June 22, 2012
Reagan’s Legacy

Of all the things that Reagan is known for, his signature policy accomplishment will always be tax reform.  When the Tax Reform Act of 1986 passed, it was hailed by many as one of the greatest economic accomplishments of any president in modern history.

But perhaps not as well known is the fact that Reagan’s signature tax reforms were largely responsible for the fact that the poor in America have little to no federal income tax liability.  In fact, that was actually the point of the bill:

An overriding goal of the Committee is to relieve families with the lowest incomes from Federal income tax liability.  Consequently, the Bill increases the amounts of both the personal exemption and the standard deduction…so that the income level at which individuals begin to have tax liability will be raised sufficiently to free millions of poverty-level individual from Federal income tax liability.

— General explanation of the Tax Reform Act of 1986 : (H.R. 3838, 99th Congress; Public Law 99-514), May 4, 1987.

This point has been made before.  Many times, actually.  And it certainly remains no small irony that Reagan’s tax reforms are largely responsible for the fact that many low-income Americans have no federal income tax liability (excluding payroll taxes, which they most certainly do pay).  Yet even at this late date, Reagan continues to be praised by same politicians who complain that the poor don’t pay their fair share, and posit this accursed state of affairs as the legerdemain of furtive sleeper communists whose agenda includes things like discussing the female reproductive system in public and making America safe for terror babies. 

Which is preposterous.  Everybody knows that furtive communist democrats prefer to reauthorize the patriot act and destroy poor and minority communities with “tough on crime” policies.  Foolish Republicans!

But this is all well and good I suppose.  Utopianism and historical revisionism are an American birthright.  Reagan raised taxes 11 times, gave amnesty to millions of illegal immigrants, smuggled weapons to Iran, and “cut and ran” from Lebanon after 299 American and French servicemen died in a barracks in Beirut.  He also had a bad habit of regularly compromising with democratic lawmakers, which would probably get him uninvited from Eric Cantor’s birthday party.  One wonders how a list of accomplishments like this would fare in today’s political zeitgeist.  Not well, I’d imagine.

Which is a shame.  With the possible exception of smuggling weapons to Iran, every one of these decisions made sense in the context which they were made.  We should have granted amnesty to illegal immigrants.  We should have raised taxes when balancing the budget required it.  We should have left Beirut; there was no reason for us to be there.  But it is highly unlikely that a single one of these decisions could have happened in our present political climate.  Whether from a democratic or a republican president.  And it boggles my mind that there are still people out there who praise him, while condemning analogous policies when they fall from the mouths of political adversaries.  Just another example of the Spectacle in action, I suppose.

(Also, Reagan sort of enabled a genocide in Guatemala.  But I can understand why his supporters might leave that one out.  Bit of a gaffe, that one).

8:14pm  |   URL: http://tmblr.co/ZMMjnxNwj2ZZ
(Notes: 49)
  
Filed under: politics reagan 
September 6, 2011
heylaney:roadrunnersoup:kateoplis: Robert Reich: The Limping Middle Class The economy won’t really bounce back until America’s surge toward inequality is reversed. Even if by some miracle President Obama gets support for a second big stimulus while Ben S. Bernanke’s Fed keeps interest rates near zero, neither will do the trick without a middle class capable of spending. Pump-priming works only when a well contains enough water. Look back over the last hundred years and you’ll see the pattern. During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats. During periods when the very rich took home a larger proportion — as between 1918 and 1933, and in the Great Regression from 1981 to the present day — growth slowed, median wages stagnated and we suffered giant downturns. It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007 — the two years just preceding the biggest downturns. Read on. Hmm, the change occurs right around the time union membership starting declining in earnest. Must be a coincidence.

heylaney:roadrunnersoup:kateoplis:

Robert Reich: The Limping Middle Class

The economy won’t really bounce back until America’s surge toward inequality is reversed. Even if by some miracle President Obama gets support for a second big stimulus while Ben S. Bernanke’s Fed keeps interest rates near zero, neither will do the trick without a middle class capable of spending. Pump-priming works only when a well contains enough water.

Look back over the last hundred years and you’ll see the pattern. During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats.

During periods when the very rich took home a larger proportion — as between 1918 and 1933, and in the Great Regression from 1981 to the present day — growth slowed, median wages stagnated and we suffered giant downturns. It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007 — the two years just preceding the biggest downturns.

Read on.

Hmm, the change occurs right around the time union membership starting declining in earnest.

Must be a coincidence.

(via robot-heart-politics)

9:52pm  |   URL: http://tmblr.co/ZMMjnx9ED9oI
(Notes: 1,109)
  
Filed under: class warfare economy oligarchy opinion reagan economy wages income growth income inequality 
August 24, 2011
Reagan: Champion Of Tax Reform For The Poor

It is a common Conservative complaint that poor people do not pay enough in taxes.  The oft-quoted statistic that 47% of Americans have no Federal tax liability is a common flashpoint for this sort of rhetoric.  Rush Limbaugh repeats this mantra virtually every other day.  Sean Hannity is no less indignant.  And many among the GOP are equally as outraged.

Yet when one reads the legislative history of the Tax Reform Act of 1986, perhaps Reagan’s most important signature piece of legislation, one finds this note from the Legislative Committee which drafted the bill:

[a]n overriding goal of the Committee is to relieve families with the lowest incomes from Federal income tax liability.  Consequently, the Bill increases the amounts of both the personal exemption and the standard deduction…so that the income level at which individuals begin to have tax liability will be raised sufficiently to free millions of poverty-level individual from Federal income tax liability.

Reagan had this to say about the bill:

When I sign this bill, America will have the lowest marginal tax rates, and the most modern tax code among major industrialized nations…in our lifetime, we’ve seen marginal tax rates skyrocket as high as 90%, and not even the poor have been spared…taxation [has fallen] most cruelly on the poor, making a difficult climb up from poverty even harder…millions of working poor will be dropped from the tax rolls altogether, and families will get a long overdue break with lower rates and an almost doubled personal exemption…i’m certain the bill i’m signing today is not only an historic overhaul of our tax code…but the best anti-poverty bill…ever to come out of the Congress of the United States.

The reason I bring this up is because I think it is yet another striking example of the cognitive dissonance that has become an existential characteristic of the contemporary American Right, particularly as it pertains to Movement Conservatism and the Republican Party.  Ronald Reagan is unequivocally celebrated as a virtual Demi-God in most Conservative circles.  And yet when Conservatives complain that poor people don’t pay enough in taxes, they seem to forget that Ronald Reagan is probably more responsible than any American political leader for the slim-to-none income tax liability of the American poor.

7:26pm  |   URL: http://tmblr.co/ZMMjnx8jRPXz
(Notes: 34)
  
Filed under: politics taxes taxation tax policy reagan 
August 15, 2011
"[I]n 1982 Ronald Reagan was willing to sign what was then the largest tax increase in American history (TEFRA) because he believed he’d get three dollars in cuts for one dollar in tax increase. Reagan came to regret his tax increase — but not because the ratio was wrong but because Democrats never delivered on the spending cuts. If Reagan had gotten the cuts he asked for — and the York/Baier question pre-supposes the spending cuts would be real – he would have taken that deal. Are Republicans in 2011 saying that a deal that would be far better than one Reagan expected and agreed to is simply beyond the pale? If so — if taxes cannot be raised under any circumstance — then we have veered from economic policy to religious catechism,"

—

Pete Wehner

h/t Sullivan

12:48am  |   URL: http://tmblr.co/ZMMjnx8KtktR
(Notes: 24)
  
Filed under: politics reagan budget debt ceiling 
July 6, 2011
"This country now possesses the strongest credit in the world. The full consequence of a default–or even the serious prospect of default–by the United States are impossible to predict and awesome to contemplate….The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns."

— Ronald Reagan

7:07pm  |   URL: http://tmblr.co/ZMMjnx6qHkc4
(Notes: 6)
  
Filed under: politics reagan debt ceiling 
June 8, 2011
Inflation Higher Under Reagan Than Obama (And Maybe It Ought To Be)

Odd monetary policy ideas are coming so fast and quickly from the right these days that I can’t quite tell if Newt Gingrich’s notion that we ought to be “returning to the Reagan-era monetary policies” is a great idea or a terrible one. The problem is that rather than proposing this as an effort to boost employment, Gingrich says we should “strengthen the dollar by returning to the Reagan-era monetary policies that stopped runaway inflation and reforming the Federal Reserve to promote transparency.”

The problem, as we’ve seen before, is that a review of 30 years of inflation history makes it clear that Reagan-era policies featured much higher inflation than Obama-era ones:

Now by my lights, this is a perfectly good idea. A wide range of economists from Paul Krugman, Olivier Blanchard, and Mark Thoma on the left to Greg Mankiw, Tyler Cowen, and Scott Sumner on the right think that setting a 4 percent inflation target will stimulate real output and reduce unemployment. Indeed, Federal Reserve Chairman Ben Bernanke himself agrees that this would work, but refuses to do it anyway. Under the circumstances, political pressure for a return to “Reagan-era monetary policy” could do a lot of good.

Conversely, if by “Reagan-era monetary policy” Gingrich means that we need to stop “runaway inflation” then of course the question is what runaway inflation is he talking about. Inflation is much lower than it was during the late Reagan years, and wildly lower than it was when Reagan took office.

emphases added.

7:53pm  |   URL: http://tmblr.co/ZMMjnx5vf6To
(Notes: 6)
  
Filed under: politics inflation monetary policy the fed reagan 
April 18, 2011
Is There Still Anyone That Doubts Reagan Would Be Too Liberal For Today's Republican Party?

or is eliminating loopholes in the corporate tax code only a stealth tax hike when Democrat-appointed bipartisan debt commissions suggest it?

11:15am  |   URL: http://tmblr.co/ZMMjnx4PK2JQ
(Notes: 7)
  
Filed under: politics taxation taxes budget tax policy reagan corporate taxes corporate income tax 
March 19, 2011
We DO have a spending problem.

evilteabagger:

NOT a revenue problem.

It’s common knowledge that no matter what the taxes are set at, the federal government will only have about 18% revenue. The reason tax revenue is so low today is because of the amount of people unemployed. One way to increase tax revenue is to make sure more people are paying taxes! How do we do this? Lower taxes.

Evilteabagger wites:

One way to increase tax revenue is to make sure more people are paying taxes! How do we do this? Lower taxes.

The increase in taxable income that occurred between 1980-1988 was not a result of lowering tax rates.  It was a decision by Congress to reduce the threshold at which income was subject to the highest rate, it also simplified the tax code, and closed many of the exemptions that were previously available.  In 1981 Congress reduced the top marginal rate frmo 69.125% to 50%, and reduced the qualifying income from $215,400 to $85,600.  The threshold climbed back up to $175,250 over the next 5 years.  Then the Tax Reform Act of 1986 dropped the highest rate from 50% to 38.5%, and it reduced the threshold for income subject to the highest rate back down to $90,000.  Rates were then reduced to 28% in 1988, and the qualifying threshold income was reduced to $29,750.  The tax base was widened because Congress made purposeful changes to the tax code.  There was no magic taxbase-broadening effect at work here.  The base was broadened because there was a lot of income that was previously protected by deductions and exemptions, which was now subject to taxation.

The reason why revenues are down, as you said, is because of high unemployment: people on unemployment are not paying taxes, erego, revenues drop.  While it is true that tax cuts can generate economic growth, they do not increase revenues.  Reagan even accidentally admitted this in his debate with George Bush Sr. in 1980.

It’s common knowledge that no matter what the taxes are set at, the federal government will only have about 18% revenue.

This is hardly a hard and fast rule of economics.  The U.S. is one of the only western nations in the world where this is true.  Almost every European and Scandinavian country have public sectors that exceed 25% of GDP.  Austria, ironically, has a public sector that exceeds 40% of gdp.  And despite this, they are one of the 12 richest countries in the world. Per capita income as of 2009 is ~$45,500.  So much for trickle-up poverty!

Broader point: lowering taxes does not raise revenue.  It doesn’t.  Bush’s own economic advisors realized this in 2001 and 2003 when they recommended the Bush tax cuts.  That’s part of the reason why they were originally passed with a sunset provision, because they were economically unsustainable.  In order for lowering taxes to increase revenue, aggregate taxation averages must be high enough to put us in the right hemisphere  of the Laffer curve.  We are not now and have not ever been in the right sphere of the Laffer curve.  That’s why Reagan had to sign the largest tax increase in peace time history after he realized his supply-side cuts weren’t actually raising revenues.  Don’t believe me?  Then don’t take my word for it.  Ask Reagan’s former Chief Economic Advisor.

(Source: antigovernmentextremist)

2:26pm  |   URL: http://tmblr.co/ZMMjnx3iJJgQ
(Notes: 21)
  
Filed under: politics taxes taxation tax cuts bush tax cuts reagan 
March 14, 2011
: Ronald Reagan was pro-LGBT, raised taxes many times during his presidency, was pro-union, and brought troops home from...

liberal-lad:

epicpurple8:

Pro-LGBT?
HOW???

Pro-Union? How? He fired the radio controllers for being pro-union.

“Prevailing scientific opinion is that an individual’s sexuality is determined at a very early age and that a child’s teachers do not really influence this.” — Governor Ronald Reagan, in a…

Reagan was a pro-union man prior to becoming President.  He was elected President of the Screen Actor’s Guild, and he did, of course, praise Polish Solidarity workers in their fight against Communism.  However, his actions against the air traffic controllers seem to contradict his past.  One might say that he changed his mind, or perhaps he was like FDR, in that he felt that public sector employee unions were different than private-sector unions.  Either way, it is certainly fair to say that he supported collective bargaining in at least some sense, given his previous position as a Union leader, and his repeated praise of collective bargaining on many occasions.

10:49pm  |   URL: http://tmblr.co/ZMMjnx3cdOB7
(Notes: 93)
  
Filed under: politics reagan unions collective bargaining 
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