Hannity Chooses Myths, Not Facts, When Remembering Reaganomics
Sean Hannity, on his syndicated radio show, suggested that one reason the Republicans did poorly in the midterm elections was that they had collectively lost touch with the "fiscally conservative" principles of Ronald Reagan.
It's mythmaking. Hannity, presumably, knows his audience is either too young to remember Reaganomics first-hand, or is too partisan to be interested in the reality of Reaganomics. Worse, Hannity pretends that President Bush's economic program isn't grounded in the Reagan legacy of tax cuts to benefit the wealthy, and massive deficits.
Jimmy Carter may have presided over the worst economy since Herbert Hoover, but one thing to note was that his annual budgets produced deficits of less than $100 billion.
Reagan needed to jumpstart the economy, which have have argued for a short-term hike in the annual deficit. But none of Reagan's budgets had deficits of less than $100 billion, and three had deficits in excess of $200 billion. Deficits ballooned more under George Bush, the man who called Reaganomics "voodoo economics," before he was tapped as Reagan's vice president.
In other words, Reagan was hardly a fiscal conservative. Reaganomics was the equivalent of maxing out your credit card in order to pretend to be well-off.
But what about Reagan and taxation?
It's true that Reagan reduced income tax rates, with the top tax rate dropping from 70% to 50% in his first tax legislation, and to 28% by the end of his presidency.
But it's also true that Reagan raised taxes several times in his presidency.
In 1982 alone, he signed into law two major tax increases. The Tax Equity and Fiscal Responsibility Act (TEFRA) raised taxes by $37.5 billion per year and the Highway Revenue Act raised the gasoline tax by another $3.3 billion.
The third tax increase came a year later, in the form of an increased payroll tax to pay for Social Security and Medicare hospital insurance.
As liberal columnist Paul Krugman noted in 2004: "For many middle- and low-income families, this tax increase more than undid any gains from Mr. Reagan's income tax cuts. In 1980, according to Congressional Budget Office estimates, middle-income families with children paid 8.2 percent of their income in income taxes, and 9.5 percent in payroll taxes. By 1988 the income tax share was down to 6.6 percent — but the payroll tax share was up to 11.8 percent, and the combined burden was up, not down."
Bruce Bartlett, writing for National Review Online, offers the rest of the Reagan legacy:
-- In 1984, Reagan signed another big tax increase in the Deficit Reduction Act. This raised taxes by $18 billion per year or 0.4 percent of GDP.
-- The Consolidated Omnibus Budget Reconciliation Act of 1985 raised taxes yet again.
-- The Tax Reform Act of 1986, which was designed to be revenue-neutral, contained a net tax increase in its first 2 years.
-- The Omnibus Budget Reconciliation Act of 1987 raised taxes still more.
Some legacy, huh? No wonder Hannity only cites the mythology, and not the facts, for his listeners.