Latest / BOB DOLE : 1995 Clinton's Comeback / Episode 445 BOB DOLE The Life that Brought Him There (Part 26) The 1981 Tax Bill - TEFRA- and Ronald Reagan

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Episode 445 BOB DOLE The Life that Brought Him There (Part 26) The 1981 Tax Bill - TEFRA- and Ronald Reagan · BOB DOLE : 1995 Clinton's Comeback

• 0:26
  SPEAKER_02: And suddenly Bob Dole is chairman of the Finance Committee.
• 0:30
  SPEAKER_02: And I mean, I because I was around then and I I remember hearing him uh talk about the difference between being in the minority when all you had to do was put out press releases.
• 0:43
  SPEAKER_02: And now all of a sudden there's this kind of sobering reality that sets in that you're responsible.
• 0:50
  SPEAKER_05: And I thought Bob made one major mistake in 1981-82 on the original tax bills.
• 0:56
  SPEAKER_05: He excluded the Democrats.
• 0:58
  SPEAKER_05: By and large, it was a Republican effort.
• 1:00
  SPEAKER_05: And was that a deliberate choice?
• 1:02
  SPEAKER_05: Really?
• 1:03
  SPEAKER_05: And why do you think that's a good thing?
• 1:04
  SPEAKER_05: I don't know why.
• 1:04
  SPEAKER_05: And I thought it was a mistake, and I told him at the time I thought it was a mistake.
• 1:08
  SPEAKER_05: Because first we didn't have that big a margin.
• 1:11
  SPEAKER_05: Uh uh in uh sorry called the committee made made 11-9.
• 1:15
  SPEAKER_05: Uh but I said, you know, Harry Byrd before Russell Long never did it, and we ran on a bipartisan basis.
• 1:23
  SPEAKER_05: And you can get an awful lot out of it.
• 1:26
  SPEAKER_05: I mean, the Democrats were not liberal.
• 1:29
  SPEAKER_05: When you start going down the line, you had Russell, you had David Borin.
• 1:33
  SPEAKER_05: Uh trying to think he had Max Baucus, who was not uh at all that liberal.
• 1:37
  SPEAKER_05: I mean, you had uh any number of people he could get on things, but he he excluded them.
• 1:42
  SPEAKER_05: And uh the final not so much on the hearings, but kind of the way the Democrats in the House excluded the Republicans on the Ways and Means Committee for years and years.
• 2:20
  SPEAKER_09: But the immediacy of congressional action on the tax program, a key component of our economic package, has to take priority.
• 2:28
  SPEAKER_09: Now, the day after tomorrow, Wednesday, the House of Representatives will begin debate on two tax bills, and once again, they need to hear from you.
• 2:38
  SPEAKER_09: I know that doesn't give you much time, but a great deal is at stake.
• 2:42
  SPEAKER_09: A few days ago, I was visited here in the office by a Democratic congressman from one of our southern states.
• 2:50
  SPEAKER_09: He'd been back in his district, and one day one of his constituents asked him where he stood on our economic recovery program.
• 2:59
  SPEAKER_09: I'd outlined that program in an earlier broadcast, particularly the tax cut.
• 3:05
  SPEAKER_09: Well, the congressman, who happens to be a strong leader in support of our program, replied at some length with a discussion of the technical points involved, but he also mentioned a few reservations he had on certain points.
• 3:18
  SPEAKER_09: The constituent, a farmer, listened politely until he'd finished, and then he said, Don't give me an essay.
• 3:25
  SPEAKER_09: What I want to know is, are you for him or again him?
• 3:29
  SPEAKER_09: Well, I appreciate the gentleman's support and suggest his questions a message your own representatives should hear.
• 3:36
  SPEAKER_09: Let me add, those representatives honestly and sincerely want to know your feelings.
• 3:41
  SPEAKER_09: They get plenty of input from the special interest groups.
• 3:45
  SPEAKER_09: They like to hear from their home folks.
• 3:48
  SPEAKER_09: The committee bill offers a 15% cut over two years.
• 3:54
  SPEAKER_09: Our bipartisan bill gives a 25% reduction over three years.
• 3:59
  SPEAKER_09: Now, as you can see by this chart, there is the 22% tax increase.
• 4:14
  SPEAKER_09: Wipes out that increase and with a little despair.
• 4:23
  SPEAKER_09: That is the 15% tax cut, and it still leaves you with an increase.
• 4:28
  SPEAKER_09: The green column is our bipartisan bill, which wipes out the tax increase and gives you an ongoing cut.
• 4:36
  SPEAKER_09: Incidentally, their claim that cutting taxes for individuals for as much as three years ahead is risky rings a little hollow when you realize that their bill calls for business tax cuts each year for seven years ahead.
• 4:51
  SPEAKER_09: It rings even more hollow when you consider the fact the majority leadership routinely endorses federal spending bills that project years into the future, but objects to a tax bill that will return your money over a three-year period.
• 5:07
  SPEAKER_09: Now, here is another chart which illustrates what I said about their giving a better break if you only intend to live for two more years.
• 5:14
  SPEAKER_09: Their tax cut, so-called, is the dotted line.
• 5:19
  SPEAKER_09: Ours is the solid line.
• 5:22
  SPEAKER_09: As you can see, in an earning bracket of$20,000, their tax cut is slightly more generous than ours for the first two years.
• 5:33
  SPEAKER_09: Then, as you can see, their tax bill, the dotted line, starts going up and up and up.
• 5:41
  SPEAKER_09: On the other hand, in our bipartisan tax bill, the solid line, our tax cut, keeps on going down and then stays down permanently.
• 5:52
  SPEAKER_09: This is true of all earning brackets, not just the$20,000 level that I've used as an example, from the lowest to the highest.
• 6:00
  SPEAKER_09: This red space between the two lines is the tax money that will remain in your pockets if our bill passes, and it's the amount that will leave your pockets if their tax bill is passed.
• 6:14
  SPEAKER_09: I take no pleasure in saying this.
• 6:17
  SPEAKER_09: But those who will seek to defeat our comable hands bipartisan bill, as debate begins Wednesday, are the ones who have given us five quote-unquote tax cuts in the last ten years.
• 6:29
  SPEAKER_09: But our taxes went up$400 billion in those same ten years.
• 6:35
  SPEAKER_09: The lines on these charts say a lot about who's really fighting for whom.
• 6:40
  SPEAKER_09: On the one hand, you see a genuine and lasting commitment to the future of working Americans.
• 6:45
  SPEAKER_09: On the other, just another empty promise.
• 6:49
  SPEAKER_01: Welcome everybody.
• 6:50
  SPEAKER_01: This is Randall Wallace, and this edition is going to look at the 1981 tax bill.
• 6:55
  SPEAKER_01: You just heard uh Bob Packwood talking about uh Bob Dole's management of that bill to start with, and then President Reagan's address.
• 7:05
  SPEAKER_01: This is about the second one, I think, on the subject.
• 7:07
  SPEAKER_01: On the legislation because they're about to vote on it at the time in July of 1981.
• 7:15
  SPEAKER_01: Uh and we're gonna look at this because uh this was a two-prong situation in 1981.
• 7:22
  SPEAKER_01: He's gonna do the big tax cuts, and the economy's still gonna tank.
• 7:26
  SPEAKER_01: And so the next year they'll come back with TEFRA, which was the uh the the bill that is sort of like the next thing they do to try to overcorrect for what happened in 81.
• 7:38
  SPEAKER_01: And people forget just how tough the economy was in 81, 82, and part of 83 under Ronald Reagan, because of course his policies led to one of the biggest booms economically that the country had ever seen.
• 7:54
  SPEAKER_01: He was re-elected 49 states in 49 states overwhelmingly, and people forget uh just what a struggle the beginning of his administration was.
• 8:03
  SPEAKER_01: So we're gonna take a look back from the American experience on Reagan about this period of time so that we get you in the right mindset as we listen to how this 1981 bill came together and then the TEFRA bill right behind it the next year.
• 8:19
  SPEAKER_10: As the recession deepened through 1982, its effects were felt across America.
• 8:30
  SPEAKER_10: Farmers were driven off their land by high interest rates.
• 8:37
  SPEAKER_10: In the cities, homelessness became a scandal.
• 8:44
  SPEAKER_10: Thousands of businesses failed.
• 8:51
  SPEAKER_10: Unemployment reached its highest level since the Great Depression.
• 9:03
  SPEAKER_10: Not only for the country and people who were out of work, but for help and guidance in doing the right thing.
• 9:14
  SPEAKER_10: Pressure on Reagan to change course mounted.
• 9:17
  SPEAKER_10: His program, now derided as Reaganomics, had not only failed to produce growth, but was leading the nation into fiscal disaster.
• 9:27
  SPEAKER_10: We are really in trouble, Reagan confided to his diary.
• 9:31
  SPEAKER_10: Our projections are out the window.
• 9:35
  SPEAKER_10: We look at$200 million deficits if we can't pull off some miracles.
• 9:41
  SPEAKER_10: Even true believers were disillusioned.
• 9:43
  SPEAKER_10: David Stockman, tired of arguing for cuts, now urged the president to raise taxes.
• 9:51
  SPEAKER_10: Reagan wrote columnists to Evans and Novak, was having to fight two-thirds of his administration to save his economic program.
• 10:09
  SPEAKER_02: But he came to office imbued with a conviction that less government and lower taxes would resolve the pervasive sickness of the American economy.
• 10:21
  SPEAKER_02: And what he saw 1982 as was the fever that was about to break.
• 10:29
  SPEAKER_10: Reagan stayed the course.
• 10:42
  SPEAKER_10: But the American people were losing faith in Ronald Reagan.
• 10:45
  SPEAKER_02: Now he was not a supply cider.
• 10:48
  SPEAKER_05: No, neither was I at the time.
• 10:50
  SPEAKER_05: Right.
• 10:50
  SPEAKER_05: That's correct.
• 10:52
  SPEAKER_05: I can remember Bob on balance budget, balance budget, balanced budget.
• 10:56
  SPEAKER_02: I mean, was there any there must have been some sort of maybe if only a creative tension internally between the kind of the orthodox faith and this new religion uh being brought in by although you recall as soon as the recession started, we end up raising taxes again that next year.
• 11:19
  SPEAKER_05: Yeah, the next year, yeah.
• 11:21
  SPEAKER_05: Which which is not something Jack Kemp wanted to do.
• 11:24
  SPEAKER_05: But the supply siders were just starting to gain control.
• 11:31
  SPEAKER_05: Literally, they had been academics during the Democrat reign and during the Carter reign.
• 11:37
  SPEAKER_05: And they didn't they didn't have a stronghold.
• 11:39
  SPEAKER_05: I can remember Kemp coming to me long before he went to Roth and wanting me to co-sponsor his camp, whoever was going to be with him, Camp Roth had as Roth would call it, the Roth camp bill.
• 11:52
  SPEAKER_05: But the supply siders hadn't yet gained the credence, and it may be wrong credence, haven't gained the credence that they did subsequently.
• 12:04
  SPEAKER_02: That 81 bill.
• 12:06
  SPEAKER_02: Um first of all, how much I realize it's speculative.
• 12:13
  SPEAKER_02: The impact of Reagan, the the assassination attempt on Reagan, and and the the aura that grew out of that, how much did that increase the president's power?
• 12:24
  SPEAKER_05: Tremendously.
• 12:25
  SPEAKER_05: Especially the way he handled it, you know.
• 12:27
  SPEAKER_05: Saying to the doctors, I hope you're all Republicans.
• 12:30
  SPEAKER_05: Yeah.
• 12:34
  SPEAKER_09: You wouldn't want to talk me into an encore, would you?
• 12:40
  SPEAKER_09: Mr.
• 12:40
  SPEAKER_09: Speaker, Mr.
• 12:42
  SPEAKER_09: President, distinguished members of the Congress, honored guests, and fellow citizens.
• 12:49
  SPEAKER_09: I have no words to express my appreciation for that greeting.
• 13:07
  SPEAKER_09: I have come to speak to you tonight about our economic recovery program and why I believe it's essential that the Congress approve this package, which I believe will lift the crushing burden of inflation off of our citizens and restore the vitality to our economy and our industrial machine.
• 13:27
  SPEAKER_09: First, however, and due to events of the past few weeks, will you permit me to digress for a moment from the all-important subject of why we must bring government spending under control and reduce tax rates, I'd like to say a few words directly to all of you and to those who are watching and listening tonight, because this is the only way I know to express to all of you on behalf of Nancy and myself our appreciation for your messages, your flowers, and most of all, your prayers, not only for me, but for those others who fell beside me.
• 14:10
  SPEAKER_09: The warmth of your words, the expression of friendship, and yes, love meant more to us than you can ever know.
• 14:19
  SPEAKER_09: You have given us a memory that we'll treasure forever.
• 14:23
  SPEAKER_09: And you have provided an answer to those few voices that were raised saying that what happened was evidence that ours is a sick society.
• 14:34
  SPEAKER_09: The society we heard from is made up of millions of compassionate Americans and their children from college age to kindergarten.
• 14:42
  SPEAKER_09: As a matter of fact, as evidence of that, I have a letter with me.
• 14:47
  SPEAKER_09: Letter came from Peter Sweeney.
• 14:49
  SPEAKER_09: He's in the second grade in the Riverside School in Rockville Central.
• 14:53
  SPEAKER_09: And he said, I hope you get well quick, or you might have to make a speech in your pajamas.
• 15:18
  SPEAKER_09: If you have to make a speech in your pajamas, I warn you.
• 15:27
  SPEAKER_09: Well sex societies don't produce men like the two who recently returned from outer space.
• 15:36
  SPEAKER_09: Sex societies don't produce young men like Secret Service Agent Tim McCarthy.
• 15:41
  SPEAKER_09: The place is body.
• 16:44
  SPEAKER_09: So proud to be Americans and so very proud of our fellow citizens.
• 16:50
  SPEAKER_09: Now, let's talk about getting spending and inflation under control and cutting your tax rates.
• 16:57
  SPEAKER_09: Mr.
• 16:58
  SPEAKER_09: Speaker and Senator Baker, I want to thank you for your cooperation in helping to arrange this joint session of the Congress.
• 17:05
  SPEAKER_09: I won't be speaking to you very long tonight, but I asked for this meeting because the urgency of our joint mission has not changed.
• 17:14
  SPEAKER_09: Thanks to some very fine people, my my health is much improved.
• 17:18
  SPEAKER_09: I'd like to be able to say that with regard to the health of the economy.
• 17:22
  SPEAKER_09: It's been half a year since the election that charged all of us in this government with the task of restoring our economy.
• 17:31
  SPEAKER_09: Where have we come in these six months?
• 17:33
  SPEAKER_09: Inflation, as measured by the consumer price index, has continued at a double-digit rate.
• 17:39
  SPEAKER_09: Mortgage interest rates have averaged almost 15% for these six months, preventing families across America from buying homes.
• 17:46
  SPEAKER_09: There are still million unemployment.
• 17:49
  SPEAKER_01: Ronald Reagan was on his way.
• 18:07
  SPEAKER_02: Now remember so in 81, apparently, I mean a bidding war breaks out in terms of tax cuts.
• 18:12
  SPEAKER_05: Oh God, yes.
• 18:17
  SPEAKER_05: The House makes the President's bill worse, or more.
• 18:20
  SPEAKER_05: The Senate now makes it more than the House, and now we go to conference and damn near make it more than everything put together.
• 18:28
  SPEAKER_05: That was that was the bidding war.
• 18:30
  SPEAKER_05: I mean, we we had one wheel.
• 18:32
  SPEAKER_05: I don't think it was called 1053.
• 18:34
  SPEAKER_05: I don't think it passed.
• 18:35
  SPEAKER_05: I mean in that form.
• 18:37
  SPEAKER_05: Depreciate buildings over ten years, cars over uh uh uh equipment over five and cars over three, depreciate them to zero.
• 18:44
  SPEAKER_05: I mean, buildings last more than ten years.
• 18:47
  SPEAKER_05: But that was one of the this was the big capital formation was critical.
• 18:51
  SPEAKER_05: We need to increase our savings rate and we need to increase our investment rate.
• 18:55
  SPEAKER_05: And that was the big push.
• 18:58
  SPEAKER_07: The only thing I remember about the tax bill of 81 is I was a advocate along with Senator Armstrong with indexing the tax rates so we didn't have the uh the pan of taxation coming in from inflation.
• 19:13
  SPEAKER_07: Uh and uh probably uh not so much problems with Dole, but problems with Reagan.
• 19:19
  SPEAKER_07: Now, can you believe it?
• 19:20
  SPEAKER_07: Reagan didn't want to do that.
• 19:21
  SPEAKER_07: Armstrong and I went down and I guess we went down until Reagan was going to do it.
• 19:27
  SPEAKER_07: And he he tried to talk as he said you ought to do that a little bit later.
• 19:30
  SPEAKER_07: Now maybe Bob Dole was of the same opinion, but I don't know that.
• 19:34
  SPEAKER_07: But we got indexing it and it's still there.
• 19:37
  SPEAKER_07: And uh and uh I believe that I believe that uh the tax bill of 81 went further than it did because of the movement of of camp and uh and uh uh camp and off, yes, you know, for the two years, maybe three years before that.
• 20:04
  SPEAKER_07: So I think you you gotta look at not just Bob Dole in the 81 text, but you gotta see the movement of camp off prior to that.
• 20:13
  SPEAKER_07: Didn't include indexing.
• 20:15
  SPEAKER_07: It was almost I don't know that Bob Dole would have had this opinion, and I'm not sure that I was a camp off person, but with the election turned out the way it was, I think it was seen as a opportunity.
• 20:28
  SPEAKER_07: And I think Bob Dole, being chairman of the committee, felt taxes, something needed to be done in taxes, and you obviously had the president of the United States on your side.
• 20:37
  SPEAKER_07: So it didn't boil down to how much to do, uh, but uh but the extent to to getting something done that Republicans had stood for for a long period of time.
• 20:53
  SPEAKER_01: The ramifications of that tax cut and and the and really frankly, the Democrats not willing to cut spending were massive deficits, and the economy, of course, uh did not turn around.
• 21:06
  SPEAKER_01: So in 1982, this this uh recession now is really deepening, and Reagan is struggling, as we showed you, as we let you listen to on the American Experience.
• 21:16
  SPEAKER_01: And that's when uh the Tax Equity and Fiscal Responsibility Act of 1982 comes up.
• 21:24
  SPEAKER_01: I'm just gonna read to you from Wikipedia a little bit that the Tax Equity and Fiscal Responsibility Act of 1982, also known as TEFRA, is the United States federal law that rescinded some of the effects of the Kemp Roth Act passed the year before.
• 21:40
  SPEAKER_01: Between the summer of 1981 and the summer of 1982, tax revenue fell by about 6% in real terms, caused by the dual effects of the economy dipping back into recession, the second dip of the double dip recession, and Kemp Roth's reduction in tax rates, and the deficit was likewise rising rapidly because of the fall in revenue and the rise in government expenditures.
• 22:03
  SPEAKER_01: The rapid rise in the budget deficit created concern among many in Congress.
• 22:08
  SPEAKER_01: TEFRA was created to reduce the budget gap by generating revenue through closure of tax loopholes, introduction of tougher enforcement of tax rules, and rescinding some of the Kemp Roth reductions in marginal personal income tax rates.
• 22:25
  SPEAKER_01: That had not yet gone into effect and raising some rates, especially corporate rates.
• 22:30
  SPEAKER_01: Tephra was introduced November 13th of 1981 and was sponsored by U.S.
• 22:36
  SPEAKER_01: rep Peter Stark of California.
• 22:39
  SPEAKER_01: After a lot of deliberation, the final version was signed by President Ronald Reagan on September 3rd of 1982.
• 22:47
  SPEAKER_09: My fellow Americans, there's an old saying we've all heard a thousand times about the weather and how everyone talks about it, but no one does anything about it.
• 22:56
  SPEAKER_09: Well, many of you must be feeling that way about the present state of our economy.
• 23:00
  SPEAKER_09: Certainly there's a lot of talk about it, but I want you to know we're doing something about it.
• 23:06
  SPEAKER_09: And the reason I wanted to talk to you is because you can help us do something about it.
• 23:11
  SPEAKER_09: Believe me, if some of you are confused, I can understand why.
• 23:15
  SPEAKER_09: For some time, ever since we started planning the 1983 budget for the fiscal year beginning this coming October 1st, there's been a steady drumbeat of quote-unquote reports on what we're supposed to be doing.
• 23:29
  SPEAKER_09: I know you've read and heard on the news a variety of statements attributed to various, quote, authoritative government sources who prefer not to have their names used, unquote.
• 23:38
  SPEAKER_09: Well, you know my name, and I think I'm an authoritative source on this since I'm right in the middle of what's going on here.
• 23:46
  SPEAKER_09: So I'd like to set the record straight on a few of the things that you might have heard lately.
• 23:51
  SPEAKER_09: I'm sure you've heard that we're proposing the largest single tax increase in history.
• 23:57
  SPEAKER_09: The truth is we're proposing nothing of the kind.
• 24:01
  SPEAKER_09: And then there's the one that our economic recovery program has failed, so I've abandoned it and turned to increasing taxes instead of trying to reduce federal spending, unquote.
• 24:11
  SPEAKER_09: Well, don't you believe that one either?
• 24:13
  SPEAKER_09: Yes, there is a tax bill before the Congress tied to a program of further cuts in spending.
• 24:19
  SPEAKER_09: It is not, however, the greatest single tax increase in history.
• 24:23
  SPEAKER_09: Possibly it could be called the greatest tax reform in history, but it absolutely does not represent any reversal of policy or philosophy on the part of this administration or this president.
• 24:36
  SPEAKER_09: Now you may have heard that some special interests oppose this bill.
• 24:40
  SPEAKER_09: And that's right, some do.
• 24:43
  SPEAKER_09: As a matter of fact, some in the Congress of my own party object to this bill, and strongly.
• 24:49
  SPEAKER_09: I'm told by many that this bill is not politically popular and it may not be.
• 24:54
  SPEAKER_09: Why then do I support it?
• 24:57
  SPEAKER_09: I support it because it's right for America.
• 25:00
  SPEAKER_09: I support it because it's fair.
• 25:02
  SPEAKER_09: I support it because it will, when combined with our cuts in government spending, reduce interest rates and put more Americans back to work again.
• 25:11
  SPEAKER_09: Now you'll recall that when our administration came into office a year ago last January, we announced a plan for economic recovery.
• 25:19
  SPEAKER_09: Recovery from what?
• 25:21
  SPEAKER_09: From a 1980 recession that saw inflation in double-digit figures for the second year in a row.
• 25:28
  SPEAKER_09: It was 12.4% when we arrived.
• 25:31
  SPEAKER_09: Interest rates had gone into outer space.
• 25:34
  SPEAKER_09: They were at the highest they've been in a hundred years, with a prime rate that hit 21.5%.
• 25:39
  SPEAKER_09: There were almost 8 million Americans out of work.
• 25:42
  SPEAKER_09: And in several hard-hit industrial states, there already were pockets of unemployment reaching figures of 15, 18, and even 20%.
• 25:51
  SPEAKER_09: I went to those areas.
• 25:52
  SPEAKER_09: I know.
• 25:53
  SPEAKER_09: The cost of government was increasing at a rate of 17% a year.
• 25:58
  SPEAKER_09: There was little we could do about the budget already in place, but we could do something about the one that had been proposed for the fiscal year beginning in October of our first year.
• 26:07
  SPEAKER_09: The measure that Congress is about to vote on, while not perfect in the eyes of any one of us, will bring us closer to the goal of a balanced budget, restored industrial power, and employment for all who want to work.
• 26:22
  SPEAKER_09: Together, we can reach that goal.
• 26:26
  SPEAKER_09: Thank you.
• 26:58
  SPEAKER_08: This is a copy of the conference report.
• 27:03
  SPEAKER_08: This is a copy of the bill that the Senate worked on.
• 27:09
  SPEAKER_08: And then of course the bill passed by the Senate is even larger, so I don't want to surprise anybody here.
• 27:14
  SPEAKER_08: But I just suggest we've got a lot of work to do.
• 27:17
  SPEAKER_08: And uh we we think we we uh we did the right thing.
• 27:22
  SPEAKER_08: Let me just back up and give everybody a little perspective.
• 27:25
  SPEAKER_08: Um I think you almost have to consider what we did last year in 1981, and the the greatest or largest uh most massive tax cut in history, along with what we did this year.
• 27:37
  SPEAKER_08: I think you sort of have to pull the two together.
• 27:40
  SPEAKER_08: And they make a great deal of sense.
• 27:41
  SPEAKER_08: What we did this year was to change some of the provisions, which were a bit too generous last year, CRS in some of those areas.
• 27:49
  SPEAKER_08: We also made some changes that should have been made in my view.
• 27:53
  SPEAKER_08: Um the past several years closing up certain loopholes and tightening up compliance.
• 27:59
  SPEAKER_08: But let's let's face it, uh we just didn't meet the Senate and Means Committee and say, well, we ought to raise a hundred million dollars.
• 28:06
  SPEAKER_08: It doesn't work that way.
• 28:08
  SPEAKER_08: I remember the last night of the conference that we've been up all night the night before, and this was about 2 a.m.
• 28:14
  SPEAKER_08: When the chairman of the Ways and Means Committee, Dan Rostinkowski, said he was making a very nice flattering statement about me saying uh this is something for which you'll long be remembered.
• 28:23
  SPEAKER_08: And I said, Yeah, I'm afraid of that, and it sort of broke up the place.
• 28:27
  SPEAKER_07: Now, when it comes to uh TEFRA, that's the name of the 82 bill, I believe, TEFRA.
• 28:36
  SPEAKER_07: Uh I believe that that uh that uh the the tax bill of she no, I think she she's going to get it.
• 28:46
  SPEAKER_07: I don't when it comes to the tax bill of 82 and the No, I better start over again.
• 28:57
  SPEAKER_07: When it comes to the tax bill of 81 and the loss of revenue, yeah, it was seen that too much was done maybe for business and corporations in the 81 tax bill.
• 29:09
  SPEAKER_07: But uh also we had the tremendous recession that nobody anticipated.
• 29:15
  SPEAKER_07: Eventually, I think 12 percent unemployment for a short period of time.
• 29:20
  SPEAKER_07: And uh and we would have had a decline in income regardless, and I'm not so sure but what the tax bill of 81 didn't get more blame, but we were still in this frame of mind that uh that you you you you lower tax rates, you cut income into the Federal Treasury.
• 29:40
  SPEAKER_07: And you lower and you raise tax rates, you bring in more money.
• 29:43
  SPEAKER_07: Well now, here we are in 2007.
• 29:46
  SPEAKER_07: We've got the history of 2004, 5, 6, and 7.
• 29:49
  SPEAKER_07: We got a Greenspan telling us that we that we have uh uh that that the tax bill is 2001 and 2003 revitalized the economy, created seven or eight tenths million new jobs, got three-quarters of a billion dollars more coming into the Federal Treasury the last three years than what we did uh what we anticipated we might have at this point, all related to uh the fact that uh uh that the that tax uh tax policy has good consequences.
• 30:19
  SPEAKER_07: See?
• 30:20
  SPEAKER_07: Now there's liberals around here you can't convince that of.
• 30:23
  SPEAKER_07: And I believe that today.
• 30:25
  SPEAKER_07: I'm not sure I believe that in two th in 81.
• 30:28
  SPEAKER_07: See.
• 30:29
  SPEAKER_07: And and I'm and I'm and I'm sure that Bob Dole believed that his tax bill cut revenue, and we need to do something about it.
• 30:37
  SPEAKER_07: I'm not sure now, on hindsight, that I believe that.
• 30:41
  SPEAKER_07: I don't know that Bob Dole uh still believes that today.
• 30:45
  SPEAKER_07: But uh, you know, tax policy does change behavior, and behavior's got something to do with the economy.
• 30:53
  SPEAKER_07: And uh but i it it was it was blamed for it, and that's why we had TEFRA.
• 31:00
  SPEAKER_02: So then in 82, with TEFRA is this attempt to take some of the ornaments off the tree.
• 31:06
  SPEAKER_02: You got it.
• 31:06
  SPEAKER_02: And apparently the president was not happy.
• 31:09
  SPEAKER_02: That's correct.
• 31:10
  SPEAKER_02: How did that and and dole is is clearly pushing this?
• 31:16
  SPEAKER_05: You're right.
• 31:16
  SPEAKER_05: He was not a supply cider.
• 31:19
  SPEAKER_05: As were most of the people that came up in that era were not supply siders.
• 31:25
  SPEAKER_05: The academics of that didn't start till the the Paul Craig Roberts and the others of the late the late 70s really relation with the president was at that time, but I I don't sense I don't sense that the president intruded himself that much.
• 31:47
  SPEAKER_05: I didn't find I'm trying to remember if I had any calls from him where he and it would be across purposes.
• 31:53
  SPEAKER_05: But I don't find he interfered a lot with Congress.
• 31:58
  SPEAKER_05: A good example was uh abortion.
• 32:02
  SPEAKER_05: Every year on the anniversary of Roe versus Wade, he would speak by phone to the right to life people by phone.
• 32:09
  SPEAKER_05: I don't recall that he ever involved himself in any of those battles.
• 32:12
  SPEAKER_05: Are we gonna cut off Medicaid funding for an abortion and recall he ever said a word or called anybody or sent a letter?
• 32:19
  SPEAKER_05: And he obviously would have done more on taxes, but I don't recall any pressure on me, and I was supporting Bob.
• 32:26
  SPEAKER_07: Now there were some bad policies in 81 that have uh I don't know the exact names of them, but we we would allow corporations, there was a term that we used for it, we would allow corporations who didn't have the benefit of uh that didn't have income enough to claim uh investment tax credit, to buy the investment tax credit from somebody else.
• 32:54
  SPEAKER_07: Uh and and you know, people learned how to gain the system.
• 32:59
  SPEAKER_07: And I think we were correcting not so much the TEFRA to bring in more revenue as to correct obvious bad tax policy we passed.
• 33:10
  SPEAKER_07: You know, you want the marketplace to make most of these decisions.
• 33:14
  SPEAKER_07: We lower tax rates because 137 million taxpayers like you making individual decisions on how you're gonna do with that extra money is gonna do more economic good than 535 of us in the Congress, bringing in that revenue, deciding how to distribute it.
• 33:34
  SPEAKER_02: How difficult was that, I mean, in 82?
• 33:37
  SPEAKER_02: I mean, to in effect, you're reversing yourselves to some degree.
• 33:41
  SPEAKER_02: You're you're all but saying we went too.
• 33:44
  SPEAKER_05: Yeah, we went too far.
• 33:45
  SPEAKER_05: I think we knew we went too far in 1981.
• 33:47
  SPEAKER_05: Yeah.
• 33:48
  SPEAKER_05: You know, Danny Rosnikowski had just become chairman of Ways and Means.
• 33:52
  SPEAKER_05: Bob has just become chairman of finance.
• 33:55
  SPEAKER_05: So you got these two both are pretty powerful guys.
• 33:58
  SPEAKER_05: And each of them gonna prove their man manhood uh uh if necessary at the expense of the other.
• 34:04
  SPEAKER_05: What was that relationship?
• 34:06
  SPEAKER_05: I don't know if mine was sensational with Danny when I became chairman.
• 34:09
  SPEAKER_05: Yeah, but uh Danny First, he excluded all the Republicans for all practical purposes on ways and means.
• 34:19
  SPEAKER_05: So you don't need to worry about having to deal with the senior Republican.
• 34:23
  SPEAKER_05: You're gonna have to deal with the chairman.
• 34:25
  SPEAKER_02: Uh the 81 tax cuts and budget cuts were, I mean, not that they were easy, but relatively easy, I imagine easier to pass than the subsequent non-tax increase tax increases.
• 34:42
  SPEAKER_02: I mean TEFRA, especially in in 1982, where you basically try to take the ornaments off the Christmas tree.
• 34:49
  SPEAKER_02: How how how did that how did that happen?
• 34:53
  SPEAKER_02: And how did the White House uh feel about uh taking a step back?
• 34:58
  SPEAKER_06: Well, you know, by that time, uh a little of the luster had gone out of the new Republican leadership, the majority of the Senate, and they were flexing their muscles here and there, and the White House was a little less reluctant to join issue with them.
• 35:13
  SPEAKER_06: And another way of long way of saying that uh the potential for controversy between the House, the White House, and the Senate uh was greater, and the willingness to disagree with the president or with the administration was a little uh greater.
• 35:32
  SPEAKER_06: But uh, even so, uh it it was not a it was not a contra, it was not a hostile relationship.
• 35:42
  SPEAKER_06: And the fact that they would talk, that the White House and their representatives, and the Senate and our representatives uh would discuss these matters even with great enthusiasm sometimes, uh helped uh reduce the prospects of great controversy within the House and Senate.
• 36:04
  SPEAKER_05: I mean, this is how powerful Danny was.
• 36:06
  SPEAKER_02: Is that just because that's how they did it in Chicago?
• 36:09
  SPEAKER_05: Damned if I know whether I don't know if that's the way Wilbur Mills ran the committee or not when Wilbur was chairman, but but interesting little bike.
• 36:17
  SPEAKER_05: I'm told that Wilbur knew the tax law backwards and forwards.
• 36:22
  SPEAKER_05: I don't know, but and that they really needed to have votes.
• 36:25
  SPEAKER_05: And the committee Wilbur said, I think we should do this, and that the committee went along.
• 36:28
  SPEAKER_05: And up until the Watergate year, when the rule was changed, up until that year, the Ways and Means Committee was also for the Democrats, the committee on committees.
• 36:38
  SPEAKER_05: So Wilbur Mills not only a chair on the Ways and Means, he decided who got to go on all the other committees.
• 36:43
  SPEAKER_05: That is power.
• 36:47
  SPEAKER_05: Here's an example of a Danny.
• 36:51
  SPEAKER_05: From time to time, there's been a provision in the tax code that the employer provides prepaid legal benefits like health insurance, that they're not taxable as income to the employee, just like health insurance is not taxable.
• 37:03
  SPEAKER_05: There was a couple of unions that had some prepaid legal contracts with employers.
• 37:09
  SPEAKER_05: And this law would normally expire between three years.
• 37:12
  SPEAKER_05: It wasn't a permanent one, and they always wanted to get it exp extended.
• 37:17
  SPEAKER_05: And I would help them, although it was a union issue.
• 37:20
  SPEAKER_05: But it wasn't one that divided us with employers, it was just the employers didn't care because it was deductible for them no matter what we did.
• 37:27
  SPEAKER_05: The issue is it taxable to the employee?
• 37:30
  SPEAKER_05: And I got it extended time or two.
• 37:35
  SPEAKER_05: It would always have to be in a Senate bill.
• 37:38
  SPEAKER_05: I finally said to them, Listen, union guys, why can't you get some Democrats on the Union's committee to support this issue so that it doesn't have to come here?
• 37:50
  SPEAKER_05: Because then I've got to go to conference and keep this.
• 37:52
  SPEAKER_05: I gotta give something up.
• 37:53
  SPEAKER_05: And I said Charlie Wrangle to agree.
• 37:58
  SPEAKER_05: So we're in conference.
• 38:01
  SPEAKER_05: Danny is sharing it.
• 38:02
  SPEAKER_05: I go, Mr.
• 38:03
  SPEAKER_05: Chairman, I'm just gonna I really think fair provision.
• 38:12
  SPEAKER_05: Employers don't oppose it to union.
• 38:14
  SPEAKER_05: It doesn't cost much.
• 38:15
  SPEAKER_05: I think the house ought to recede to the Senate and accept our provision.
• 38:18
  SPEAKER_05: Charlie Wrangle raises his hand and goes, Mr.
• 38:20
  SPEAKER_05: Chairman, I I think Senator Pack was correct.
• 38:23
  SPEAKER_05: I think probably it is a good provision.
• 38:26
  SPEAKER_05: I think the House ought to recede.
• 38:29
  SPEAKER_05: All right, everybody on this side who wants to recede, raise their hand.
• 38:33
  SPEAKER_05: Charlie doesn't raise his hand.
• 38:35
  SPEAKER_05: That's how powerful he was.
• 38:37
  SPEAKER_05: It's not 15 seconds after he said we ought to recede.
• 38:41
  SPEAKER_05: Yeah, they change your heart.
• 38:44
  SPEAKER_00: Well Reaganomics refers to the economic policies of Ronald Reagan, the 40th president of the United States of America.
• 38:52
  SPEAKER_00: We're going to take a look at the economic policy that still affects your paycheck to this day.
• 39:01
  SPEAKER_00: When Ronald Reagan was elected to be the 40th president of the United States in 1980, the nation's economy had been in a state of great inflation since 1965.
• 39:11
  SPEAKER_00: The decade leading up to Reagan's presidency was characterized by something called stagflation, for prices were rising even as unemployment remained high and economic growth was slow or stall.
• 39:24
  SPEAKER_00: This not only damaged the U.S.
• 39:26
  SPEAKER_00: economy but economies around the world.
• 39:28
  SPEAKER_00: Reagan's solution was an economic plan that became to be known by his supporters and critics alike as Reaganomics.
• 39:35
  SPEAKER_00: Reaganomics was heavily based on the trickle-down theory.
• 39:38
  SPEAKER_00: This argues that if you lower costs for corporations by cutting their taxes, businesses use those savings to invest.
• 39:45
  SPEAKER_00: The thinking was more money for corporations would mean more jobs and higher wages for workers and thus increased spending.
• 39:53
  SPEAKER_00: But trickle-down is a controversial idea.
• 39:57
  SPEAKER_00: Opponents argue that when corporate taxes are cut, domestic social programs suffer.
• 40:03
  SPEAKER_00: And most likely only a small handful of rich individuals at the top become even richer.
• 40:13
  SPEAKER_00: Reaganomics wasn't just about tax cuts.
• 40:16
  SPEAKER_00: The policy had three other central points: deregulating businesses, turning government services over to private contractors, and decreasing spending on domestic social programs, including food stamps, Social Security, and disability insurance.
• 40:31
  SPEAKER_00: During his presidency, Reagan signed two tax bills into law, one in 1981 and the other in 1986.
• 40:38
  SPEAKER_00: As a combined result of the 1981 and 1986 bills, the top income tax rate was flashed from 70 to 28 percent.
• 40:47
  SPEAKER_00: The lowest income tax rates for the rich since the 1920s.
• 40:55
  SPEAKER_00: Reagan's policies were highly debated, and economists still argue about the pros and cons of Reaganomics in terms of both immediate and lasting effects.
• 41:04
  SPEAKER_00: Proponents argue that by 1983, the nation's economy had started to recover from stagflation.
• 41:09
  SPEAKER_00: This led to a period of economic prosperity that continued through the rest of Reagan's presidency.
• 41:14
  SPEAKER_00: Though another recession soon followed after he left office.
• 41:18
  SPEAKER_00: But critics argue that based on a normal economic cycle, the economy would have recovered from the recession on its own without reagonomics.
• 41:26
  SPEAKER_00: Critics also point out that Reaganomics led to larger, not smaller, budget deficits and a larger national debt.
• 41:32
  SPEAKER_00: Many people say Reagan giving corporate tax cuts while cutting funding for domestic social programs was a policy that favored the rich and led to increased wealth inequality.
• 41:43
  SPEAKER_00: While Republicans tend to reference regonomics as exemplary policies, Democrats almost always bring it up as an example of corporate greed that hurts the middle and working classes.
• 41:53
  SPEAKER_00: Either way, it remains a defining part of Ronald Reagan's presidency and legacy.