The Reagan Revolution was a Lincoln Day Dinner speech. It never happened in the real world of fiscal policy. During the 1980's, Big Government got bigger and the Federal tax burden was just shuffled, not reduced. The main fiscal legacy of the Reagan era is that the Federal debt was raised from $1 trillion to $3 trillion. Unfortunately, when the economy rebounded after Federal Reserve Chairman Paul Volcker's conquest of runaway inflation, Republicans embraced the dangerous shibboleth that deficit-financed tax cuts are good for growth.
The reason spending went up is that there was no reform of the big entitlements like Social Security and Medicare and not a single department or function of government was eliminated.... Further, many of the initial cuts in discretionary programs were restored over the years, and the cost of interest on the ballooning Federal debt rose significantly.
The tax burden rose during the Reagan era as well. Specifically, when Reagan left office Federal taxes accounted for 18.4 percent of GDP -- a figure slightly higher than the 1960-80 average of 18.0 percent. More importantly, nearly half of the massive 1981 tax reduction -- festooned as it was with every manner of special interest tax breaks that K-Street lobbyists could conjure -- was recouped during the next four years in a series of annual deficit reduction bills that a bi-partisan majority was able to persuade the President to sign.
At the end of the day, during the 1980s income tax rates were lowered, the tax base was broadened through loop-hole closing and the 1986 tax reform act and the payroll tax was raised by a full percentage point of GDP as part of the 1982 Social Security rescue plan. On net, however, there was no reduction in the total Federal tax burden during the Reagan era. What survived was an anti-tax religious catechism which has left the country with two free lunch parties and no prospect of responsible fiscal governance.
And, to be fair, Stockman isn't too impressed with President Obama, either:
I can't see the man has a single principle. I think he is an utter opportunist, a pragmatist. The only change you can believe in is that he changes his mind every day and every week. If he believes that the upper five percent has way too much income and wealth -- which, frankly, I agree with -- then he should have dug in his heels and said, "I am not going to sign a bill to extend the tax cuts for the top tax bracket." What did he do? He folded like a lawn chair within two days. So I don't think there's any comparison [with Reagan] at all. I thought his State of the Union speech was dreadful -- I called it a "ponderous procession of pieties and platitudes." He didn't ask the American public for one sacrifice, didn't warn us of one dark cloud on the horizon, and simply gave a lot of cheerleading hoopla that had almost no connection with the real choices that unfortunately we face.
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