"Budget Study Finds Cuts Cost the Poor As the Rich Gained"

Does this headline sound familiar?

It's from a 1984 New York Times article. The first sentence reads, "The Congressional Budget Office, analyzing the cumulative effect of budget and tax changes adopted since January 1981, said today that low-income families had lost the most money and high-income families had gained the most."

At Ronald Reagan's urging and with bipartisan support, Congress had cut taxes and spending on social programs during the first years of his presidency. By 1984, it was clear what the effects of those cuts had been: the deficit had ballooned because spending cuts did not nearly equal the revenue lost from tax cuts. In the meantime, people in the richest tax bracket had saved more than 20% on their tax bills, and the poorest Americans had overall lost money (the combination of a big loss of government benefits and the tiny savings the got on their tax bills).

The article quoted David Stockman, Reagan's director of the Office of Management and Budget, who had denied that the Reagan tax cuts were a "windfall for the wealthy." He argued that the cuts did not amount to a transfer of money from the poor to the rich, and called such concerns "an absolute red herring" propagated by "soak-the-rich apologists."

Recently Stockman's been singing a different tune, thankfully. 
In July, he published an op-ed in the Times arguing that an extension of the Bush tax cuts were yet another example of disastrous Republican fiscal non-management, expanding the deficit to unmanageable levels. He traced the history of this fiscal policy back to Nixon, although he conveniently erased his own part in it by explaining that:

"In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine."

Of course, he failed to mention that he was one of the people in charge of designing the "hastily prepared" budget, and that he and his colleagues should have anticipated and accounted for rising welfare and military spending.

In any case, now he's arguing that "the day of national reckoning has arrived," and that ending the Bush tax cuts are a necessary step towards regaining fiscal soundness and economic growth. He's been all over the news (including the Colbert Report!) promoting his new devotion to the idea that endless tax cuts are destroying rather than stimulating our economy. I'm thankful that he's seen the light - but I wish he had seen it 30 years ago before helping Ronald Reagan destroy our safety net, and our economy with it.

Full citation: Robert Pear, "Budget Study Finds Cuts Cost the Poor As the Rich Gained," The New York Times, April 4, 1984, A1.