Fool us twice, shame on us.
In 1982, President Ronald Reagan advocated a “balanced approach” resulting in TEFRA (Tax Equity and Fiscal Responsibility Act) where the Democrats agreed to bring about $3 in spending cuts for every $1 in new revenue, which on paper, advanced Reagan’s goal of shrinking the federal government.
In practice, TEFRA was almost exactly the opposite. While the tax increases were real, Democrats never delivered on the spending cuts. The 1982 budget deal actually resulted in $1.14 of new spending for each extra tax dollar. Reagan was sorrowful about TEFRA in his memoir, writing that “later the Democrats reneged on their pledge and we never got those cuts.”
The 1990, President George H.W. Bush huddled with Democrats and was promised a bipartisan deal promising $2 in spending cuts for every $1 in tax increases. Bush signed the deal on Nov. 5, 1990. Every penny of the tax increases, $137 billion from 1991-1995, went through. Not only did the Democrats break their promise to cut spending below the CBO baseline by $274 billion, they actually spent $23 billion above CBO’s pre-budget spending baseline.
When it comes to taxes, the reality seems to play out like this: Overspending leads to a deficit/debt problem; An offer is made to cut spending and increase taxes in what is hailed as a great compromise to solve the deficit/debt problem; taxes go up but the spending always increases and we are back at step one with a deficit/debt problem for the continuation of the endless loop.
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