President Reagan learned his lesson when it came to the (many) mistakes he made in his tax reforms. He famously tried to cut taxes and walk away without raising revenue to cover those cuts… but learned the hard way that you can’t have cuts in some areas and not raise revenues to cover it. So a few months after he cut taxes he had to start raising them again…an amazing 11 times!!
This coming ‘Fiscal Cliff’ event is creating all sorts of discussions and ideas and hand-wringing and panic and accusations,etc. However, if we look at history, it seems quite clear: Deficits DO matter and we must raise more revenue. We cannot tax cut our way out of debt.
But in the face of large and growing deficits, Reagan eventually did come around on the need for additional revenue. Even before the 1981 tax cut was on the books, many White House advisers had begun to worry about projected deficits, which were on a steady upward march from 2.6 percent of gross domestic product in 1981 to 4 percent in 1982. They would reach 6 percent in 1983.So, just weeks after his Santa Barbara signing ceremony, Reagan floated the possibility of — wait for it — closing loopholes. He was careful to avoid any suggestion that he wanted a tax increase. Instead, he and his advisers asked Congress for “revenue enhancements… Euphemisms can obscure a variety of sins. And Reagan’s euphemist, Larry Kudlow — then an official in the Office of Management and Budget — was unrepentant. “There’s no better way to sell economic theory than by the euphemistic route,” he told the New York Times.”
In other words, lie to and confuse the Republican base so they won’t think you raised taxes. And it worked. To this day, they insist Saint Reagan did nothing of the sort.
Fast forward to today and enter Ben Stein…noted eye drops guy…on Fox news trying to educate their viewers. [There’s a joke in that statement somewhere]
Mr. Stein is making the clear cut statement that he agrees with President Obama that some raising of taxes is warranted by the present fiscal needs of the country.
“I hate to say this on Fox– and I hope I’ll be able to leave here alive—but I don’t think there is any way we can cut spending enough to make a meaningful difference. We’re going to have to raise taxes on very rich people, people with income like say $2-3 million a year and up and then slowly move it down,… “
As President Obama said, ‘it’s math’ when we raise taxes carefully, we will grow the economy in a positive way and become as Ben Stein says ‘extremely prosperous’
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