Washington Could Learn a Lot from a Drug Addict
We should learn what Reagan learned late in his presidency. Congress will lie about cutting spending because they are addicted to it.
Radio Address to the Nation on the Economy and Soviet-United States Relations
October 24, 1987
My fellow Americans:
Let’s also remember a critical reason for this expansion was our decision to reduce taxes in 1981. I’m sure many of you know it was very difficult getting this through the Congress, although with your help we achieved it. And despite all the predictions of high inflation from our opponents, our tax cuts not only fueled our expansion, they had a benefit that surprised some people: Far from reducing the amount of money the Federal Government collected in tax revenues, over the long run, those collections actually increased due to the economic activity sparked by the tax cuts. In fact, tax revenues from 1981 to 1987 actually went up $255 billion. Of course, this meant we had enough to pay for our defense buildup and some left over to help get our deficit spending problems under control. But instead of using new revenues to cut the deficit, the Congress decided to spend even more.
In 1982, for example, TEFRA, as it was called, the Tax Equity and Fiscal Responsibility Act, raised taxes by $131 billion over 4 years, with Congress pledging to slash spending by $3 for every dollar of increased revenue. Instead, 4 years later, taxes had gone up the expected $131 billion, but spending over this same period had risen by $244 billion. In fact, every dollar in increased revenue since 1980 had been matched by $1.25 of increased spending.
Now, 3 days ago, I called on the congressional leaders to meet with me early next week to outline our deficit reduction plans. And as we move toward a budget settlement, it’s good to remember that there’s a fundamental difference here inWashingtonon one critical issue. I’m proud that since 1913 my party has reduced taxes 10 times and increased them only once. And that’s why I hope members of the Democratic Party will follow President Kennedy’s lead of some years ago and remember that lower taxes mean higher growth.
But the simple fact is that all sides must contribute to this process if it is to succeed and if a package is to be developed that keeps taxes and spending as low as possible. This effort must also address the flipside of our twin deficit problem. I mean, here, our trade deficit, a problem that would only be worsened by protectionist legislation. So, let’s keep the stock market healthy and sound, and let’s do it by avoiding protectionist legislation and by keeping taxes and spending down so we can keep interest rates and inflation rates low.
Until next week, thanks for listening, and God bless you.
Note: The President spoke at 12:06 p.m. from Camp David, MD.
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