James Miller Center: President Ronald Reagan- 'Address on Tax and Budget Legislation August 16, 1982'

Source:James Miller Center- President Ronald W. Reagan (Republican, California) Borrow and Spender.

"In this address, President Reagan speaks about the Tax Equity and Fiscal Responsibility Act of 1982 or TEFRA and discounts claims that this is "the largest single tax increase in history," stressing that one-third of the increased tax revenue will come from those evading taxes. This legislation represents a departure from the 1981 tax cuts, although Reagan notes it resulted from a difficult compromise."

From the James Miller Center

In the late 1970s 1978 or 79, Republican Senator Bill Roth who was on the Senate Finance Committee and Republican Representative Jack Kemp, over in the House, together introduced the Kemp-Roth bill in the House and Senate. Which was deep tax cuts across the board. 

Supply side tax cuts, meaning there weren’t budget cuts to pay for them. neither Member of Congress was the Chairman, or Ranking Member of their committees. They were also Conservative Republicans serving in a Democratic Congress with a Democratic President. So they both knew that their legislation wouldn’t pass, at least in that Congress.

Kemp-Roth was about the 1980 general election, hoping of course Ronald Reagan is elected President and that Republicans pick up a lot of seats in Congress and even take over the House, or Senate, or both. 

Congressional Republicans picked up a bunch of seats in the 1978 mid-term elections, especially in the House. But they had a long way to go going and Democrats kept control of Congress for 1979-81. But Kemp-Roth help set the stage for the 1980 general elections with high taxes becoming unpopular across the country. With a very weak economy with high unemployment, the recession of 1979-80 and everything else. And Ron Reagan knew this and made Kemp-Roth part of his 1980 presidential campaign.

Ron Reagan becomes President of the United States in a landslide in 1980, Senate Republicans take control of the Senate pick up thirty seats in the House. President Reagan is pretty popular from the beginning, the assassination attempt in 1981 actually helped in a sense. Because his approval rating went up. Senate Republicans had the votes in the Senate, the question was whether they can pass Kemp-Roth in the Democratic House. Which was controlled by Speaker Tip O’Neil who was a very Progressive Democrat (to put it mildly) and didn’t believe in tax cuts. 

The thing that the Reagan Economic Recovery Plan is that the economy goes back into recession in 1982. The Federal Reserve wanted to wipe out inflation and high interest rates, before it did anything else. It wasn't until interest rates and inflation were finally under control by 1984, that the American economy finally took off. And I'm sure the Reagan tax cuts had some impact on the recovery, once inflation and the high interest rates were no longer a major factor in the economy. 

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