by the rhetoric of “fairness.” In the end, if Obama and the Democrats get their way, we all will be worse off.

Tax Cuts & the Fiscal Cliff

Let’s return to fiscal news today. Are you aware that the Bush tax cuts—you know, those awful tax breaks that benefit only the wealthy—are due to end in January? If that happens, we will all find out soon enough that they actually were a benefit for everyone. Democrats play politics with this, seeking to extend them only for the “non-rich.” That posture is intended to portray them as for the middle class. What they don’t tell you is that the “rich” include about 900,000 small businesses who, if these cuts aren’t extended, will have to lay off workers. Now, who is this really going to hurt? Republicans, on the other hand, are calling for the cuts to remain in effect for everyone. Trying to get this through Congress, though, will never happen as long as Harry Reid and his gang control the Senate:

Democrats are attempting to woo the moderate Republicans to their side on this plan, but thus far Republicans are holding firm—for good reason:

One thing to keep in mind, however, is that these tax cuts can’t apply to almost half the population. Why?

It’s the producers in society who are being targeted:

And presiding over all this is a man who has expressed hostility toward those producers and has no grasp of how an economy works:

I’ve always enjoyed good oxymorons. Here are some appropriate ones for today:

Bush's Decisions

Over Christmas, I took the opportunity to read former President Bush’s new book Decision Points. I did so for two reasons: first, I really wanted to “hear” what he had to say; second, as an American historian, I need to be up to speed on how this former president defends his actions.

Let me begin with what I consider to be its strengths.

The first strength is Bush’s informal writing style. You get the impression this is exactly how he would express himself if you were sitting across the table from him, asking him questions. There is a personableness in the writing that is attractive. You connect with the man.

Second, I appreciate his unapologetic appeal to his Christian faith as his motivation for not only his policies but for all of his life. He does not artificially separate faith from action, personal or governmental.

Third, I highly recommend his chapters dealing with the 9/11 attacks and the subsequent War on Terror. He takes the reader through that awful day in American history as seen through the eyes of the one most responsible for an American response. One understands how difficult it was for him to know what he should do next, yet he explains clearly why he came to his decisions on how to deal with terrorism. The title of the book is appropriate. He does focus on key decisions.

Probably the most significant decision for his presidency was whether to go forward into Iraq. This chapter is a step-by-step analysis of all the twists and turns of the diplomatic thrust to avoid war, and then the rationale for finally giving the go-ahead. Bush is particularly effective in detailing the actions of Saddam and the manner in which he thumbed his nose at international law and his manifold violations of the conditions he had agreed to at the end of the Gulf War.

Bush also clearly explains why he thought WMDs existed within Iraq. He goes to great pains to document the intelligence regarding WMDs, and just as great pains to show that nearly all congressional Democrats at the time agreed with this conclusion. He includes vote tallies on the congressional resolutions that gave him permission to use the military and identifies key Democrats who favored this action—the very ones who later accused him of lying.

So, as a primer on the rationale for how to conduct a War on Terror, this book is invaluable. I highly recommend these chapters. Even some of Bush’s most vociferous critics have had to come to grips with the necessity of his policies.

It’s on the domestic side of his decisions where I have more fundamental disagreements. He does a fine job of explaining the need for tax cuts and often advocates the vitality of the free market. Yet he then goes on to offer an apologetic for why he had to interfere with the market, especially with the big bailout at the end of his presidency. He says he did it to save the market ultimately, but I don’t find his logic persuasive. I believe he allowed some of his advisors to pull him away from fundamental principles.

Neither does Bush have a great appreciation or commitment to federalism. He sees a need and wants to get the federal goverment involved to solve the problem: No Child Left Behind and the prescription drug bill added onto Medicare are two of the most egregious examples. While I’m sure he is fond of the Constitution, I wish he had been more devoted to following it.

So, yes, I do have criticisms of some of his decisions. Yet one can’t read this book without coming away with a sense of the basic decency of the man. That comes across repeatedly.

George Bush is coming to my university this March as part of our National Leadership Forum. I plan to be there to hear him speak, along with his former Secretary of State Condoleeza Rice. I will do so with sincere gratitude for his prosecution of a war on terror that is essential to the future of this nation. I will also do so out of respect for a Christian brother who tried to do his best in a very trying time.

The Media's Perspective on 2010

I love all those year-in-review segments on the news channels. Sometimes they are interesting; other times, they are rather humorous. For example, in dissecting why the November elections turned out as they did, you might hear something like this:

The answers are not all that difficult to discern. Yet the media continues to portray political developments in the best light possible for the administration:

There’s also a lot of talk about President Obama veering to the center of the political spectrum. I’m not yet convinced. In fact, I think the following perspective is closer to the truth:

If I’m wrong, and he does attempt to govern from the center, I know it will be for political expediency only, and not because he has changed his views. The next task will then be to enlighten the general public on that point, so that the media won’t be allowed to frame the issue in its own way.

Unfortunately, it’s almost as if we desire to be fooled at times. Maintaining our liberty requires that we pay close attention to what is really happening.

Obama's Tactics

The proposed tax deal is still the talk of the political world. First, there’s the substance, which is good with respect to maintaining the Bush tax cuts, but not so good on unemployment benefits and the estate tax. Second, there’s the politics of it all. That’s where the president fell down on the job completely.

His own party is hopping mad at him, primarily because he didn’t include them in the negotiations. This is not a man who knows how to work well with others; he seems to think he can handle things himself. Now he’s getting some grief over that approach. The threat is real:

Now that’s scary.

To remedy his oversight, he’s brought in Bill Clinton to make the case for him. It was a little surreal last week when he introduced Clinton at a White House press conference and then turned it over to him totally. Some people had nightmares of the return of the Clinton era. Just what can the former president teach the current one?

But of course, he still has his ace in the hole:

Not very original, to be sure. Is this really his only tactic? Stay tuned and we’ll see how prophetic this is.