On Feb. 15, Rush Limbaugh claimed that the Reagan tax cuts had “doubled revenues to the Treasury.” Even Nobel Prize-winning economist Paul Krugman has failed to recognize how completely bogus this claim is.
Writing in a blogpost, “Reagan and Revenue,” Krugman analyzed some of the CBO data from the Reagan years. The revenue gain Limbaugh refers to is from the years 1980 to 1988, in which total revenue went from $517.3 billion to $909 billion. Krugman and Limbaugh calculate that this is an 80 percent revenue gain.
However, Limbaugh leaves out that because of the high inflation in Reagan’s first term, “80 percent gain” is very inaccurate and must be adjusted to constant dollar values. Krugman makes this adjustment and finds that during Reagan’s presidency, real revenue increased by only 18 percent — nowhere near double.
Moreover, even Krugman leaves out analysis of the most colossally fraudulent aspect of Limbaugh’s, and the Republicans’, claim.
According to the CBO, revenue from the Social Security (plus Medicare) tax increased from $157.8 billion in 1980 to $334.3 billion in 1988; i.e., social insurance tax payments more than doubled in that time period. This is a 112 percent increase, compared to the 64 percent increase (244 to 401) in individual income tax payments.
The total revenue gain claimed to be the Reagan revenue miracle is therefore $392 billion, which is made up of $177 billion from social insurance, $157 billion from income tax and $58 billion from other sources.
The dominant revenue component of the Reagan miracle is seen to be due to Franklin Delano Roosevelt, the signer of the Social Security Act in 1935.
The notion that massive tax cuts to the richest Americans stimulate economic growth is a fraud. It is propaganda with zero numeric basis.
The numbers from the CBO prove that the supposed Reagan revenue miracle incessantly driveled by the Republicans was actually due to Social Security taxes paid by average Americans — not tax cuts for the richest Americans. The writer has a new and more appropriate name for “Reaganomics” or “supply-side economics”: chutzpahnomics.
Limbaugh’s low-information audience thinks Reagan’s tax cut doubled revenue. Fortunately, most Americans know that our civic duties include learning, and helping our fellow Americans learn, the facts.
This is how our country will right itself — with, unfortunately, very little help from the Rush Limbaughs of the world.