Bozell Dismisses Reagan's Warning That Risking Default Would Threaten The Economy

Bozell: Dems Are “Despicable” For Pointing To What Reagan Said About Default. Bozell appeared on Fox News to discuss a Democratic ad that cites Reagan's 1987 warning against using the debt ceiling for “brinkmanship.” Bozell called this use of Reagan's comments “despicable” and “typical of the far left today”:

BRIAN KILMEADE (Fox & Friends co-host): But you say that they are taking him out of context, even though the issue of the debt ceiling was front and center?

BOZELL: Oh, you better believe it. This is despicable. This is typical of the far left today, of the Harry Reid, Nancy Pelosi machine, and of the national news media for not denouncing them.

What did he also say in that very same speech that they're quoting? He said, “For those who say that more taxes will solve, solve our deficit problem: they are wrong. Every time Congress increases taxes, the deficit does not decrease, spending increases.”

In other words, Ronald Reagan was attacking exactly what the Democrats are proposing.

KILMEADE: Well, if the Republicans are smart they will take that section and put it in their ad. Brent Bozell, thank you very much for doing the research and looking at the entire speech. [Fox News, Fox & Friends, 7/22/11]

But Reagan's Comments About Taxes Do Not Contradict His Position That Congress Should Not Risk Default Over The Debt Ceiling

Reagan in 1987: “The United States Has A Special Responsibility To Itself And The World To Meet Its Obligations.” In a September 26, 1987, address, Reagan did criticize “those who say more taxes will solve our deficit problem.” But he also said, “I would have no problem signing an extension of the debt limit,” something that he said “we must do to avoid default on our obligations.” From his speech:

Unfortunately, Congress consistently brings the Government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility--two things that set us apart from much of the world.

Some in Congress will claim that if I reject this bill with its Gramm-Rudman-Hollings fix, then I'm against deficit reduction. But, of course, nothing is farther from the truth. Since 1980 when you first elected me to this office, I have led efforts to control Congress' appetite to spend in deficit. Over a 5-year period, while revenues went up 28 percent, congressional spending went up 46 percent. From 1982 to 1987, for every dollar Congress cut from our national defense, they added $2 for domestic spending. Now, that's not fiscal restraint. Two years ago, Congress took a first step to curb spending with Gramm-Rudman-Hollings, and I agreed. Its purpose was to get on a track to lower deficits and eventually a balanced budget. Well, the ink was not even dry before Congress walked away from its own plan. Instead of facing the tough choices to reduce Federal spending, Congress attempted to shift the burden to our national security and to you, the American taxpayers, in the form of new taxes.

For those who say further responsible spending reductions are not possible, they are wrong. For those who say the only choice is undermining our national security at a time when the United States is close to an agreement with the Soviet Union on reducing nuclear weapons, they are wrong. For those who say more taxes will solve our deficit problem, they are wrong. Every time Congress increases taxes, the deficit does not decrease, spending increases. It's time for a clear and consistent policy to reduce the Federal budget deficit. [Ronald Reagan Presidential Library, The University of Texas, 9/26/87, accessed 7/22/11]

Reagan In 1983: “The Nation Can Ill Afford To Allow” For Consequences Of Default. In a November 16, 1983, letter to then-Senate Majority Leader Howard H. Baker Jr. (R-TN), Reagan warned:

This country now possesses the strongest credit in the world. The full consequences of a default -- or even the serious prospect of default -- by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns. [Reagan letter to Sen. Howard Baker, 11/16/83, via The Washington Post]

And, In Fact, Reagan Increased The Debt Ceiling 18 Times ...

CBS News: Debt Ceiling Was Raised 18 Times During Reagan Administration. CBSNews.com reported that "[t]he debt ceiling was raised 18 times during Reagan's eight years in office." [CBSNews.com, 7/19/11]

... While Also Passing Tax Increases To Rein In Deficits

Krugman: Reagan “Followed His Huge 1981 Tax Cut With Two Large Tax Increases.” In a June 8, 2004, New York Times column, Nobel Prize Winning Economist Paul Krugman wrote:

Ronald Reagan does hold a special place in the annals of tax policy, and not just as the patron saint of tax cuts. To his credit, he was more pragmatic and responsible than that; he followed his huge 1981 tax cut with two large tax increases. In fact, no peacetime president has raised taxes so much on so many people.

[...]

The first Reagan tax increase came in 1982. By then it was clear that the budget projections used to justify the 1981 tax cut were wildly optimistic. In response, Mr. Reagan agreed to a sharp rollback of corporate tax cuts, and a smaller rollback of individual income tax cuts. [The New York Times, 6/8/04]

Newsweek: Reagan Raised Taxes In 1982 And 1983 In Part “To Compensate For Gaps” In Government Revenue. In a July 9, 2010, article titled “What Would Reagan Really Do?” Newsweek reported that:

In 1982, Reagan agreed to restore a third of the previous year's massive cut. It was the largest tax increase in U.S. history. In 1983, he raised the gasoline tax by five cents a gallon and instituted a payroll-tax hike that helped fund Medicare and Social Security. In 1984, he eliminated loopholes worth $50 billion over three years. And in 1986, he supported the progressive Tax Reform Act, which hit businesses with a record-breaking $420 billion in new fees. When it came to taxation, there were two Reagans: the pre-1982 version, who did more than any other president to lighten America's tax burden, and his post-1982 doppelgänger, who was willing (if not always happy) to compensate for gaps in the government's revenue stream by raising rates. [Newsweek, 7/9/10]