"In the present weak economic climate," a group of conservatives, including Newt Gingrich, wrote in an open statement, "we believe that to restore the health of the economy and put Americans back to work, America should follow a course against high taxes and federal spending."
The White House was unmoved. "Republicans may feel they can't go to voters after supporting a tax increase," one administration official told the New York Times. "We've got to convince them that the situation won't be as devastating as it would be if the tax bill is sabotaged."
The latest moves in the debt ceiling debate? Not quite: The administration was Ronald Reagan's, and the year was 1982. With his previous year's landmark tax cuts having exploded the budget deficit, Reagan had reluctantly backed a tax increase to bring it back under control, prompting a minor conservative uprising led by then Rep. Jack Kemp and which included then backbench House member Gingrich. "You can't have the largest tax cut in history and then turn around and have the largest tax increase in history," one conservative rebel groused.
Right-wing economists issued dire forecasts. Arthur Laffer, widely described as the father of supply-side economics, warned that the bill would "stifle economic recovery" and "lengthen and deepen the recession." The president of the U.S. Chamber of Commerce wrote that the tax hike would "curb the economic recovery everyone wants," adding: "It will mean a lower cash flow as more businesses pay more taxes, with a depressing effect on stock prices. It will reduce incentives for the increased savings and investment so badly needed to improve productivity and create more jobs." As Bruce Bartlett, an early supply-sider and Reagan aide who has since recanted the faith, noted last month, "It would be hard to find an economic forecast that was more wrong in every respect." Real gross domestic product grew at 4.5 percent in 1983 and 7.2 percent in 1984, while unemployment fell from 10.6 percent in December 1982 to 7.1 percent in 1984.
Just about the only thing the conservative rebels got right back in 1982 was Gingrich's comment to the New York Times that the skirmish was the "opening round of a fight over the soul and future of the Republican Party." Looking back, the extent to which the conservatives won the fight within the party while losing the war with economic reality is fairly astounding. In the nearly three decades since, the Republican feeling toward tax increases has moved from Reaganesque dislike but acceptance (he signed tax increases into law in seven of his eight years in office) to their current, blindly absolutist position flatly opposing any tax increases at all, even in the face of spiraling deficits and possible economic default. [See a roundup of editorial cartoons about the deficit and debt.]
Witness comments like House Speaker John Boehner's that "raising taxes is going to destroy jobs." The rhetoric hasn't changed much since 1982, but the accumulated evidence against this GOP dogma is overwhelming.
Gingrich was again at the forefront of the fight against taxes in 1993 when he warned that the Clinton budget plan "will in fact kill the current recovery and put us back in a recession." Rep. Dick Armey, who would go on to be House majority leader and now is a Tea Party godfather, warned that "the impact on job creation is going to be devastating." Texas GOP Sen. Phil Gramm warned that the budget deal was a "one-way ticket to a recession," adding that Clinton's would be one of the jobs killed by the bill. (Gramm would seek Clinton's job, but couldn't best Bob Dole; he was last seen being muzzled by John McCain's presidential campaign in 2008 after calling the country a "nation of whiners.") Laffer warned that "Clinton's tax bill will do about as much damage to the U.S. economy as could be feasibly done in the current political environment." Boehner himself dismissed the Clinton plan as "Christmas in August for liberal Democrats: more taxes, more spending, and bigger government."
He got the Christmas part right. Unemployment, which had been 7.1 percent in January 1993, fell to 5.4 percent by the end of 1994. Real GDP grew from 2.9 percent in 1993 to 4.1 percent in 1994. The final tally of the Clinton years was 23 million new jobs and a budget surplus. [See editorial cartoons about the Democrats.]
Clinton and his villainous tax hikes were followed by George W. Bush and his cure-all tax cuts. "Tax relief will create new jobs," Bush argued in April 2001. "Tax relief will generate new wealth." When the bill was enacted that June, GOP Rep. Mike Pence (now running for governor of Indiana) gushed that they would "stimulate our economy" and "put the ax to the root of the Internal Revenue Code as it wages war on the American dream."
How'd that turn out? From 2001 to 2007, jobs grew at one fifth the pace of the 1990s, the slowest rate in the post-World War II era. GDP in those years grew at half the rate of the 1990s. Oh yeah, and the deficit exploded. Fully 10 years after the largest tax cuts in history, the economy had shed 1.1 million jobs. It seems Pence's ax was put to the root of the American dream itself. [Check out editorial cartoons about the GOP.]
Given the historical and economic record, one has to ask: How can anyone take the GOP seriously, especially when they are playing fast and loose with economic disaster in service to a political philosophy that not even their main icon—Reagan—followed with such monomania?
Decrying the Clinton tax plan in 1993, Boehner recalled the quote: "Those who do not learn from history are doomed to repeat it." He went on, "It very appropriately applies to Congress today." That's one piece of rhetoric Boehner really should recycle. And learn from.