Open letter to Speaker of the House John Boehner (Part 4 on ‘TEFRA Debacle of 1982’)

 

John Boehner, Speaker of the House

H-232, The Capital, Washington, DC 20515

Dear Mr. Speaker,

I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. DO NOT TAKE THE BAIT AND RAISE TAXES IF THE DEMOCRATS PROMISE YOU THEY WILL CUT SPENDING SOMETIME IN THE FUTURE. Look at the history from 1982.

There they go again: Remembering the ‘TEFRA Debacle of 1982‘ | 

By: Gary Hoitsma | Op-Ed Contributor | 07/14/11 8:05 PM
It was the long hot summer of 1982, exactly 29 years ago. The worst economic recession since the Great Depression was in full flower. Unemployment was over 10 percent.The first phases of the 1981 Reagan tax cuts had kicked in, but Washington’s bipartisan ruling class was spooked by ominous deficit projections. The imperative of the moment then — like now — was that something had to be done.In their minds, that “something” boiled down to finding a way to convince the “fanatical” wing of the stupid(er) party — the Republicans — to accept the need to raise taxes.

Only in this case, the fanatic in chief, as present-day New York Times columnist David Brooks might have called him, was none other than the president of the United States.

Enter the “Gang of 17:” An ad-hoc bipartisan negotiating group made up of 17 members of Congress along with high-ranking presidential aides representing the president.

Off to Blair House and a variety of undisclosed locations they went over a period of weeks to work their magic. When they were through, out came TEFRA, the Tax Equity and Fiscal Responsibility Act, a legislative package sold to President Reagan as a grand compromise constituting a 3-to-1 rate of spending cuts to tax increases.

This is the same ratio that Brooks, in the current context, calls “an astonishing concession” on the part of Democrats, the framework of a deal Republicans should accept without hesitation as the “mother of all no-brainers.” That’s essentially what the Gang of 17 told Reagan in 1982.

Reagan reluctantly agreed, signing the bill into law, saying he was supporting “a limited loophole-closing tax increase to raise more than $98.3 billion over three years in return for … agreement to cut spending by $280 billion during the same period.”

While the tax provisions (including excise tax increases and various business tax adjustments) were promptly put in place, Reagan wrote years later that “the Democrats reneged on their pledge (to cut spending) and we never got those cuts.”

Indeed, spending by Congress increased in subsequent weeks (!) (not to mention years), and there was no discernible progress in reducing the deficit.

Reagan’s counselor and later attorney general, Edwin Meese III, who supported the TEFRA deal along with Reagan at the time, summed it up succinctly in hindsight in his 1992 book, “With Reagan: The Inside Story.”

“I believe that the TEFRA compromise — the ‘Debacle of 1982’ — was the greatest domestic error of the Reagan administration,” Meese wrote. “It was a complete departure from our tax-cutting mandate, failed to reduce the growth of government spending, (and) did not decrease the deficit. … Judged by the results, TEFRA was not only a mistake, it was an abject lesson in how not to reduce the deficit.”

The question for today is whether we are watching history repeating itself in the talks aimed at addressing the current debt crisis and whether the powers that be are going to show evidence of having learned the right lessons from that history.

Brooks suggests that accepting the “no-brainer” business-as-usual deal would be a sign of maturity (he says normality) on the part of Republicans. Others might wonder if acquiescing to doing the same thing that has so obviously been done before, and expecting a different result, might be a sign of something else.

Gary Hoitsma, a political appointee in the Reagan administration, is managing associate at Carmen Group, a Washington-based government relations firm.

_________

Sincerely,

Everette Hatcher, 13900 Cottontail Lane, Alexander, AR 72002, lowcostsqueegees@yahoo.com, www.thedailyhatch.org, ph 501-920-5733

___________

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