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George Bush Sr. on Tax Reform
President of the U.S., 1989-1993; Former Republican Rep. (TX)
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1989: Prioritized cutting capital gains tax
What George really cared about, and what became apparent when he himself moved into the Oval Office in 1989, was the tax on capital gains, or the amount stocks and bonds or other assets appreciate over the period that an investor owns them.
Throughout his term, that was the priority--a tax cut that would have sent 60% of the benefit to the richest 1% of the population earning more than $200,000 a year. During the now-infamous budget-cutting, tax-raising deal of 1990,
George was able to leave capital gains rates where they were while other taxes went up. And then, when the recession hit, George's ready answer was to push Congress into cutting capital gains taxes.Others have pushed him to cut payroll taxes on a
one-time basis, a move that would have helped middle- and lower-class workers the most because Social Security and Medicare taxes make up a proportionately larger share of their tax burden than it does for wealthier taxpayers.
Source: America's Next Bush, by S.V. Date, p.278
, Feb 15, 2007
Cut capital gains tax on those earning over $200K per year
George Bush betrayed the most famous words he ever uttered: "Read my lips. No new taxes." He knew at the time he made the promise that it was a lie.Reneging on his campaign promise to Americans, the President agreed to a tax increase in 1990 as
part of the $492 billion deficit reduction package passed by Congress. He felt compelled to compromise because of the rapidly escalating costs of salvaging the savings-and-loan industry. In exchange for agreeing to a tax increase,
Bush insisted on cutting the capital-gains tax to benefit those who earned more than $200,000 a year.
He admitted later that it was the "biggest mistake" of his presidency. Democrats applauded him: "He laid the economic foundation for the prosperity
that Bill Clinton took credit for in the 1990's."
"You are going to get killed [in the midterm elections]," said the head of the National Republican Congressional Committee. "This is the most sacred pledge Bush ever made."
Source: The Family, by Kitty Kelley, p.493
, Sep 14, 2004
Abandoned “Read my lips: No new taxes” pledge
In June 1990 Bush abandoned his “Read my lips. No new taxes” campaign pledge and acknowledged that new or increased taxes were necessary. Many Republican conservatives were critical of this shift, and his popularity ratings fell immediately. A compromise
deficit-reduction plan was killed by the House, with many Republicans in opposition. As a result, the government was almost forced to shut down for lack of money while a new budget proposal was drafted.
Source: Grolier Encyclopedia on-line, “The Presidency”
, Dec 25, 2000
Demanded capital gains tax reduction; yielded to Congress
The president and Congress reached a compromise on a budget package that increased the marginal tax rate and phased out exemptions for high-income taxpayers. Despite his repeated demands for a reduction in the capital gains tax, Bush had to surrender on
this issue as well. His popularity among Republicans never fully recovered, and the compromise plan reduced the size of the deficit only marginally, despite Bush’s claim that it was the toughest deficit reduction package ever approved.
Source: Grolier Encyclopedia on-line, “The Presidency”
, Dec 25, 2000
"Read My Lips" did not promise to cut taxes
Bush had made his famous tax pledge at the 1988 Republican convention. "Read my lips," he proclaimed, "no new taxes." The contentious young Turks in the House were focusing on domestic policy and social issues.
They wanted a capital gains tax cut, enterprise zones for cities, and tax fairness for families. Bush may have promised not to raise taxes, but he had not promised to cut them.
In White House Daze, Charles Kolb was rougher. He spoke for most
Conservatives when he wrote: "With this one assertion [violating the no-tax pledge], Bush squandered not only his capital but also his credibility. Democrats now knew for a certainty that he would compromise with them on even his most
fundamental 'beliefs.'" It was a blow to the middle class, many of them Reagan Democrats that would doom the Bush presidency. Public cynicism would skyrocket and voter participation would decline.
Source: Newt!, by Dick Williams, p.123&125
, Jun 1, 1995
OpEd: 1990 taxes caused right wing to rise up against Bush
In early 1993, from outside the White House, Adviser James Carville was furious. He knew the policy people and the president had to make the decisions on the economic plan.
But he told others that if an energy tax were actually proposed, he would break ranks and personally lead the war against it. "The Republican Party is in shambles,"
Carville noted. A new tax could provide a rallying point. "This could be the issue that galvanizes them." The new taxes in 1990 had effectively caused the right wing of the
Republican Party to rise up against Bush. Even Bush had finally admitted the new taxes were a political mistake. It was the one thing Republicans might agree on.
Source: The Agenda, by Bob Woodward, p.129
, Jun 6, 1994
Page last updated: Apr 28, 2013
