Yahoo Finance ‘Read My Lips’: How George H.W. Bush’s Tax Hikes Changed Our Politics
Amount spent by inaugural committee: $30 million
Adjusted for inflation: $58.4 million
The tributes to former President George H.W. Bush have focused on his life of service, his character, his sense of humor, his courage and his leadership. But as the nation mourns and celebrates the life of the 41st president, Bush is also being remembered for his willingness to raise taxes as part of a bipartisan compromise to bring down the deficit — a controversial and politically costly step since it violated his 1988 “read my lips: no new taxes” pledge and infuriated conservatives.
In a eulogy Wednesday at the Washington National Cathedral, former Sen. Alan Simpson remembered Bush’s willingness to raise taxes even though he knew “it would be a real punch in the gut” for him and prompt a backlash.
That deal may have set the stage for the ‘90s boom: “It was the first step to eliminating the Reagan-era deficits,” writes David Leonhardt in The New York Times. “Bill Clinton and a Democratic Congress took the next step, in 1993, and by the late 1990s the federal government was running a surplus. The turnaround played a significant (if unknowably large) role in creating the 1990s economic boom — which remains the only period of broad-based income gains over the past 40 years.”
A turning point for the Republican Party, and the country: The Washington Post’s Charles Lane writes that Bush’s 1990 tax increase “sowed a lasting grass-roots distrust of the party establishment that fueled Newt Gingrich’s rise to power in the House and culminated, arguably, in Donald Trump’s 2016 insurrection.” The conservative backlash to the tax hikes certainly reshaped the Republican Party and affected every presidency since Bush’s. “No national GOP leader since has accepted that preserving the government services Americans want requires higher taxes,” writes CNBC’s John Harwood. “Instead, the party has treated the levers of government power as a one-way ratchet down for tax rates.”
The last of his kind? The Times’ Leonhardt argues that only one major modern Republican figure deserves the label of fiscal conservative, and it’s George H.W. Bush. And The Washington Post columnist Catherine Rampell says Bush “may well be the last Republican leader to acknowledge the fundamental fraud of Republican fiscal policy — that tax cuts do not pay for themselves.” (She notes that Reagan raised taxes 11 times, undoing about half of his big 1981 tax cut, according to one estimate — but Reagan avoided a backlash by using euphemisms such as “revenue enhancements” or “receipts strengthening” rather than calling them tax hikes. “Incidentally, the Reagan budget official who came up with these euphemisms, and thereby helped paper over the lies of supply-siderism, was a genial young fellow named Larry Kudlow — now President Trump’s top economic adviser,” Rampell adds.)
Where do we go from here? The Post’s Lane argues that the American public is now more worried about the fairness of the federal tax system than about rates being too high. “Bush may have lived just long enough to witness the moment at which tax cuts have finally reached the point of diminishing political returns for Republicans,” he writes. “In 1990, it was indeed political suicide for George H.W. Bush to support a tax increase. The situation for Trump and his fellow Republicans now may be even worse: Promising to cut taxes for everyone no longer helps them politically, while promising to raise taxes, on the rich, may help the Democrats in 2020.”
