Appearing on CSPAN’s Washington Journal this morning, Rep. Mike Pence (R-IN), the third ranking Republican in the House, repeatedly claimed that the solution to the economic crisis was to “do what Ronald Reagan did” and implement “across-the-board permanent marginal tax reductions.” Towards the end of his interview, however, a caller challenged Pence’s idea, saying that deficits exploded under Reagan, forcing the first President Bush to raise taxes.
Pence replied that the caller was right that Reagan “saw deficits and the national debt grow,” but claimed it was the fault of spending in Congress because Reagan’s tax cuts “resulted in more than a doubling of the revenues.” Pence then asked viewers to “check me on this”:
PENCE: You’re absolutely correct in saying that they saw deficits and the national debt grow under President Reagan, but it was — and check me on this, people can check things easily on the internet these days, check me on this — the rate reductions that President Reagan enacted resulted in more than a doubling of the revenues over the next seven years that went from the American people to the federal government.
As Media Matters noted when Sean Hannity made the same argument, revenues did not get close to doubling under Reagan:
According to the White House’s Office of Management and Budget (OMB), when adjusted for inflation to constant fiscal year 2000 dollars, receipts (revenues) increased only from $1.077 trillion to $1.236 trillion during Reagan’s term in office. Even in unadjusted (current) dollars, Hannity’s claim that revenues “doubled” to more than $1 trillion during the Reagan administration is false: From 1981 to 1988, revenues in current dollars increased from $599.3 billion to $909.3 billion.
Additionally, the Center on Budget and Policy Priorities (CBPP) has found that “Income tax receipts grew noticeably more slowly than usual in the 1980s, after the large cuts in individual and corporate income tax rates in 1981.” In contrast, “income tax collections grew much more rapidly in the 1990s,” when “marginal income tax rates at the top of the income spectrum were raised,” wrote CBPP.
CALLER: Good Morning. I’m a little nervous. I watch your program every morning and I’d like to ask the Congressman a question. Regard…you mentioned Ronald Reagan’s tax cuts and you mentioned it again. You mentioned Ronald Reagan’s tax cuts.
CALLER: And that it was also the greatest deficit spending that we had up until that time. Subsequent to that, George Bush, when he was elected, was required to raise taxes to pay for federal government and programs. How do you explain that? You remember “no new taxes?” And that’s why when Clinton ran against him, that’s why George, the Republican party lost to Clinton subsequent to that.
PENCE: Yeah, it’s really a fair question. But let me say, I don’t want to be partisan about this. I think John F. Kennedy was right in the 1960s when he cut marginal tax rates and got the economy rolling again. I think Ronald Reagan was right when he cut marginal tax rates across the board for upper income Americans and lower income Americans in the early 1980s and got the economy working again. But it’s got to be married to fiscal discipline.
To the caller’s point from Illinois, you’re absolutely correct in saying that they saw deficits and the national debt grow under President Reagan, but it was — and check me on this, people can check things easily on the internet these days, check me on this — the rate reductions that President Reagan enacted resulted in more than a doubling of the revenues over the next seven years that went from the American people to the federal government. But then a liberal Democrat Congress managed to outspend more than a doubling of what we were sending to Washington DC and that put George Herbert Walker Bush in a position, which I didn’t agree with at the time and still don’t, of raising taxes on the American people to deal with this deficits. But I really do believe that a combination of fiscal discipline and a combination of across the board, permanent pro-growth tax relief is the prescription for a healthy American economy and a healthy American economy and a vibrant public sector and ultimately putting Americans back to work.