Karen Thurman: “we have been hearing an awful lot about the need to pass the biggest tax cut since 1981, and we always seem to go back…”

“we have been hearing an awful lot about the need to pass the biggest tax cut since 1981, and we always seem to go back to 1981. Maybe it was the teacher in me, I am not real sure, but for some reason I thought, well, what exactly happened in 1981? Well, I got to looking at it, and found out some information. Like this bill, the Reagan tax bill of 1981 was an exploding tax cut. If it had not been changed, CBO estimated that by 1986 it would have reduced revenues by 5.5 percent of the gross domestic product. At today's level, that is about $550 billion per year. And because of these projections, Congress passed legislation in 1982 to raise revenues by a little over 1 percent. Another part of this history lesson is, it could not come out of the House, it was passed by the Senate under Senator Dole's guidance. Two years later, the Deficit Reduction Act of 1984 raised taxes again. Taxes again were raised in 1987, 1989, 1990, and then in 1993. Taken together, all six of these tax increases reversed about two-thirds of the 1981 Reagan tax cut. Proponents of the Bush tax cut often argue that the deficits of the 1980s and the early 1990s resulted from surging spending rather than reduced revenues. The figures that they cite on spending are misleading. Why? Because they include soaring interest payments on the national debt. Gee, we have not heard this before. Appropriations declined relative to GDP while our entitlement spending held roughly constant as a share.”