Reagan Economic Adviser: TPaw Is Lying – Reagan Tax Cuts Did Not Raise Revenue ‘By Almost 100%’

Reminds Republicans That Reagan Raised Taxes 11 Times

Last week, former Minn. Gov. Tim Pawlenty, the Republican presidential candidate, claimed that:

“When Ronald Reagan cut taxes in a significant way, revenues actually increased by almost 100 percent during his eight years as president. So this idea that significant, big tax cuts necessarily result in lower revenues – history does not [bear] that out.”

Former Reagan and Bush I economics official Bruce Bartlett says Pawlenty’s assertion is false:

In point of fact, this assertion is completely untrue. Federal revenues were $599.3 billion in fiscal year 1981 and were $991.1 billion in fiscal year 1989. That’s an increase of just 65 percent. But of course a lot of that represented inflation. If 1981 revenues had only risen by the rate of inflation, they would have been $798 billion by 1989. Thus the real revenue increase was just 24 percent. However, the population also grew. Looking at real revenues per capita, we see that they rose from $3,470 in 1981 to $4,006 in 1989, an increase of just 15 percent. Finally, it is important to remember that Ronald Reagan raised taxes 11 times, increasing revenues by $133 billion per year as of 1988 – about a third of the nominal revenue increase during Reagan’s presidency.

The fact is that the only metric that really matters is revenues as a share of the gross domestic product. By this measure, total federal revenues fell from 19.6 percent of GDP in 1981 to 18.4 percent of GDP by 1989. This suggests that revenues were $66 billion lower in 1989 as a result of Reagan’s policies.

3 Comments

  • Sam Simple
    June 23, 2011 - 10:28 am | Permalink

    I read Bartlett’s article too. He is starting to sound like a liberal. It is so unfortunate for this country that we have one major political party that is completely delusional and believes utter crap like “cutting taxes raises revenues” without a shred of evidence to support it.

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