Consider this article by the Cato Institute, a libertarian think tank, which discusses how the Reagan tax cuts affected the unemployment rate.
Excerpt:
In 1980, President Carter and his supporters in the Congress and news media asked, “how can we afford” presidential candidate Ronald Reagan’s proposed tax cuts?
Mr. Reagan’s critics claimed the tax cuts would lead to more inflation and higher interest rates, while Mr. Reagan said tax cuts would lead to more economic growth and higher living standards. What happened? Inflation fell from 12.5 percent in 1980 to 3.9 percent in 1984, interest rates fell, and economic growth went from minus 0.2 percent in 1980 to plus 7.3 percent in 1984, and Mr. Reagan was re-elected in a landslide.
[…]Despite the fact that federal revenues have varied little (as a percentage of GDP) over the last 40 years, there has been an enormous variation in top tax rates. When Ronald Reagan took office, the top individual tax rate was 70 percent and by 1986 it was down to only 28 percent. All Americans received at least a 30 percent tax rate cut; yet federal tax revenues as a percent of GDP were almost unchanged during the Reagan presidency (from 18.9 percent in 1980 to 18.1 percent in 1988).
What did change, however, was the rate of economic growth, which was more than 50 percent higher for the seven years after the Reagan tax cuts compared with the previous seven years. This increase in economic growth, plus some reductions in tax credits and deductions, almost entirely offset the effect of the rate reductions. Rapid economic growth, unlike government spending programs, proved to be the most effective way to reduce unemployment and poverty, and create opportunity for the disadvantaged.
President Bush signed the first wave of tax cuts in 2001, cutting rates and providing tax relief for families by, for example, doubling of the child tax credit to $1,000.
At Congress’ insistence, the tax relief was initially phased in over many years, so the economy continued to lose jobs. In 2003, realizing its error, Congress made the earlier tax relief effective immediately. Congress also lowered tax rates on capital gains and dividends to encourage business investment, which had been lagging.
It was the then that the economy turned around. Within months of enactment, job growth shot up, eventually creating 8.1 million jobs through 2007. Tax revenues also increased after the Bush tax cuts, due to economic growth.
In 2003, capital gains tax rates were reduced. Rather than expand by 36% as the Congressional Budget Office projected before the tax cut, capital gains revenues more than doubled to $103 billion.
The CBO incorrectly calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion. Revenues for 2006 came in $47 billion above the pre-tax cut baseline.
Here’s what else happened after the 2003 tax cuts lowered the rates on income, capital gains and dividend taxes:
GDP grew at an annual rate of just 1.7% in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1%.
The S&P 500 dropped 18% in the six quarters before the 2003 tax cuts but increased by 32% over the next six quarters.
The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.
The timing of the lower tax rates coincides almost exactly with the stark acceleration in the economy. Nor was this experience unique. The famous Clinton economic boom began when Congress passed legislation cutting spending and cutting the capital gains tax rate.
Those are the facts. That’s not what you hear in the media, but they are the facts.
Eight Republican presidential candidates will debate on September 7 at the famed Ronald Reagan Presidential Library in Simi Valley, California.
Texas Gov. Rick Perry, who is currently at the front in many national polls, will join Mitt Romney, Newt Gingrich, Rick Santorum, Jon Huntsman, Herman Cain, Michele Bachmann, and Ron Paul on stage.
NBC News and POLITICO will moderate the debate, and it will be co-hosted by NBC Nighlty News anchor Brian Williams and POLITICO’s editor-in-chief John Harris.
The debate will be significant because it is Perry’s debut on the national debating stage. Even more so, it is first debate in which someone other than Romney will most likely be the leader in the polls.
This dynamic can impact debate strategy in a number of ways.
Will Perry be above the fray and take a page out of Romney’s playbook or will the combative Texan go straight after Romney?
Will Romney act like an underdog and make it seem as if he is punching up in a weight class to Perry?
For Ron Paul, who has been at a stable 10-15 percent in the polls, how will he break out? Can he put together a crisp debating performance that highlights the areas where Republicans have moved toward his views and not come across as too professorial and absent-minded?
Michele Bachmann and Herman Cain will come into the debate sharing a similar set of debate experiences. Both splashed onto the national scene during a debate. For Cain, it was in South Carolina. For Bachmann, it was in New Hampshire. But both candidates have not been able to maintain the initial burts of momentum they received from their respective debates due to a mixture of gaffes and staffing questions though Bachmann did win the Ames Straw Poll, which, in the end, seems to not have given her a bounce in the polls.
Newt Gingrich, fresh off his last stellar debate performance, must kick his campaign into gear. He said his campaign would be like Walmart in terms of being innovative. September seems like the time when he should be rolling out his campaign innovations.
The debate is going from 8 PM to 10 PM Eastern. I am concerned about the moderators being mainstream media. I hope they don’t ask stupid questions like John King did last time.
Tonight Brian Williams will moderate, along with Politico’s John F. Harris, the GOP presidential candidate debate at the Ronald Reagan Presidential Library. If recent performances by the NBC Nightly News anchor are an indication, candidates (particularly those favored by the Tea Party) should recognize his hostility to their agenda and be prepared for a number of topics and questions from the left.
Ever since its emergence, Williams has undercut the Tea Party, its champions within the GOP, and its cause of fiscal conservatism. At the same time, Williams has heralded its chief opponent Barack Obama.
[…]Williams has also attacked those in the GOP who have championed the Tea Party cause, namely – Texas governor and presidential candidate Rick Perry, former Alaska governor and 2008 vice presidential candidate Sarah Palin and current Wisconsin Governor Scott Walker.
“On the broadcast tonight, fighting words. Rick Perry comes out swinging and talking, and the White House tells him to watch what he says….The rest of the country is learning what Texans already know about their Governor, what he says, what he does, how he does business….Today’s debate had to do with money, name-calling, and whether or not the President of the United States loves his country.”
Uh oh. I don’t think the Republicans should let radical leftists moderate their debates. It’s just stupid. Let Paul Ryan and Marco Rubio be the moderators.
And so, if defining the proper role of government was one of the central issues of the Reagan era, it remains that now. The truth is that people are going around saying that, well, we’re worried about – let me just add something to this because I think this is an important forum for candor.
I know that it is popular in my party to blame the president, the current president. But the truth is the only thing this president has done is accelerate policies that were already in place and were doomed to fail. All he is doing through his policies is making the day of reckoning come faster, but it was coming nonetheless.
What we have now is not sustainable. The role of government and the role that government plays now in America cannot be sustained the way it is. Now some are worried about how it has to change, we have to change it. The good news is it is going to change. It has to change. That’s not the issue.
The issue is not whether the role that government now plays in America will change. The question is how will it change. Will it change because we make the changes necessary? Or, will it change because our creditors force us to make these changes?
And over the next few moments I hope to advocate to you –- I don’t think that I have to given the make up of the crowd –- but I hope to advocate to you that, in fact, what we have before us is a golden opportunity afforded to few Americans.
We have the opportunity –- within our lifetime –- to actually craft a proper role for government in our nation that will allow us to come closer than any Americans have ever come to our collective vision of a nation where both prosperity and compassion exist side-by-side.
To do that, we must begin by embracing certain principles that are absolutely true. Number one: the free enterprise system does not create poverty. The free enterprise system does not leave people behind.
People are poor and people are left behind because they do not have access to the free enterprise system because something in their lives or in their community has denied them access to the free enterprise system. All over the world this truism is expressing itself every single day. Every nation on the Earth that embraces market economics and the free enterprise system is pulling millions of its people out of poverty. The free enterprise system creates prosperity, not denies it.
The second truism that we must understand is that poverty does not create our social problems, our social problems create our poverty. Let me give you an example. All across this country, at this very moment, there are children who are born into and are living with five strikes against them, already, through no fault of their own.
They’re born into substandard housing in dangerous neighborhoods, to broken families, being raised by their grandmothers because they never knew their father and their mom is either working two jobs to make ends meet or just not home. These kids are going to struggle to succeed unless something dramatic happens in their life.
These truisms are important because they lead the public policies that define the proper role of government. On the prosperity side, the number one objective of our economic policy, in fact the singular objective of our economic policy from a government perspective is simple — it’s growth. It’s not distribution of wealth; it’s not picking winners and losers.
The goal of our public policy should be growth. Growth in our economy, the creation of jobs and of opportunity, of equality of opportunity through our governmental policies.
And the most gripping part of the speech:
To me, this is extremely special, and I’ll tell you why. During the ’80s, politically especially, there were two people that deeply influenced me. One clearly was Ronald Reagan, the other was my grandfather, who lived with us most of the time in our home.
We lived part of our life, especially the key years, ’80-’84, in Las Vegas, Nev. And my grandfather loved to sit on the porch of our home and smoke cigars. He was Cuban. Three cigars a day, he lived to be 84. This is not an advertisement for cigar smoking, I’m just saying to you that …
He loved to talk about politics. My grandfather was born in 1899. He was born to an agricultural family in Cuba. He was stricken with polio when he was a very young man, he couldn’t work the fields, so they sent him to school. He was the only member of his family that could read. And because he could read, he got a job at the local cigar rolling factory.
They didn’t have radio or television, so they would hire someone to sit at the front of the cigar factory and read to the workers while they worked. So, the first thing he would read every day, of course, was the daily newspaper. Then he would read some novel to entertain them.
And then, when he was done reading things he actually went out and rolled the cigars because he needed the extra money. But through all of those years of reading, he became extremely knowledgeable about history, not to mention all the classics.
He loved to talk about history. My grandfather loved being Cuban. He loved being from Cuba. He never would have left Cuba if he didn’t have to. But he knew America was special. He knew that without America, Cuba would still be a Spanish colony. He knew that without America, the Nazis and Imperial Japan would have won World War II. When he was born in 1899 there weren’t even airplanes. By the time I was born, an American had walked on the surface of the moon.
And he knew something else. He knew that he had lost his country. And that the only thing from preventing other people in the world from losing theirs to communism was this country – this nation.
It is easy for us who are born here –- like me –- and so many of you, to take for granted how special and unique this place is. But when you come from somewhere else, when what you always knew and loved, you lost, you don’t have that luxury.
My grandfather didn’t know America was exceptional because he read about it in a book. He knew about it because he lived it and saw it with his eyes. That powerful lesson is the story of Ronald Reagan’s presidency. It’s our legacy as a people. And it’s who we have a chance to be again. And I think that’s important for all of us because being an American is not just a blessing, it’s a responsibility.
As we were commanded to do long ago, “Let your light shine before men” …
[PAUSE – he is overcome by emotion]
…“that they may see your good works and glorify your Father in heaven.”
Well, as we gather here today in this place, that pays homage and tribute to the greatest American of the twentieth century, we are reminded that for him and for our nation, being a light to the world, that’s not just our common history, it remains our common destiny.
I cried at the part in bold above.
Here’s the verse he cited – Matthew 5:16 – in context: [NASB]
13 “You are the salt of the earth; but if the salt has become tasteless, how can it be made salty again? It is no longer good for anything, except to be thrown out and trampled under foot by men.
14 “You are the light of the world. A city set on a hill cannot be hidden;
15 nor does anyone light a lamp and put it under a basket, but on the lampstand, and it gives light to all who are in the house.
16 Let your light shine before men in such a way that they may see your good works, and glorify your Father who is in heaven.
I notice that he cites the NASB, which is my favorite translation – the translation closest to the original Greek.
On my Facebook page, I have Matthew 5:13, which is the verse that comforts me when things look bad in my life – when my plans haven’t worked out the way I hoped they would. Things look bad for us right now as a nation. Maybe we need to reconsider these words.
This speech is being well-received everywhere. Permit me just one reaction from the UK Telegraph, which is still punch-drunk from socialism-induced rioting caused by the anti-marriage, anti-family, anti-father policies of the secular left Labour Party.
Excerpt:
Two of the brightest rising young stars in American conservatism today are Paul Ryan and Marco Rubio. Neither are running for president in 2012, but both will be strong contenders for the vice presidential running mate slot, whoever wins the Republican nomination. And I wouldn’t be surprised to see Ryan or Rubio eventually sitting in the Oval Office itself at some stage in the future. After all, Congressman Ryan of Wisconsin is only 41, and Senator Rubio of Florida is just 40; they have decades of public life ahead of them. They are both deeply principled politicians in the Reagan mould who grew up during the late Cold War years, and share a profound belief in American exceptionalism and the need for the United States to maintain its position as the world’s leading power.
A few weeks ago, I wrote about Congressman’s Ryan’s superb speech on foreign policy to the Alexander Hamilton Society in Washington, remarks which outlined in stark terms the challenges the United States faces if it is to avoid decline. Ryan’s address, which I attended, was probably one of the most important statements by a US politician on American leadership this year.
Senator Rubio’s speech yesterday at the Reagan Presidential Library in the presence of Nancy Reagan, was another key address by a Member of Congress that deserves to be widely read, both at home and abroad. Like Ryan, Rubio offers a powerful rejection of the Big Government approach that has crippled America’s economy, and outlines a firm defence of the free market, championed by Ronald Reagan.
There is something very different and special about America. And Marco Rubio reminds us all what it is in this speech. A speech heard ’round the world! A reminder of our principles – of our role – and of our responsibility to the world.
WINTERY KNIGHT 