Al Franken Distorts Limbaugh’s Claims Regarding Reaganomics

In a chapter entitled THE REAGAN YEARS: RUSH LIMBAUGH IS A BIG FAT LIAR Franken accuses Limbaugh of propping up a supposed big lie (that Reaganomics worked) with three legs–each leg a lie in its own right.

The first question we should ask is, “why three?” Rush uses multiple lines of evidence to argue Reaganomics worked, so why limit it to three? Because Franken could only successfully manage to distort three.

Among the claims Franken ignores from Rush’s book: “Average real family income grew by well over 15 percent from 1982 to 1989” and “For the poorest fifth of Americans, real income grew almost 12 percent.” That alone shows Reaganomics worked.

As Rush also points out, the rich shouldered a higher share of the income tax burden than before: “The top 1 percent paid more than 25 percent of all federal income taxes in 1990, a 40 percent increase over 1980.”

In addition, the average citizen jumped income brackets. As Rush says, “Between 1983 and 1989, the total population under the poverty line decreased by 3.8 million people.” and “Families earning more than $50,000 (in 1990 dollars) went from less than 25 percent of families in 1980 to 31 percent in 1990“ and “of those who were in the bottom-fifth bracket in 1979, 65 percent jumped at least two income brackets during the 1980s.”

Rush also mentions that 20,000,000 new jobs were created, “82 percent of which were in the higher-skilled, higher-paying occupations.”

Oh, and the stock market “nearly tripled in value.”

Franken does not counter these facts. Nor does he counter the fact that “We experienced sustained economic growth without inflation, low unemployment, and low interest rates.” In short, Franken does not counter the reality that Reaganomics worked. That does not stop him however from claiming to counter it. Here’s a closer look.

The First Leg

Rush admits the federal deficit skyrocketed in the 1980s but blames it on spending. Franken does not dispute this, but blames the spending on Reagan while Rush blames it on the Democratic Congress.

As Franken points out, “the Gipper asked Congress for 16.1 billion more in spending than it passed into law” over the course of his presidency. But Franken is lying. According to Franken himself in a later book, Congress passed 47 billion dollars more than Reagan proposed (Lies p. 108). So it is Rush who has a point. The question is how strong the point is.

Reagan was focused on defense spending while Congress was focused on what Rush considers wasteful spending. The President and Congress had to concede the others’ demands to get their funds approved. Reagan’s budget proposals reflected long hours of conferencing with Congressmen, working out compromises.

In the end, Rush Limbaugh is right that Reagan’s budget proposals would have been substantially smaller if it were not for differing Congressional priorities and the related politics and compromise. In other words, the deficits do not reflect Reaganomics. So Rush does not blame Reaganomics for them.

But more importantly, the question of who to blame for spending is a side-note at best. Rush never relied on it to prove the efficacy of Reaganomics. This means Franken used the whole argument as a straw man.

The real question about whether Reaganomics created the deficit pertains to revenue. Did we go into deficit because Reaganomics produced insufficient revenue? No. Reaganomics grew the economy and nearly doubled revenue for the federal government. Yet spending skyrocketed. That is true regardless of the reason. The fact is, increases in spending—rather than Reaganomics–caused the deficits.

Even if Reagan were wholly responsible for 80s deficits, it would reflect his spending habits not his economic growth plan (Reaganomics).

Leg Two

Here is Franken goin’ the rounds with his next straw man:

The second leg of the three-legged coffee table that is the Big Lie about Reaganomics is that Reagan’s massive tax cuts were directly responsible for what Limbaugh calls “unprecedented growth and prosperity.” This gets to the heart of supply-side economics: the less you tax the rich, the faster the economy will grow.

Take, for example, the fifties. We taxed the [expletive deleted] out of the rich. The top marginal rate was 88 percent. And the economy grew at an annual rate of just over 4 percent. Then look at the eighties. Reagan knocked the top rate down to 28 percent, and the economy grew at a yearly rate of just under 2.5 percent.

So cutting the marginal rate didn’t give us “unprecedented” growth. What it did give us was “unprecedented” deficits.”

Okay, let’s dissect this. Watch close.

As you recall, “Reaganomics worked” is supposed to be the “Big Lie” Franken accuses Rush of propping up. But the question of whether Reaganomics created growth and prosperity is equal to asking whether Reaganomics worked. Objectively, growth and prosperity were created under Reaganomics. So if Franken were to confront the question directly he would have to explain why he thinks the growth caused by Reaganomics was not enough to “count” as successful. He cannot do that so he dodges the question and obfuscates instead.

That is why Franken talks about the deficit. Still, he cannot ignore the economy altogether–so he says that it is only part of the picture–one of three “legs.” He misleadingly addresses the economy using the words “tax cuts” as though Reagan’s tax cuts were only “about” Reaganomics rather than synonymous with it. In disguising the question of whether Reaganomics worked as a side question of whether tax cuts work, Franken can then get away with less detail while appearing to address the economy of the eighties.

Then, Franken relies on illusion. He comes right out and says the economy grew under Reagan but he contrasts it with the fifties—a unique situation in which goods and services were finally returning to the market after having been on hold during the war and trade as usual was resuming. The whole world relied on the U.S. dollar since the U.S. had avoided structural damage during the war thanks to our isolation.

Furthermore, why did Franken have to cite a unique situation to state a case for high taxes? Considering that the top marginal rate was 70 percent when Reagan took office, why did Franken not point to the Carter years? Was it because of the interest rates, inflation rates, unemployment rates or all of the above?

The comparison to the fifties is not only misleading, but also unnecessary. Franken essentially argues that Reaganomics was a failure because it was not the greatest success in history. Franken gets away with it by drudging up a quote from Rush about “unprecedented” growth so it looked like Rush was the one setting it as the standard of success for the tax cuts.

However, Rush was not claiming that the growth rate was at a higher percent than ever before. What he did say, and on the very first page of the chapter no less, was that the eighties had “the longest period of peacetime growth in this nation’s history.” Then, in the paragraph after the “unprecedented” claim that Franken picked out of context, Rush went on to repeat the context of his statement, that the U.S. experienced “the longest peacetime expansion in history”.

Did Franken not see it? Did Rush not emphasize it enough? Don’t think so. After Rush repeated the statistic, he then wrote:

Did I already say that? Good. It needs to be repeated and repeated to counter the lies.

Yet Franken left out that context entirely.

Leg Three

This leg is the big diversion. Out of a bulleted list of 16 statistics in Rush’s book, Franken picks out one of the less critical claims and spends five pages attempting to refute it. He tries to turn Rush’s icing-on-the-cake into a main course.

According to Franken, the third leg is that “Reagan’s economic policies were just as good for the poor as they were for the rich.” That could mean anything and it’s not what Rush said. What Rush actually said was that the poor received the most relief as a percentage of their income.

More specifically, Rush claimed that between 1980 and 1992, “income taxes as a percentage of their income of all income groups was reduced, with each of the four lowest quintile groups experiencing greater percentage reductions than those income groups above them.” Franken conveniently skipped that part and quoted the next sentence from Rush

In other words, all income groups paid less taxes as a percentage of their income during the Reagan years, but the poor received the most relief, the middle class the next, and the rich, the least.

That is a cool point to make. Rush even put it in bold. It is not however necessary to the argument that Reaganomics worked. It just shows that tax relief for the rich was far from being the sole focus of Reagan’s methods.

Franken can’t really argue that this particular point is all that critical, so he creates the illusion that Rush was the one holding this up as central criteria. Franken says, “In 725 pages of opinion-barfing spread over two books, only once does Rush consider a point important enough to trot out a visual aid.” [p. 126]

Franken is referring to a chart Rush had used to show the reduction of tax rates.

Franken claims the numbers are cooked. What is his big problem with them?

He [Rush] leaves out payroll taxes!

[p. 127]

That means Social Security and Medicare taxes; which is interesting, because Rush specifically said the numbers are in reference to income tax. Remember the line that Franken didn’t quote, but I did, where Rush said he was talking about income taxes? That made clear what he was talking about–right?

I thought so but just to make sure, let’s look at the line before it: “…between 1980 and 1992 the wealthy not only paid more income taxes in actual dollars, but they paid a greater share of income taxes as a percentage of their income, compared to other income groups.” Wow, he mentioned “income taxes” twice in that one. Franken must have known that Rush was talking about income taxes.

So Rush did not dishonestly “leave out” other taxes. That’s like saying if someone talks about baseball they are dishonestly “leaving out” football.

Social Insurance taxes are irrelevant anyway, because they are benefit programs for the poor. What the poor pay into them is for their own use. What the rich and middle class pay is also for the poor, with little for themselves.

If we do look at them, we find that, the share of Social Insurance taxes paid by the top 1 percent rose 50 percent during the eighties while the share paid by the lowest 20% went down.

Franken also objects to using the year 1992. However if we use a different year— 1990 or 1989—the point still stands. The gap is not as wide but the poor still receive a greater percentage of income tax cut than the Rich.

Regardless, there is nothing wrong with using 1992. It concluded the Reagan/Bush era. Rush did say that Reaganomics ended in 1990 but that was in reference to the tax increase that year, which had negligible effect on Limbaugh’s numbers. The larger difference in numbers is from the increase in the Earned Income Tax Credit, a credit that was championed and expanded by Reagan.