Reaganomics won't work today, but GOP candidates keep pushing it anyway
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In their debates, ads and speeches, the candidates for the Republican presidential nomination are vying for the label of most Reagan-esque.
On taxes, "I take the Reagan approach," former Sen. Rick Santorum said at a recent Florida debate.
On the economy, "under Ronald Reagan, we had ... the right laws, the right regulators, the right leadership," former House Speaker Newt Gingrich said in a debate before his South Carolina primary victory.
Judging from the candidates' tax proposals, they seem to believe that the most Reagan-like candidate is the one with the biggest tax cut. But, as the person who drafted the 1981 Reagan tax cut, I think Republicans misunderstand the premises upon which Reagan's economic policies were based, and why those policies can't -- and shouldn't -- be replicated today.
I was the staff economist for Rep. Jack Kemp, R-N.Y., in 1977, and it was my job to draft what came to be the Kemp-Roth tax bill, which Reagan endorsed in 1980 and enacted the following year. Kemp and Sen. Bill Roth, R-Del., proposed cutting tax rates across the board by about a third, lowering the top rate from 70 percent to 50 percent and reducing the bottom rate from 20 percent to 8 percent. (Though when the Reagan tax cut finally was enacted in 1981, the bottom rate was reduced to 11 percent.)
While our aim was to increase growth and employment, we were intent on doing so in a way that did not exacerbate inflation, which was the nation's top problem at that time.
After all, growth was not particularly sluggish in the late 1970s -- the economy grew at 5.4 percent in 1976, 4.6 percent in 1977 and 5.6 percent in 1978. (We haven't seen three consecutive years as good since.) But people didn't feel very prosperous because inflation and unemployment were high. The unemployment rate was around 7 percent during those three years, and inflation accelerated, going from 4.9 percent in 1976 to an astonishing 13.3 percent in 1979.
First Published February 12, 2012 12:00 am
