How Reagan's Tax Cuts Saved Clinton and Gore
When Reagan took office in 1981, the US economy was in shambles. We have difficulty remembering how bad the economy was under Carter, but it was described in terms of the "misery index," and the word "stagflation" was coined to refer to the double-whammy of economic stagnation combined with runaway inflation. The automotive industry was on the verge of collapse under the pressure from Japanese competition and an oil crisis. The American way of life itself seemed to be in serious jeapordy. It wasn't the Great Depression, but it was as close as we've come to it since.
The top tax rate was 70% when Reagan took office. He got it cut in half to 35%. At the same time, he eliminated many tax shelters that the rich routinely relied on to avoid paying taxes altogether, forcing them to invest in the free market and actually pay taxes. Shortly after the tax cuts were enacted, the economy took off for an unprecedented period of peacetime growth. The misery index plummeted as unemployment fell, inflation slowed, and interest rates dropped, leading to a seven-year boom that the liberal media cynically dubbed "the decade of greed."