OK, so Obama said … “as far back as the 1980s, America started amassing debt at more alarming levels…” And if you ever have heard about the 1980s, the liberal mantra always has been that “Reagan reduced tax rates on the rich and that caused the national debt to triple”.
That is nonsense. Here are the numbers again:
In 1980, when Ronald Reagan was elected, the GDP was $2.79 trillion, and the debt was 32.6% of GDP. In the last full year of Ronald Regan’s tenure in 1988, GDP was $5.1 trillion, and the debt was 51% of GDP.
So notice that the GDP increased by a whopping 82% over just 8 years under Reagan. That is a huge leap. Under Obama between 2008 and 2010, it increased only about 3%.
Reagan did cut taxes on “the rich” from 70% to 28%, a drop of 60%. By liberal accounting, that should have caused revenues to the government to fall by 60%. But revenues to the federal treasury went from $517 billion in 1980 to $991 billion in 1989, increasing by 91%. Wow! So indeed, tax cuts on the wealthy did what they always do – they produced economic growth. In 1921, cuts in the top rate from 63% to 25% produced The Roaring 1920s.
The liberals never, ever want you to know about the huge surge in the economy in the 1980s, and huge gains in employment, more than 20 million jobs. They only like to point out that during Reagan’s presidency the debt increased from $909 billion in 1980 when Reagan was elected to $2.857 trillion by 1989 when Reagan left office. So they always say, “Reagan tripled the national debt because he lowered tax rates”.
Technically, they can say that that is true, that he tripled the debt. But if you consider the debt increase as a percentage of the whole national wealth (GDP) went from 32.6% to 51%, that is a 59% increase relative to the whole economy, not a 300% increase (tripling) like liberals say. And still, after defeating the Soviet Union with a huge military buildup, the final debt of the Reagan years was only about half (51% of GDP) of what it is today (100% of GDP).
Yet even this 59% increase in the debt was caused mostly by the Democrats in Congress. Here is how:
Reagan cut top tax rates which set off an economic boom, causing huge inflows to the treasury. He then spent some of that money on the military to defeat the Soviet Union – certainly some of the best-spent dollars in American history.
But at the same time, the heavily-Democrat Congress went on a wild spending spree after promising not to, like typical Democrats (the agreement was called TEFRA. You can search it on the internet to read about it). So it was not tax cuts that caused the debt – they caused the boom. And while military spending did cause the debt to rise somewhat, it was the Democrats’ massive spending that really caused the spike.
Yet Reagan policies have historically been blamed by Democrats like Obama only for the bad things but never for the really big accomplishments which were a booming economy and, most significantly, the defeat of Soviet communism.
About That ‘Reagan Debt’ | RedState