The Right Opinion

Obama's Misleading Reagan Reference

By Lawrence Kudlow · Apr. 14, 2012

In President Obama’s latest class-war, tax-the-rich gambit, he has stooped to a new low with misleading and out-of-context quotes from Ronald Reagan. Apparently, the president is now trying to use the Gipper for cover while he attacks Mitt Romney with the so-called Buffett Rule.

In an address this past week, Obama cited a couple of Reagan speeches from June 1985, in which the former president quoted a letter from a wealthy executive who grumbled that he paid less in taxes than secretaries or bus drivers.

Obviously, Obama was trying to draw a parallel with Warren Buffett’s complaint that his tax rate is lower than his secretary’s, and to the resulting Buffett Rule, a proposed 30 percent minimum tax on millionaires. With a tongue-in-cheek flourish, Obama referred to Reagan as “that wild-eyed, socialist, tax-hiking class warrior.”

Of course, Obama doesn’t tell you that Reagan had a completely different tax-reform vision.

And reality. Rather than raising the capital-gains tax on successful investors or punishing wealthy people – which are Obama’s priorities – Reagan wanted full-bore pro-growth tax reform that would slash rates for everyone, simplify the tax system with only two brackets and eliminate tax shelters that allowed people to avoid paying any taxes at all.

Obama’s duplicity in misquoting Reagan was chronicled nicely by Glenn Kessler of The Washington Post. Kessler pointed out that Reagan said: “We want to cut taxes, not opportunity. … By lowering everyone’s tax rates all the way up the income scale, each of us will have a greater incentive to climb higher, to excel, to help America grow.”

This is Reagan the supply-sider emphasizing economic-growth incentives. The Gipper had nothing to do with punishing rich people or jacking up the capital-gains tax, which is probably the most important investor-class tax on risk and entrepreneurship. The cap-gains tax is certainly the most important stock market tax, with dividends taxes (which Obama also would raise) a close second.

Reagan, who lowered the cap-gains tax from 28 percent to 20 percent in his first term, actually wanted to lower it to 17.5 percent in his second term. The way the story ended, the final tax bill had two brackets of 15 percent and 28 percent, with substantial base-broadening and loophole-closing. Indeed, by slashing the top income-tax rate from 70 percent all the way to 28 percent, Reagan launched a huge prosperity boom that basically spanned three decades.

As we know, Obama has a totally different vision. The president’s budget would lift the top income and investment tax rates to about 45 percent. Meanwhile, the integrated corporate and capital-gains tax would be 55 percent.

Instead of rewarding success, Obama punishes it. Instead of economic growth, he talks about tax fairness, which is a euphemism for redistributing resources from private hands to the government sector – the exact opposite of Reagan.

By the way, we already have an alternative minimum tax. And the IRS shows that the wealthy pay roughly twice the effective tax rate of those in the middle class.

And while Obama talks about cutting the deficit, the Joint Tax Committee says the Buffett Rule would produce about $5 billion a year, for maybe $47 billion over 10 years. Compare that to $45 trillion in spending over that period.

But wait, Uncle Sam might not get a dime from Obama’s millionaire’s tax. History shows that a higher capital-gains tax reduces revenues from slower growth, countless evasions and a non-realization of gains. The only budget surplus in my lifetime occurred in the late 1990s. It followed a Clinton-Gingrich cap-gains tax cut, which produced a flood of revenues from growth and wealth-creation.

But in truth, this whole millionaire’s tax is a political ploy. And it’s aimed at Mitt Romney and his business success. That’s why the White House wants Romney to release tax returns going back to the 1970s. And that’s why Vice President Joe Biden is on the campaign trail talking about the “Romney Rule,” which he says means, “Let’s double-down on tax cuts for the wealthy.”

In fact, Romney has proposed a Reagan-like 20 percent tax cut for all taxpayers. And Rep. Paul Ryan, one of Obama’s favorite targets, has proposed a Reagan-like tax reform that would simplify rates to 10 and 25 percent while removing numerous loopholes and tax shelters.

These are pro-growth visions. Obama’s is an anti-growth vision.

Just this past week, New Jersey Gov. Chris Christie said Obama’s divisiveness is demoralizing to the economy and the country. And former General Electric CEO Jack Welch told me in an interview that Obama has taken a “divide-and-conquer approach, amassing a list of enemies that would make Richard Nixon proud.”

Ronald Reagan’s optimistic rising-tide-lifts-all-boats message was the direct opposite. For Obama to attempt to associate himself with Reagan is a demagogic falsehood of the worst kind.

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5 Comments

MikeEcho said:

If I were Romney I would challenge Obama to release all his "locked away" university records and papers for public examination before releasing any IRS returns. Ronald Reagan was a rare gem in politics. He was cool under pressure and had the uncany ability to find the humor in just about any situation. On the other hand Obama is just like all the other "tin pot" wanna-be dictators that have come down the pike. They manage to make other people's lives miserable while feathering their own nests. He will say and do anything to remain in power. I am amazed so may people follow him like the "lemming in chief" that he is.

Saturday, April 14, 2012 at 1:32 AM

wjm in Colorado said:

These marxist statist traitors are beyond despicable. Facts be damned, just make up anything, attach a name of a conservative, and serve it up for the ministry of propoganda to broadcast to the useful idiots. A list of enemies that would make Nixon proud, sounds like everyone who votes against him can expect the jackboots to visit should this Anti American, Marxist Statist Islam loving Traitor win re-election. I hope everyone has utilized the last four years to garner enough supplies to endure and resist the unfettered tyranny his new flexibility would unleash.

Saturday, April 14, 2012 at 11:56 AM

H. D. Schmidt said:

Obama is presently the President simply because, this nation of ours was in the greatest mess ever, created by a Republican President that of George W., and his Militaristic Imperialist that of Dick Cheney! While Republicans could only come up with another Republican Militaristic Imperialist that of McCain, who lost shamefully because even he could not come up with a viable running mate, and finally went desperately for Sarah Palin as his running mate. Yes, even now the Republican Party is shamefully trying to destroy Ron Paul, who is the only one that is a true redbloodeed American and should be elected if America wishes to survive as the Nation the Founding Fathers "invented" so long ago at great sacrifice! As long as America keeps its military circling the globe and trying to dominate the world by force, which is what Romney is going to do, America will continue on the road to hell like all previous Empires who self-destructed. Sadly I find, as a legal immigrant now going on 57 years that there is such a shamefully ingnorance amongst born Americans hence the more a and deeper America is self-destroying! I did vote for Ron Paul in the last election as write-in here in Californa and will only spent time if he becomes the Republican nominee, period.

Sunday, April 15, 2012 at 5:16 PM

Capt. Call in New Mexico said:

H.D. Schmidt: Nice post! Very nice post! There is of course, only one problem with it---it is all a lie! Was Obama your instructor in the "How to Lie"course you took? If you don't like the United States, I've got one suggestion for you: LEAVE!

Monday, April 16, 2012 at 2:36 AM

wjm in Colorado said:

@Schmidt The republicans don't have to, and are not trying to destroy Ron Paul. He is doing a fine job of that himself, championed by delusional support from delusional beleif in a Total Loser of a Crazy Old Man. You should joing him on a porch in Texas.

Monday, April 16, 2012 at 9:13 AM