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Caveat lector
 | SPIN AND TAXES! Krugman offers a useful point, counteracting a decade of spinning: |
TUESDAY, JUNE 8, 2004
SPIN AND TAXES: This week will be a time for tributes from those who admire President Reagan and his legacy. But whatever one thinks of the Reagan years, this week could present a chance to learn more about an important part of our recent history. Many scribes have begun to offer their views on aspects of the Reagan presidency. Paul Krugman’s column in this morning’s Times is a good—and useful—example.
“Ronald Reagan does hold a special place in the annals of tax policy, and not just as the patron saint of tax cuts,” Krugman writes. Krugman notes that Reagan “followed his huge 1981 tax cut with two large tax increases.” Here’s the skinny on Reagan Tax Increase number 1:
KRUGMAN: The first Reagan tax increase came in 1982. By then it was clear that the budget projections used to justify the 1981 tax cut were wildly optimistic. In response, Mr. Reagan agreed to a sharp rollback of corporate tax cuts, and a smaller rollback of individual income tax cuts. Over all, the 1982 tax increase undid about a third of the 1981 cut; as a share of G.D.P., the increase was substantially larger than Mr. Clinton’s 1993 tax increase.We’ll return to that highlighted point. For the record, here’s Krugman’s description of Reagan Tax Increase 2:
KRUGMAN: I’m referring to the Social Security Reform Act of 1983, which followed the recommendations of a commission led by Alan Greenspan. Its key provision was an increase in the payroll tax that pays for Social Security and Medicare hospital insurance.For those who don’t want to do the math, Krugman’s “middle-income families with children” were paying a combined burden of 18.4 percent by 1988, up from 17.7 percent in 1980. For these middle-class families, Reagan—who did reduce taxes overall—had actually raised their tax burden.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.
For many American consumers of “news,” these facts might come as a surprise. As we’ve told you again and again, our modern press corps is fact-averse, but is very much fable-friendly. We’re fed simple tales about every topic, including Reagan’s effect on taxes. With that in mind, let’s return to that point Krugman made about Reagan’s 1982 tax increase: “[A]s a share of G.D.P., the increase was substantially larger than Mr. Clinton’s 1993 tax increase.” Presumably, Krugman included that fact today because he’s familiar with our spin-driven cable discourse, in which President Clinton’s 1993 increase is routinely said to have been “the largest tax increase in American history.”
The spinning began almost instantly, driven by the foolish—and largely uncorrected—hyperbole which now defines our discourse. On May 2, 1993, David Rosenbaum quoted a leading Republican in the New York Times:
ROSENBAUM: “This is the largest tax increase in the history of the human race, and it is not appealing to us,” said Representative Bill Archer of Texas, the top Republican on the [House Ways and Means Committee].The largest in the history of the human race! On May 28, 1993, the Times’ Michael Wines captured more of the clowning:
WINES: “The largest tax increase in the world,” said Representative Deborah Price, an Ohio Republican.Lenin and Mao never taxed so much! For that matter, Pharoah was off the hook too! On radio, of course, Rush Limbaugh was peddling such pap every day. In late May, the Times tried to introduce a few facts in an unsigned “scorecard” feature:“The largest tax increase in the history of civilization,” anted Representative Philip M. Crane, an Illinois Republican.
NEW YORK TIMES (5/28/93): The Congressional Budget Office, the official scorekeeper in such matters, estimates that the package will increase taxes by $270 billion over five years. That appears to make it larger than the 1982 tax increase, which raised $215 billion in new taxes over five years under President Ronald Reagan.As everyone knows, it’s pointless to compare budget costs across the decades without adjusting for inflation. On August 5, David Rosenbaum also laid out some facts:But if inflation is factored in, the Clinton package raises taxes less.
Viewed another way, the Clinton package would raise taxes in its fifth year by slightly more than 0.9 percent of gross domestic product. The Reagan tax increase ends up being larger because it increased taxes in its fifth year by 1.3 percent of gross domestic product.
ROSENBAUM (8/5/93): When the dollars are adjusted for inflation, this year’s budget bill is neither the biggest deficit reduction measure nor the biggest tax increase in recent years...And, of course, as Krugman notes, the Reagan increase was followed by Reagan Tax Increase 2. But so what? Two days before Rosenbaum’s analysis appeared, Bob Dole had responded to an address by Clinton, saying the Man From Hope’s budget plan was “not just the largest tax increase in American history, but the largest tax increase in world history.” And uh-oh! Someone had penned a Times op-ed that same day. His name was Ronald Reagan:As for taxes, the 1982 law enacted under Ronald Reagan raised taxes by $215 billion over five years, which amounts to $286 billion in 1993 dollars, considerably more than this year's figure.
REAGAN (8/3/93): [Clinton] knows Americans have always been kind and generous. In war and peace, they have been willing to make great sacrifices to serve a greater good. Today, the White House is trying to appeal to this great quality by getting us to go along with the largest tax increase in the history of our country.Needless to say, Reagan was troubled by all the spinning. “Despite the slick presentation, talented spin doctors and White House talking heads all over TV, the simple truth is that this plan is bad for America,” he good-naturedly said.
This is just a tiny part of the recent history of tax-increase-spinning. For the record, we’re pretty sure that we saw Bob Dole, in recent years, acknowledge ruefully that the GOP may have exaggerated the size of Clinton’s tax hike a bit. But we’re darned if we can find the statement today. (Anyone know where he said it? We have an idea, but it won’t be on Nexis.) So why did Krugman mention the fact that Reagan’s 1982 increase was actually somewhat larger than Clinton’s? Most likely, because this silly spinning continues. Clinton’s “biggest tax increase in human history” is a silly staple of pseudo—con spin. Just last month, as a matter of fact, Sean Hannity made a comical adaptation. Here he was on April 16, trashing big-taxing John Kerry:
HANNITY: John Kerry has flipped and flopped on just about every issue...The only issue he is consistent on is voting for taxes. He voted for the two largest tax increases in American history, voted to raise taxes 350 times. And, you know, on every tax issue he’s wrong.No, we’re not sure what Hannity meant; at the time, the official Bush/Cheney talking-point only said that Kerry had voted for the one biggest increase. Was Hannity comically accusing Kerry of voting for Reagan’s tax increase too? Of course, Kerry didn’t happen to be in the Congress at the time of the Reagan increase, but Hannity didn’t seem to know that. Here was another exchange from this same laughable program:
ELAINE KAMARCK: Well, first of all, you’ve got to start with the fact that John Kerry has been a deficit hawk from the word go. In the 80s—don’t laugh at me. Do you know that he voted with President Reagan? In the 80s, he voted for the famous Gramm-Rudman Act. Not many Democrats did that.No he didn’t, and neither did you. You weren’t in the Congress then, and neither was Ol’ Flip-Flip, John Kerry.HANNITY: Did he vote for the Reagan tax cuts?
KAMARCK: He voted for—
HANNITY: Did he vote for the Reagan tax cuts? No.
This week could be a time for tributes—and beyond that, it could be a time for learning. But the press corps rarely lays out facts when clowning clowns make a joke of your discourse. Today, Krugman offers some information. Expect it to end right there.
(Note: None of this has a thing to do with the merits of these different tax increases. But our discourse is rarely about the merits. Our discourse is about pleasing spin.)
VISIT OUR INCOMPARABLE ARCHIVES: In October 2003, conservative economist Bruce Bartlett wrote a detailed review of Reagan’s tax increases. For the record, he referred to Reagan’s 1982 hike as “the largest peacetime tax increase in American history.” Incomparably, we quoted Bartlett at length. See THE DAILY HOWLER, 10/31/03.
Meanwhile, one last point on that Clinton increase. By the time Clinton’s budget plan passed, Americans were deeply misinformed because of all the silly spinning. In our discourse, spin and dissembling almost always overwhelm the press corps’ feeble attempts at clarification. Too see how little the voters knew, see THE DAILY HOWLER, 11/12/02. As usual, American voters lacked the first clue. Our discourse tends to be like that.