Reagan's Revolution, Plus 10

GEORGE F. WILL

August 19, 1991|By GEORGE F. WILL

WASHINGTON — Washington. -- Dueling pistols -- Clay was wounded and Hamilton was killed by such pistols -- have been supplanted by dueling calculators in political disputes. Today, blazing calculators are disgorging ammunition for arguments about the effects of the Reagan tax cuts passed 10 years ago this month.

Is this or that group better off than it was? Or than it would have been if things had stayed as they were (which things never do)? Or relative to this or that group? Such micro-questions should yield to a few macro-facts.

If the Democratic Party stands for anything, it is job creation and low inflation. Until Jimmy Carter's double-digit inflation, Democrats were vocal about inflation being a cruel tax on the poor, who devote a high proportion of their income to consumption. Indisputably, Ronald Reagan's tax cuts coincided with (let others argue about causation) sharply declining inflation and prodigious job creation.

In his new edition of ''The Almanac of American Politics,'' Michael Barone notes that in the 1980s population increased 10 percent but the number of Americans employed increased 20 percent. Labor force participation reached 66 percent, a record level exceeding even that of World War II.

Democrats respond with four complaints.

They say many new jobs are low-skill and not ''meaningful.'' (This, from members of Congress?) What, then, of the Democrats' correct complaint that American education is not meeting the high-skill needs of the new economy? In fact, the Bureau of Labor Statistics reports that high-skill jobs have increased much faster than low-skill jobs.

Second, Democrats say income distribution has become less equal. But this started in the mid-1970s, before the Reagan Terror, and slowed when the nation's longest peacetime expansion began in 1983.

Third, Democrats say the tax cuts unleashed gluttonous consumption, thus under-investment and thus the demise of manufacturing. But manufacturing today provides the same percentage of GNP as 20 years ago.

Fourth, Democrats say the deficit is a menace. True, but Democrats are unconvincing when they wave old Robert Taft banners about balanced budgets.

The tax cuts of August 1981, were echoes of June 1978, when Californians passed Proposition 13, slashing property taxes. Opposition to Proposition 13 had been led by public employee unions -- government stepping forward as an aggressive interest group.

By the late 1970s, taxes were a big issue because of the -- how soon we forget -- biggest issue: inflation. It produced ''bracket-creep,'' floating taxpayers into higher brackets. This produced revenues Democrats needed so they could continue the game of giving periodic tax cuts and counting on inflation silently to erase them.

By the time the crucial congressional vote came 10 Augusts ago, the choice was between Mr. Reagan's tax cut and the Democrats' quite similar cut. So similar were the two, Mr. Reagan belatedly embraced indexation of the tax code. Hence he could say in his address to the nation: If you are only going to live two more years, the Democrats' bill is better.

Mr. Reagan's tax cuts reflected Republican macro-thought: stress national strength, stimulate the economy and let growth dampen demands for government preferences for particular groups. Today Democrats are still addicted to micro-thoughts. Mr. Barone notes that the Democratic National Committee's response to Desert Storm was a resolution that barely mentions the victory, ''singles out black and Latino troops for special praise and treats the troops as victims -- in need of special government programs -- rather than heroes.''

Mr. Barone also notes that the last time Democrats won an impressive presidential victory 1964 -- was before LBJ passed the Great Society legislation. His landslide followed two large legislative achievements -- a civil rights bill that banned quotas and a tax cut.

For Mr. Reagan, cutting taxes was a win-win proposition. The cuts might be self-financing, recouping revenue through economic growth. If not, deficits would stall domestic initiatives, the Democrats' strength, and would make foreign policy, the Republicans' strength, everything. One result is: George Bush, President of Cyprus.

But real conservatives respect the law of unintended consequences; it is one reason they are conservative. The law is: The unintended consequences of large governmental acts are apt to be larger than and contrary to the intended consequences. Mr. Reagan's tax cuts confirm the law.

When the deficits that coincided with (again, never mind arguments about causation) the tax cuts soared past $200 billion with low inflation and steady growth, the political class, Republicans as well as Democrats, came to a radical conclusion: There are no restraining rules.

Today a deficit of merely $200 billion is a utopian goal. The fiscal 1992 deficit, honestly calculated, approaches $500 billion. Government spending is less restrained than ever in history. Happy birthday, Reagan revolution.

George F. Will is a syndicated columnist.

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