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Reagan’s Error


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Reagan’s Error

July 26, 2011 11:00 A.M.

By Yuval Levin

In making his case for tax increases last night, President Obama described past deals in which Democrats promised spending cuts in return for tax increases, and said:

The first time a deal passed, a predecessor of mine made the case for a balanced approach by saying this: “Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? And I think I know your answer.” Those words were spoken by Ronald Reagan. But today, many Republicans in the House refuse to consider this kind of balanced approach.

Well, yes, those words were spoken by Ronald Reagan (in August of 1982) in reference to TEFRA—the Tax Equity and Fiscal Responsibility Act—which congressional Democrats promised would involve a ratio of $3 in spending cuts for every $1 in tax increases (which they said would consist only of closing loopholes). TEFRA passed later that year, and the tax increases certainly happened but, as Reagan later put it in his autobiography, “the Democrats reneged on their pledge and we never got those cuts.”

TEFRA was one of Reagan’s great regrets about his time in the White House, and should serve as a warning to Republicans contemplating similar grand bargains. Obama’s reference to it only highlights the fact that he tried to pull off something much like TEFRA. Luckily, he appears to have failed.

El Linko

Actually, Reagan himself failed to learn this lesson; in 1986, he signed off on the general amnesty for illegal immigrants with the promise that Democrats in Congress would secure the borders. That didn’t work out too well, either. Reagan’s VP failed to learn the lesson from both of these events, reneging on his pledge to fight tax increases in exchange for future budget cuts in 1990. Those cuts never materialized.

Obama thinks he can get the tax increases he wants and never have to cut spending, unless it's the military.

Reagan’s Error was trusting democrats.

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