WHY such an experienced politician as Walter Mondale called for a tax increase when he accepted his party’s nomination for the Presidency in San Francisco in 1984 is still a puzzlement. Now another Democrat with a comparable reputation for political smarts has done the same thing.
House Speaker Jim Wright has said he is ready to fight for a tax increase this year even in the face of President Reagan’s pledge to “just say no” to all tax increases. Tax increases not only are NOT smart politics; they are not smart economics.
Reaganomics has given America an end to inflation, four years of steady economic expansion, unprecedented job creation, and an extraordinary rise in the stock market. If the media weren’t so biased against Reagan and his policies, TV would be showing pictorial evidence every night about the 12 million new jobs and the three million new businesses created since Ronald Reagan went into the White House.
In theory, Reaganomics means trusting the people rather than the government planners to make our economic decisions. In practice, Reaganomics means cutting taxes and letting the people spend their own money.
When Ronald Reagan became President, we were staggering under the burden of double-digit inflation, double-digit interest rates, and 70 percent top marginal tax rates. No wonder the stock market was depressed.
The 1981 Reagan tax cut started the boom in our economy. Now the top marginal tax rate is down to 38.5 percent. The result is that since 1981 Americans have enjoyed a $1.7 trillion increase in equity wealth in the stock market.
The 1981 Reagan tax cut was the prime stimulus for the remarkable creation of 12 million new jobs in the private sector. Tax cuts spurred new businesses to start, and old businesses to expand, and that process generates jobs.
The liberals prefer to peddle the shopworn shibboleth that “government” should create jobs to help the poor and unemployed. As Al Smith used to say, “let’s look at the record.”
The General Accounting Office recently reported the pitiful results of the Emergency Jobs Act of 1983. This make-work agency cost the taxpayers $4.5 billion, but reduced unemployment by only 14,000. Thus, it cost the taxpayers $325,000 for every person transferred from the ranks of the unemployed to the ranks of the employed.
On the other hand, in the single month of January 1987, the private sector created 448,000 jobs without any taxpayer help! And it costs the private sector only $33,000, on the average, to create a new full-time job.
Reaganomics has succeeded beyond our most optimistic hopes, and despite the constant carping of the media. In the first couple of years of the Reagan Administration, the media liberals were aided by the negativism and dire predictions of OMB Director David Stockman. The liberals haven’t got Stockman to quote any more, but they still refuse to credit Reaganomics with success.
The plain truth is that the liberals don’t want low taxes; and they don’t want the free market to succeed because they don’t trust it. The liberals want a society in which their intellectual elite can do the planning and the managing in order to bring about the results that THEY want, instead of letting people plan their own lives and spend their own money.
In order to keep Reaganomics on course and producing even more in the coming years than it did in the past, here are some suggestions.
We should cut the capital gains tax in half and eventually eliminate it. The 1978 cut in the capital gains tax proved conclusively that this move promotes plant expansion and creates new jobs.
We should reduce tax rates further, down to a top rate of 20 percent, and raise the exemption for children in increments until it reaches $5,000. We should cut the tax rate on savings and develop new proposals for tax-exempt retirement, education, and health insurance savings accounts.
We should consider exempting new small businesses from federal taxes during the critical first few years. We should help reduce unemployment by giving full tax deductions for businesses that operate training programs for the unemployed.
We should give tax breaks to enterprise zones in cities in order to help the unemployed to get private-sector jobs. We should abolish the ridiculous government busybody rules that prohibit women from working at home to make and sell such items as crafts and jewelry. In the real world, Reaganomics has been a smashing success. It’s too bad it’s such a well-kept secret in the media.
