Apropos of a point I made in today’s column: there were two major tax changes in Reagan’s first term, which began in January 1981. ERTA, aka the Reagan tax cut, was signed in August 1981; TEFRA, which raised taxes, was signed in September 1982.
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Of course, I don’t believe that correlation was causation: in fact, both job losses in 1981-2 and job gains thereafter were mainly the result of Federal Reserve policy, rather than tax changes. (I have a private bet here: despite this disclaimer, I’m almost certain that some commenters and/or writers on other blogs will accuse me of slandering Reagan, claiming that the 1981 tax cut caused the recession). The point, instead, is to highlight just how long the lag was between those tax cuts and “morning in America”.
http://krugman.blogs.nytimes.com/2010/01/18/reagan-taxes-jobs/
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