It's often pointed out that in the wake of his signature tax cuts, Reagan raised taxes six or seven times, notably in the social security bargain that raised payroll taxes on everybody. I've been looking at Reagan's State of the Union address of 1983, which led off with a victory lap in celebration of that grand bipartisan bargain:
Just 10 days ago, after months of debate and deadlock, the bipartisan Commission on Social Security accomplished the seemingly impossible. Social security, as some of us had warned for so long, faced disaster...That major tax hike and deal with the Dem devil was not Reagan's only departure in the 1983 SOTU from current GOP orthodoxy. He did, it's true, propose to hold Federal spending growth to the inflation rate, freeze pay for Federal workers, find some defense "savings" in the wake of his previous buildup, and slow the growth of so-called "automatic spending programs," for which his poster item was that easy path to ill-gotten riches, food stamps. But then, apparently not yet aware that he had proven that "deficits don't matter," he worked the other side of the equation:
When the Speaker of the House, the Senate majority leader, and I performed the bipartisan-- or formed the bipartisan Commission on Social Security, pundits and experts predicted that party divisions and conflicting interests would prevent the Commission from agreeing on a plan to save social security. Well, sometimes, even here in Washington, the cynics are wrong. Through compromise and cooperation, the members of the Commission overcame their differences and achieved a fair, workable plan. They proved that, when it comes to the national welfare, Americans can still pull together for the common good.
Tonight, I'm especially pleased to join with the Speaker and the Senate majority leader in urging the Congress to enact this plan by Easter.
There are elements in it, of course, that none of us prefers, but taken together it performs a package that all of us can support. It asks for some sacrifice by all-- the self-employed, beneficiaries, workers, government employees, and the better-off among the retired-- but it imposes an undue burden on none. And, in supporting it, we keep an important pledge to the American people: The integrity of the social security system will be preserved, and no one's payments will be reduced.
The Commission's plan will do the job; indeed, it must do the job. We owe it to today's older Americans and today's younger workers. So, before we go any further, I ask you to join with me in saluting the members of the Commission who are here tonight and Senate Majority Leader Howard Baker and Speaker Tip O'Neill for a job well done. I hope and pray the bipartisan spirit that guided you in this endeavor will inspire all of us as we face the challenges of the year ahead.
And fourth, because we must ensure reduction and eventual elimination of deficits over the next several years, I will propose a standby tax, limited to no more than 1 percent of the gross national product, to start in fiscal 1986. It would last no more than 3 years, and it would start only if the Congress has first approved our spending freeze and budget control program. And there are several other conditions also that must be met, all of them in order for this program to be triggered.Standby tax? When did you ever read about that one? It seems to have dropped out of the national consciousness as soon as uttered. But the patron saint of supply-side economics uttered it.
Now, you could say that this is an insurance policy for the future, a remedy that will be at hand if needed but only resorted to if absolutely necessary.
Further, fond though he was of demonizing "welfare queens" and alleged food stamp cheats, with unemployment topping 10% Reagan had not quite reached the unemployed-are-like-stray-animals level of social Darwinism attained by his acolytes of today:
No domestic challenge is more crucial than providing stable, permanent jobs for all Americans who want to work. The recovery program will provide jobs for most, but others will need special help and training for new skills. Shortly, I will submit to the Congress the Employment Act of 1983, designed to get at the special problems of the long-term unemployed, as well as young people trying to enter the job market. I'll propose extending unemployment benefits, including special incentives to employers who hire the long-term unemployed, providing programs for displaced workers, and helping federally funded and State-administered unemployment insurance programs provide workers with training and relocation assistance. Finally, our proposal will include new incentives for summer youth employment to help young people get a start in the job market.Nor was the government-is-the-problem president entirely averse to investments in what a recent successor has called competitiveness:
Education, training, and retraining are fundamental to our success as are research and development and productivity. Labor, management, and government at all levels can and must participate in improving these tools of growth. Tax policy, regulatory practices, and government programs all need constant reevaluation in terms of our competitiveness. Every American has a role and a stake in international trade.That government role would include fostering the industries of the future:
We Americans are still the technological leaders in most fields. We must keep that edge, and to do so we need to begin renewing the basics-- starting with our educational system. While we grew complacent, others have acted. Japan, with a population only about half the size of ours, graduates from its universities more engineers than we do. If a child doesn't receive adequate math and science teaching by the age of 16, he or she has lost the chance to be a scientist or an engineer. We must join together-- parents, teachers, grassroots groups, organized labor, and the business community-- to revitalize American education by setting a standard of excellence.
To many of us now, computers, silicon chips, data processing, cybernetics, and all the other innovations of the dawning high technology age are as mystifying as the workings of the combustion engine must have been when that first Model T rattled down Main Street, U.S.A. But as surely as America's pioneer spirit made us the industrial giant of the 20th century, the same pioneer spirit today is opening up on another vast front of opportunity, the frontier of high technology.That commitment would lead Reagan, four years later, to sign a bill allocating $100 million per year to Sematech, the chip industry consortium funded by the Federal government to forestall the then-rapid loss of market share to the Japanese.
In conquering the frontier we cannot write off our traditional industries, but we must develop the skills and industries that will make us a pioneer of tomorrow. This administration is committed to keeping America the technological leader of the world now and into the 21st century.
This is a highly selective portrait, of course. Reagan's assault on domestic spending and government regulation was deep and long. The point is simply that that assault was mild and equivocal by the standards of today's extremist GOP.