Paging Steve Doocy: Reagan Did Not Pass "Permanent Tax Cuts" -- He Raised Taxes


Right-wing media often turn to their favorite idol, Ronald Reagan, to put a stamp of approval on an idea. But Fox & Friends co-host Steve Doocy made an interesting claim today, predicting that Obama's "temporary targeted policies" like "another stimulus, essentially, with his jobs [bill]" would not work and suggested he should emulate Reagan's "permanent tax cuts." This is more than a little misleading, as Reagan actually raised taxes multiple times -- and history shows there is no such thing as a "permanent tax cut" in the United States of America.

Doocy made his claim during a discussion of President Obama's jobs bill with guest Dick Morris. He kicked off the segment by saying, "The stimulus was supposed to create a ton of jobs, but with unemployment at 9.1 percent and, perhaps, rising, critics say it was nothing more than a Washington jobs killer." Later, hyping an op-ed from fellow News Corporation outlet The Wall Street Journal, Doocy said:

DOOCY: Well, one of the things [Obama] wants to do, Dick, is he wants another stimulus, essentially, with his jobs, saying it really is a stimulus. But there was an item in The Wall Street Journal yesterday that talked about how temporary targeted policies, a lot of politicians think, this is going to be good for me and going to get me re-elected. It didn't work for Gerald Ford. It didn't work for Jimmy Carter. Ronald Reagan wouldn't do it. Instead, he had permanent tax cuts and that worked for him.

First of all, the stimulus was not a "job killer," no matter how many times Fox relentlessly repeats this lie. Experts have agreed that the stimulus raised employment by 1.2 to 3.3 million and boosted GDP by 1.8 to 2.7 percent.

And Doocy's claim that Reagan had "permanent tax cuts" is flat out false. Reagan indeed cut taxes significantly in 1981 and again in 1986. However, as reported, two bills Reagan signed in 1982 and 1984 together "constituted the biggest tax increase ever enacted during peacetime," according to tax historian Joseph Thorndike. The article explains:

Soon after taking office in 1981, Reagan signed into law one of the largest tax cuts in the postwar period.


In 1986, Reagan lowered individual income tax rates again, this time in landmark tax reform legislation.

As a result of the 1981 and 1986 bills, the top income tax rate was slashed from 70% to 28%.

Despite the aggressive tax cutting, Reagan couldn't ignore the budget deficit, which was burgeoning.

After Reagan's first year in office, the annual deficit was 2.6% of gross domestic product. But it hit a high of 6% in 1983, stayed in the 5% range for the next three years, and fell to 3.1% by 1988. (By comparison, this year it's projected to be 9% but is expected to drop considerably thereafter.)

So, despite his public opposition to higher taxes, Reagan ended up signing off on several measures intended to raise more revenue.

"Reagan was certainly a tax cutter legislatively, emotionally and ideologically. But for a variety of political reasons, it was hard for him to ignore the cost of his tax cuts," said tax historian Joseph Thorndike.

Two bills passed in 1982 and 1984 together "constituted the biggest tax increase ever enacted during peacetime," Thorndike said.

The bills didn't raise more revenue by hiking individual income tax rates though. Instead they did it largely through making it tougher to evade taxes, and through "base broadening" -- that is, reducing various federal tax breaks and closing tax loopholes.

The article goes on to say that there "were other notable tax increases under Reagan," including "accelerat[ing] an increase in the payroll tax rate" in 1983 and tax reform in 1986 that further reduced tax breaks.

Most important, there is no such thing as "permanent tax cuts." This chart from the Tax Policy Center shows, for example, how often the top marginal tax rate has changed since 1913: a total of 35 times. And, as illustrated above, tax rates certainly didn't stay the same throughout Reagan's presidency. In fact, several times, they went up, no matter how much Steve Doocy tries to pretend otherwise.


Posted In
Economy, Taxes
Fox News Channel
Steve Doocy
FOX & Friends
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