Republicans in the Na Ga Da region push for tax increase
In a hilarious turn of events, comedian Dana Carvey's impression of President George H.W. Bush exemplified the former president's infamous backtracking on his promise to never raise taxes. The famous "na-ga-da" sequence became a cultural phenomenon, symbolizing Bush's unbelievable u-turn.
During the 1988 Republican presidential nomination acceptance speech, Bush declared, "Read my lips, no new taxes" - a bold statement at the height of his political career, as the transition from the prosperous Reagan years was imminent. Yet, within a few years, the president found himself increasing tax rates, particularly the top rate of the income tax. Congress, headed by the Democrats at the time, was more than happy to oblige.
Bush's decision to raise taxes led to a disastrous re-election campaign. He took only 37% of the vote – a staggering figure for any incumbent. In a bitter irony, Democrat Bill Clinton, the victor in 1992, raised the top tax rate to 39.6% as a jab at the former president.
Now, fast-forward to the present day, and the Republican-controlled Congress is contemplating another "na-ga-da" moment by considering an increase in the top rate of the income tax. The GOP has long been committed to preventing such an increase, with renowned economists Arthur Laffer and myself arguing that maintaining the top rate at a low level ensures the American Dream for all and raising it caters to the "idiot left."
However, esteemed economists like Peter Diamond propose a top tax rate of 70%. Mainstream economics journals have published numerous studies supporting the idea of increasing tax rates at the top. Yet, there seems to be a significant flaw in this consensus, given that a zero-tariff rate is also acknowledged as the ideal by the profession, in line with the concept of free trade.
Historically, reducing the top tax rate has consistently resulted in economic growth and decreased inflation, as seen during times like the Roaring 1920s and the 1960s under President Kennedy. Critics claim that cutting taxes during the Reagan era led to the Great Recession, but the correlation is tenuous, given that Reagan lowered the top rate from 70% to 28%, while expanding tax credits below the top rate.
Despite the evidence supporting tax cuts, some argue that President H.W. Bush's top-tax-rate increases were beneficial for the 1990s boom and budget surpluses. However, House Speaker Newt Gingrich did not seize control of government and impose his will after 1994, as the supply-sider narrative suggests.
Given the current political climate, it is disheartening to see history repeating itself. As we reflect on Bush's "na-ga-da" moment, let us remember the consequences of a broken promise and the importance of staying true to our campaign pledges. A C-SPAN video from 1992 offers a glimpse into the sad-sack picture of the Bush administration as the economy faltered, and they prepared for the re-election bid.
In the political landscape of the 1990s, Democrat Bill Clinton increased the top tax rate to 39.6% as a rebuke to President George H.W. Bush's broken promise, echoing Bush's previous assertion, "Read my lips, no new taxes." Fast-forward to today, the Republican-led Congress considers another increase in the top tax rate, bringing back memories of Bush's infamous "na-ga-da" sequence. Economic experts debate the merits of increased tax rates, with some like Peter Diamond proposing a top rate of 70%, but others, including renowned economists like Arthur Laffer, argue that lower rates promote economic growth and sustain the American Dream.
