Lessons Not Learned? "Grand Bargains" Don't Work

ATR ^ | 2012-06-11 | Mattie Duppler

[92nina]

Faced with the coming threat of the largest tax hike in history, commentators are salivating at the idea of another "grand bargain" that gets Republicans to agree to raise taxes on American families and employers. Any lawmaker willing to consider such a deal is poised to become another fool of history.

The 1990 Budget Deal: Starting May of 1990, President George H.W. Bush huddled with Democrat House and Senate members at Andrews Air Force Base.

• What was Promised: Congressional Democrats convinced a number of Republicans to join them in a bipartisan deal promising $2 in spending cuts for every $1 in tax increases. President Bush signed the deal on November 5, 1990.
• What Actually Happened: Every penny of the tax increases ($137 billion from 1991-1995) went through. Not only did the Democrats break their promise to cut spending below the CBO baseline by $274 billion—they actually spent $23 billion above CBO’s pre-budget deal spending baseline. 34 House Republicans broke their own Taxpayer Protection Pledges and went along with this one-sided “deal.” As a result, Republicans lost 8 seats in the 1990 Congressional midterms, and President Bush only received 38% of the vote in the 1992 Presidential election.

The 1982 Tax Equity and Fiscal Responsibility Act: Rather than bring spending in line with declining revenues, overspending and the resulting deficit caused widespread hysteria regarding the country’s fiscal health in 1982.

• What was Promised: President Reagan signed the deal on September 3, 1982, agreeing to a budget deal with Congressional Democrats that promised $3 in spending cuts for every $1 in tax hikes.
• What Actually Happened: The spending restraint never materialized – instead, the resulting tax hike made up almost 1 percent of GDP ($37.5 billion) and amounted to the largest peacetime tax increase in American history. Moral of the story: When bipartisan deals are struck promising to cut spending and raise taxes, the spending cuts don’t materialize but the tax hikes do.

Read more: http://atr.org/lessons-learned-grand-bargains-dont-work-a6950#ixzz1xaUpjBNo

[92nina]

History shows that budget deals premised on trading tax cuts for spending hikes don't work

Take this article and others I found to the fight to the Libs on their own turf; put the Left on the defensive at Digg and at Reddit and in Stumbleupon and Delicious

[Theoria]

'Faced with the coming threat of the largest tax hike in history'

Who keeps saying that? WWI and WWII the taxes were raised for some over 65%.

[Haiku Guy]

[Pollster1]

Let’s be optimistic here. I think this could work as well as the Arab-Israeli peace plans, where Israel gives up land in return for a promise of peace, if we close our eyes and really believe.

[92nina]

With WWI not sure...many people were still excluded from the Federal Income tax, but the rates certainly went up, so you’re right about taxes going up. (And a permanent Federal Death tax got established.)

But you’re absolutely correct about WWII being a huge tax hike, what with most people being added into the Federal Income tax, rising actual tax rates, withholding introduced, and other taxes. The author may have forgotten in this article to include “peacetime” to clarify. (Or if the economy is now so large, per dollar, it may be a larger tax hike?)

[Theoria]

Per dollar could be right. But, that of course is misleading. By percentage would be more accurate and truthful.

[SunkenCiv]

Thanks 92nina.

...commentators are salivating at the idea of another "grand bargain" that gets Republicans to agree to raise taxes on American families and employers.