Freedom New Mexico
On Aug. 13, 1981, President Ronald Reagan, at his modest hideaway in the hills overlooking Santa Barbara, Calif., signed into law perhaps the most aggressive tax cut in U.S. history. Friday marked the 29th anniversary of the signing of the Economic Recovery Tax Act of 1981 and should remind us, in a similar time of economic tumult, of better approaches for stimulating the economy and strengthening Americans’ pocketbooks.
President Barack Obama, take note.
The ERTA was simple in approach but momentous in outcome. Its purpose, as stated, was to amend the tax code “to encourage economic growth through reductions in individual income tax rates … incentives for small businesses, and incentives for savings, and for other purposes.”
ERTA was a 25 percent across-the-board tax cut affecting individual marginal income tax rates, among other reforms. As Andrew Chamberlain for the Tax Foundation once said, the law was a “watershed event in the history of federal taxation.”
The Gipper understood that the best place for money to reside was with those who earned it, the same people who will know best how to spend it.
In his own words, “What our critics really believe is that those in Washington know better how to spend your money than you, the people, do. But we’re not going to let them do it, period.”
In contrast, President Obama’s American Recovery and Reinvestment Act — the stimulus bill — was created to distribute some $787 billion of taxpayer monies, which have gone to pet projects and government programs, creating temporary, government jobs or, at least, government-subsidized jobs.
The results have been disappointing. What the Obama administration labeled in June as the “Recovery Summer” has, instead, been a time of stubbornly high jobless rates and grim economic indicators. This season may turn out to be more aptly called the “Relapse Summer.”
President Obama’s economic stimulus is anything but. Increased government spending and the creation of new, huge entitlement programs, like Obamacare, are not going to put more people back to work and, most importantly, will not increase consumer confidence — it will, instead, create more uncertainty in an already timid market.
Reagan understood this all too well: “You can’t stand for big government, big taxes and big bureaucracy and still be for the little guy.”
On the 29th anniversary of the Reagan tax cuts, the political elite in Washington, D.C, led by President Obama, should heed the lessons of the 40th president. Burdening people further with taxes is the last thing we ought to be doing — we should be putting money back in the pockets of the taxpayers.