Economists celebrated former President Ronald Reagan's tax cuts on the fortieth anniversary of the law's passage, warning that President Biden's current and prospective policies effectively reverse them, portending a Jimmy Carter-style malaise for the country.
"Reagan, in effect, unleashed capitalism," Larry Kudlow, a Fox Business host who also served as the associate director for economics and planning in the Office of Management and Budget under Reagan and director of the National Economic Council under President Donald Trump, said at a Heritage Foundation event Thursday. "I think we are in danger of re-handcuffing free enterprise and capitalism."
The Economic Recovery Tax Act, which Reagan signed into law on August 13, 1981, represented more than a change in policy. Matt Dickerson, director of the Grover M. Hermann Center for the Federal Budget at the Heritage Foundation, told Fox News that the law also represented "a change in mindset."
"The 1970s were a time of malaise, of high inflation, high unemployment, and low on opportunity. Our nation’s leaders rejected American greatness and thought the American Dream was behind us," Dickerson said in a statement to Fox News. "As the tax cuts were being debated in Congress, President Reagan reassured the American people that: ‘All the lobbying, the organized demonstrations, and the cries of protest by those whose way of life depends on maintaining government's wasteful ways were no match for your voices, which were heard loud and clear in these marble halls of government.’ "
Dickerson cited a Tax Foundation retrospective analysis of the 1981 tax cuts, which found that if the ERTA had been allowed to stay fully in place instead of getting partially rolled back, it would have increased GDP by 8 percent in the long run. "It turns out that if you lower taxes and reduce regulatory burdens, it results in economic growth, more prosperity, and higher standards of living," he noted.
Yet Biden's agenda reverses Reagan's successful policies, Dickerson warned.
"Biden’s agenda adds another major threat to American prosperity and our way of life, with massive tax hikes and a massive expansion of government control over the most personal aspects of Americans’ lives," he warned. "Perhaps most important, federal spending is unsustainable, costly, and harmful, restricting current and future growth, having negative effects for real people."
Steve Forbes, editor-in-chief of Forbes, noted that 50 nations around the world imitated the Reagan tax cuts, ushering in a "global boom."
Forbes argued that while Biden's policies may lead to a return to the stagflation — inflations combined with slow economic growth — America suffered under President Jimmy Carter, Reagan's tax cuts proved that this malaise "can be turned around."
"Let’s turn it around and not repeat the same mistakes again," Forbes urged.