Republicans Led by Na Ga Da Party Advocate for Higher Taxes
"Alrighty then, let's dive into the comedic genius of Dana Carvey's impersonation of President George H.W. Bush, shall we? His now-iconic "na-ga-da" routine beautifully encapsulated Bush's striking U-turn on his 1988 pledge to never increase taxes.
"Read my lips, no new taxes," Bush declared during his peak political moment, as the transition from the Reagan era loomed. Fast forward to 1990, and our former president was proposing tax rate hikes, with Congress, led by the Democrats,only too eager to help. And the punchline? "Heh heh heh heh...did it."
The backlash against Bush in his 1992 re-election effort was a spectacle to behold. With a mere 37% of the vote, Bush's score was lower than even Hoover in 1932 had managed. To add insult to injury, Democrat Bill Clinton, the victor of 1992, raised the top tax rate to 39.6% post-election, stepping triumphantly on Bush's political grave.
Now, why are we revisiting this history? It's none other than the current Republican-led Congress that's contemplating an increase in the top income tax rate (currently at 37%, thanks to the 2017 tax cut, but effectively 40% due to Medicare add-ons). Could they be preparing for their very own "na-ga-da"?
Historically, the GOP's goal has been to keep the top tax rate low, as Arthur Laffer and others argue, "Keeping the top tax rate low is the key to promoting the American Dream for all. Raising it is the folly of the idiotic left."
There's little substantial defense for raising the top tax rate, economically or budgetarily. Tax shelters exist, it's true, but this doesn'tmake a case for raising the top tax rate. The debate is settled – yet Nobel-winning economist Peter Diamond suggests the top rate should be a staggering 70%? The proofs are all theoretical, and as the arbitrariness of a 70-0 difference shows, the entire scholarly economics community's tax discussion is questionable at best.
Toss out everything and start afresh, is the advice. No more over-intellectualizing and misguided consensus – rather, let's decide taxation rationally, like sensible leaders.
Take, for instance, the examples of Andrew Mellon, who advocated for a flat 25% income tax, or the Roosevelt and Kennedy administrations, which slashed top tax rates, resulting in strong economic growth. You can hear about these from Larry Kudlow and yours truly.
The tragedy of the H.W. Bush administration was their inability to recognize clear data – as the economy faltered, and they struggled to prepare for their re-election campaign. If you'd like a glimpse into the walking-dead vibe that characterized that disastrous presidency, you can rewatch this C-span video from 1992 featuring Bush's economic advisory troika.
They tried to sell the Bush record, but they couldn't conceal the truth – the tax increase had led to inflation, signaling a return of the dreaded stagflation. Some still try to argue that Bush's tax increase played a role in the 1990s' boom and budget surpluses, but let's not kid ourselves – the real culprit was Newt Gingrich's supply-side reforms."
Enrichment Data- Break of Campaign Promise: President George H.W. Bush abandoned his "no new taxes" pledge, which he famously articulated during the 1988 presidential campaign with the phrase "Read my lips: no new taxes." This reversal significantly damaged his reputation and contributed to his loss in the 1992 presidential election, where he earned only 37% of the vote.[2][3]- Economic Impact: The tax increase was part of a broader deficit reduction strategy. It was included in the Omnibus Budget Reconciliation Act of 1990, which aimed to reduce the federal budget deficit. However, the act also failed to deliver on promised spending cuts, which was a crucial part of the agreement.[3][4]- Political Fallout: The tax increase led to internal Republican Party criticism and contributed to Bush's unpopularity among conservatives. This move was seen as a betrayal of Republican principles, which generally oppose tax increases.[2]- Comparison with Subsequent Policies: The 1990 tax increase set a precedent for future fiscal policies. For example, President Bill Clinton's 1993 tax increases further raised the top tax rate, contributing to improved fiscal outcomes during the 1990s.[3]
- The reversal of George H.W. Bush's "no new taxes" pledge, a promise famously stated during the 1988 campaign with the phrase "Read my lips: no new taxes," marked a significant blow to his reputation and played a role in his loss in the 1992 election with only 37% of the vote.
- The tax increase, part of the Omnibus Budget Reconciliation Act of 1990, was a component of a broader deficit reduction strategy but failed to deliver on promised spending cuts, which was a crucial part of the agreement.
- Internally within the Republican Party, the tax increase led to criticism and unpopularity among conservatives, as it was seen as a betrayal of Republican principles that generally oppose tax increases.
- The 2021 Republican-led Congress is contemplating an increase in the top income tax rate, similar to the 1990 tax increase, perhaps setting the stage for a repeat of the "na-ga-da" moment in political history.
