NCPA - National Center for Policy Analysis

Comparing Reagan And Bush Tax Cuts

March 7, 2001

Observers say that while there are similarities between the Bush tax cut plan and Ronald Reagan's cuts in 1981, they are more different than alike.

With the 1981 figures adjusted for inflation so they are comparable to 2001 dollars, here is how they stack up:

  • Over five years, Reagan proposed $1.4 trillion in tax cuts, while Bush proposes $460 billion.
  • Reagan's plan included $824 billion in offsetting spending cuts over five years; Bush's plan would require $98 billion.

Thus, adjusted for inflation, Reagan's tax cut was three times as large as Bush's, and it was enacted during a time of double-digit inflation and economic stagnation.

But there is one prospective parallel troubling some legislators: like Bush, Reagan asked Congress not to increase the size of his tax cut or expand his lean spending requests, but Congress wound up cutting taxes a lot more, and cutting spending a lot less, than he had proposed.

Texas Rep. Charlie Stenholm, one of the few remaining House Democrats who voted for Reagan's 1981 program, says the result proved disastrous: ''We cut taxes but we never got around to the tough decisions on spending that it took to make it work. I was a willing participant -- but not again.''

Apparently, Stenholm means that rather than voting for the plan and working to slow the rate of growth of government spending, he will vote and work against Bush's tax cut plan.

Because Congress enacted Ronald Reagan's plan, and additional tax cuts, but did not rein in spending, budget deficits soared and the federal debt increased four-fold.

Source: Jonathan Weisman, "Bush's big pitch has vast differences from Reagan's; But the parallels make some lawmakers uneasy," USA Today, March 7, 2001.



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