Sunday, April 12, 2015

Bogus claims for Reagan tax-cut benefits get Rand Paul three 'Pinocchios'. Mister Geppetto gears up

Rss@dailykos.com (meteor Blades)
Friday, April 10, 2015, 4:37 pm
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pants on fire
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Glenn Kessler of The Washington Post's Fact Checker has been known to miss the mark, but he hit a bullseye Friday in his takedown of this Rand Paul statement in aninterview with Sean Hannity earlier in the week:
“The last president we had was Ronald Reagan that said we’re going to dramatically cut tax rates. And guess what? More revenue came in, but tens of millions of jobs were created.”
For that he gets three of Fact Checker's "Pinocchios" for...uh...stretching the truth.
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Take the easy one first. When Reagan began his presidency, there were 90.9 million jobs. When he left, there were 106.9 million. A 16 million gain, 2 million a year. During President Bill Clinton's two terms, 23.1 million new jobs were created, so he could legitimately claim "tens of millions." But Reagan can't. In fact, during President Jimmy Carter's single term, 2.6 million jobs a year were created. If he had been reelected and kept up that pace, he could also have claimed tens of millions. Even libertarian math can't say the same for Reagan.
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The impact of the tax cuts was more complicated. Yes, revenue went up during the Reagan years. But in addition to tax cuts, Reagan raised taxes four times. Stephen Moore—a "distinguished visiting fellow" at the Heritage Foundation that a Paul aide pointed to—included the $137 billion in extra revenue those tax increases created in his analysis of what the tax cuts achieved. Thus, although revenue rose from $517 billion in 1980 to $909 billion in 1988 (a 25 percent increase when adjusted for inflation), tax increases generated more than a third of that rise. And, as Kessler notes, there's missing context in Moore's claim:
First of all, revenues as a percentage of gross domestic product (GDP), which is the best way to compare across years, dropped from 19.1 percent in 1981 to a low of 16.9 percent in 1984, before rebounding slightly to 17.8 percent in 1989. One reason the deficit soared during Reagan’s term is because spending went up as a share of the economy and revenues went down.
But we can get even more specific about the impact of the 1981 cut in rates. A Treasury Department study on the impact of tax bills since 1940, first released in 2006 and later updated, found that the 1981 tax cut reduced revenues by $208 billion in its first four years. (These figures are rendered in constant 2012 dollars.) The tax reform act of 1986, which was designed to be revenue neutral, reduced revenues by less than $1 billion four years after enactment.
It's just the beginning of the presidential campaigns, but I suspect Mister Geppetto will be going 24/7 to carve new Pinocchios for the next 19 months.

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