Former adviser: Reagan as a tax-increaser was ‘whitewashed’ from GOP history

>>> so, whether grover is or is not the actual issue, we have a convenient symbol for a larger set of horses. he's a damn good organizer. as the son of an organizer, i'm impressed.

>> that is the symbolism of his pledge. it's a big shifting point. you couldn't discuss the idea of raising tax rates . the last time it happened was clinton, '93. this really does make a formative change. i think it's creating a lot of opportunity. see how it plays out. a mixture of economic reality and hopefully political momentum. you can see, you know, one thing that wasn't in your little monologue was looking at --

>> just go at it. it was terrible.

>> no, it was great. you can only do so much in three or four minutes. how does it fit into the fiscal crisis? you can't have a great economy when wealth is at the high end . you need a strong, broad based economy.

>> the debt ceiling leverage. we have seen it used before. here he is talking to mike allen about how he sees the strategy of this playing out.

>> this president is not going to extend. he loses his leverage that way.

>> republicans have other leverage. they can give him debt ceiling increases once a month, have them on a rather short leash, here's your allowance, come back if you have behaved.

>> wait. you are proposing the debt ceiling be increased --

>> monthly. monthly if he's good. weekly, if he's not.

>> it's no -- note that in the opening offer, getting rid of essentially this debt ceiling procedure was part of that. i think probably because of precisely that. i want to bring in bruce bartlett . he's an analyst from the reagan and bush administration . bruce, you were there at the beginning of the supply side revolution, the tax revolt . i guess, what is your sense of how it's evolved and what the poll -- how the politics have changed over time .

>> first of all, in the late 1970s , early 1980s , taxes were, in fact, at a historical high. more importantly, they were rising rapidly. we had high inflation. the tax system was not index for inflation. people pushed into higher tax brackets . we needed a high tax cut to keep the burden from rising. the taxes as a shared gdp were about the same as they were in the 1970s . there was less of a tax cut than people imagined. part of the reason for that is ronald reagan raised taxes 11 times after 1981 and this whole history of ronald reagan , the tax increaser has been whitewashed out of right wing history. by 1988 , he took back about half of the 1981 tax cut with tax increases. now, i think, today, our economic problems, our fiscal problems are vastly different than they were in 1981 . we need different solutions. the idea we have cookie cutter policy, cut taxes, taxes, taxes, all the time. it's the only policy. it's ludicrous.

>> governor, say taxes have to go up. i think they do. let's stipulate that for a second. how do you make the case? you actually had this experience. you had a big budget short fall when you came to office, you raised taxes, how do you make the case?

>> two things. we had an election about it. it's going to take care of the issue. it's appropriate to put it in the context the president put it in. we are going continue a lower rate for a bunch of people. we have to look at revenue from somebody. on the state side , when i got elections a $3.65 billion deficit. the worst in the nation. i quickly realized it's too large to tax your way out of or to cut your way out. it had to be a combination. that portion hasn't happened to the extent we presumed it would. this year, we have to trim expenditures by $365 million more than we otherwise would have. but, the grand bargain with the public is, to maintain a level of service they have a comfort level with. to not overdo it, not overextend ones self.

>> when grow to voters and say, we are going to raise taxes, what is the pitch?

>> i did 14 town hall meetings , no, 17 town hall meetings and got yelled at at every single one of them. we had a conversation with the public about what are the options. if you are talking cutting a budget by 17% because that's what the revenue short fall was, they quickly understood, you can't cut a budget 17% in a single year and sustain the level of services that allow their children to be educate and their mother and father remain in a nursing home and receive benefits and so see bridges and roads constructed and replaced.

>> i want to talk about the history of how this argument has been made. it has been made in the past. we have amazing fdr sound making this case. bruce, hang out with us, if you would. back after this