Reagan's Tax Cuts Ended 80's Recession?

[Bolo Boffin]

Rush Limbaugh, among many of the things he spouted in his recent free time on CNN and Fox, said that Reagan got us out of the 1981-1982 recession with tax cuts. He got one of many standing ovations for that line.

Trouble is, that's not exactly true.



The US fiscal year is October - September. So first quarter is Oct-Dec, second is Jan-Mar, etc.

The 1981-1982 recession began in July 1981, which is 1981 4Q. It's easy to see on the graph. See where the line starts going down? 1981 Q4 is the first quarter in at least two in a row of GDP decline.

Reagan's tax cut bill, the one Limbaugh touted so highly, is was passed in August 1981, again 1981 Q4. But as you can see, the economy kept tanking. It stayed down and contracted until November 1982. Then up it went and the recession was over.

However, in August 1982, Reagan signed TEFRA, the Tax Equity and Fiscal Responsibility Act of 1982 -- also known as the "largest tax hike in history." It was two months after that record-breaking legislation that GDP recovered, growth began again, and the recession was over.

Now I don't want to commit a logical fallacy here. Perhaps TEFRA had nothing to do with ending the recession. But how the hell can Limbaugh claim that a bill passed over a year earlier -- having no apparent upward effect on the growth numbers -- fixed the recession?

He can't. Limbaugh is lying (or just doesn't know any better).

[havocmom]

1. Limbaugh & GOP pols don't care if it's true or not, they just wanna pertend tax cuts work

for every problem. Facts do not enter into any discussion for them.

[Bolo Boffin]

8. No, of course not

I didn't mean to imply any particular devotion to the truth by Limbaugh or his buddies. ;)

[havocmom]

10. Rush has buddies?

who knew? :shrug:

[Bolo Boffin]

16. lol

They certainly were clapping for him at the CPAC. :)

[rpannier]

2. I didn't realize the 80's fell into depression

nt

[bbinacan]

3. Do you have a souce link? n/t

[Bolo Boffin]

5. Yes

http://www.housingbubblebust.com/GDP/1981.html
http://en.wikipedia.org/wiki/Early_1980s_recession
http://www.google.com/url?sa=U&start=10&q=http://thomas.loc.gov/cgi-bin/bdquery/z%3Fd097:HR04961:%40%40%40L%257CTOM:/bss/d097query.html%257C&ei=P8-pSZTBNMTMnQeyhdXrDw&usg=AFQjCNGAGAAbOxKJL41ozOMtI3DfQnU4cg (that's THOMAS on TEFRA)
http://en.wikipedia.org/wiki/Economic_Recovery_Tax_Act_of_1981 (that's Reagan's tax cut)

[bbinacan]

14. Thanks. n/t

[edhopper]

4. The 1980s Recession

was induced by Paul Volcker to curb run away inflation. When the Feds felt inflation was in check, they lowered rates and turned the spigots on.
Reagan had nothing to do with it.

[Bolo Boffin]

6. I'm guessing

that this is connected to the reason the GDP didn't contract at all in current dollars, but did in 1981-2 dollars. Is that right?

[edhopper]

9. Pretty much

[spanone]

7. the republics abandoned any hint of truth years ago...thugs want to hear lies and they provide

[omega minimo]

11. Nothing Limbot says is true.

[rurallib]

12. The other fantasy I love is that W inherited a Clinton recession

IIRC (and I have no link) interest rates were cranked up by Greenspan to @ 9% to 'slow' a really hot economy. Couple that with the Enron game in California in March to May of 2001 that brought California business to its knees and - voila - recession. At least that is what I remember.

[creeksneakers2]

13. Same way with George W. Bush

Big tax cuts and terrible economic performance. Pop Bush raised taxes and the economy started to recover. Clinton raised them more and we had a fantastic economy.

Limbaugh and his kind know that if they tell the same lie over and over most people will believe it.

[roamer65]

15. Rash is telling lies again.

Volcker's lowering of interest rates, after his intentional murdering of the US economy via loan shark rates, is what finally brought us out of the 1982 recession.