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Re: Stimulus 101: Obama vs Reagan
President Barack Obama says the economy is the worst since the Great Depression. Actually, it is the worst since the Reagan recession of 1982-83. Further, the 2009 market crash is not the worst since 1929, but since 1987 — also on Ronald Reagan’s watch.
What did Reagan do — or, more importantly, didn’t do — in response to these “crises?” How was Ronald Reagan’s response different from what Barack Obama is doing?
In both cases, Reagan did the exact opposite of Mr. Obama’s massive government spending infusions. In fact, it’s worth noting that Bill Clinton — listen up, Democrats — didn’t invoke Mr. Obama’s method when he faced recessions at the very start and end of his presidency. (That’s another article for another time.)
As for the Reagan recession, the president waited extremely patiently — to the point where he drove his advisers nearly nuts — for his huge 1981 tax cuts to take effect. He didn’t spend money because he believed spending had been out-of-control, particularly since FDR’s New Deal and LBJ’s Great Society, which created systemic deficits. Reagan felt that high spending, high regulation, and high taxes had sapped the American economy of its vitality, and particularly its ability to rebound from recession. The economy needed to be freed in order to perform.
Reagan’s prescription rested on four pillars: tax cuts, deregulation, reductions in the rate of government spending, and a stable, carefully managed growth of the money supply. The federal income tax reduction was the centerpiece: Reagan secured a 25 percent across-the-board reduction over a three-year period, beginning in October 1981. The upper income marginal tax rate was dropped from 70 percent, which Reagan believed was punitive and stifling, to 28 percent.
By 1983, America had begun its longest peacetime economic expansion in history, cruising right through the 1987 market plunge.
What did Reagan do about the October 1987 crash? Basically nothing — certainly nothing like a massive government “stimulus.”
“Some people are talking of panic,” Reagan calmly confided to his diary. “Chrmn. of Stock Exchange is acting very upset.”
Those are Reagan’s only diary references to the financial crisis. With the economy freed, he was confident it would bounce back. Reagan let the economy correct itself.
OK, but Reaganomics created huge deficits, right?
That’s the big criticism. It isn’t accurate. It needs to be understood — now more than ever.
First off, know these crucial facts: The deficit under Ronald Reagan increased 35 percent, from an inherited deficit (from President Jimmy Carter) of $104 billion in 1980 to a final deficit of $141 billion in 1989. The deficit peaked at $236 billion in 1983, particularly because of the plummet in tax revenue during the recession. It began dropping steadily in 1986, continuing through the 1987 crash. (Source: Congressional Budget Office figures, “Historical Tables.”)
Compare that to what’s happening now, where the direct opposite of Reaganomics is being pursued by the liberal Democratic president and congressional leadership:
President Obama inherited a record Bush deficit of $400 billion, but is generating a far worse $1.8-trillion deficit in his first year. (Source: Congressional Budget Office, March 20, 2009.) We’ve never seen anything like this. This unthinkable explosion is a direct result of the stunning government spending unleashed by Mr. Obama and the Democratic leadership in just eight weeks — an unheard of development in 233 years of American history.
So, think about this:
Ronald Reagan increased the deficit by 35 percent in eight years, whereas Barack Obama has increased the deficit by 450 percent in eight weeks. Reagan created an extra $37 billion in annual deficit. Mr. Obama has already created an extra $1.4 trillion in annual deficit.
But what, exactly, caused the Reagan deficits? There were several factors: the recession of 1982-83, the Reagan defense spending — implemented to turn the screws on the Soviets — the domestic social spending by the Democratic Congress and more. Some reasons were Reagan’s fault; others were Congress’ doing — both share blame in differing degrees.
Importantly, and despite what you’ve heard, Reagan’s tax cuts didn’t create the deficit. Tax revenues actually boomed from roughly $600 billion in 1981 to $1 trillion in 1989.
The primary cause of the deficit was recession and spending, mainly spending — as is always the case. It is especially the case right now under Mr. Obama, with the spending component utterly out-of-control.
The crucial lesson for today is that the best “stimulus” is one that relies on the tried-and-true American way: letting free individuals and entrepreneurs stimulate the economy through their own earnings and economic activity. Wealth confiscation and redistribution by government collectivists and central planners never works; unfortunately, it is that failed, extremely destructive method that Americans elected in November 2008.
For three decades now, the minority of Americans who make up the hard left have been trashing Reaganomics. Well, on Nov. 4, 2008, for the first time in American history, they convinced enough voters to join them in electing the extreme opposite. At long last, they will pay for the economic consequences of their ideology, as will their children and grandchildren.
http://www.americanvision.org/article/s … vs-reagan/
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I realize that is a tad partisan, but its also an honest assessment and he does bring facts to the table. Irrefutable facts, I might add.
While comparisons between the Carter disaster/Reagan boom and Bush disaster/God only knows what are valid, its difficult to hold ANY leader to that standard because our country is so different now.
We function as a service economy now. We didn't back then. While Reagan was able to enact policies that opened the spigots which millions of jobs flowed from, Obama doesn't have this option. The "Reagan jobs" are now in China, India, Mexico,etc. thanks to Clinton and Bush II. What is troubling about that is so far Obama has not attempted to change this course even though he has spent trillions of dollars. There are only so many Wal Mart openings available for Joe and Jill Blow.
As far as tax cuts/increases go, Reagan went back and forth depending on the needs of the nation. While he is known for massive tax cuts, he actually signed a hefty tax increase, although it was a short term hike.
With Federal, State, and local governments dead broke, how does Obama do this same thing? He doesn't. Lowering taxes gets them nowhere, yet raising taxes(which he is now doing starting with that dreaded sin tax) risks stifling the economy even worse than it is.
While the runaway spending is needed at the moment, it simply isn't accomplishing anything. Someone will say, "he's only been president a few months", well when you are talking trillions of dollars, there should have been immediate results. Not talking a full fledged recovery, but things where he could easily point and say, "see, its working."
Can you imagine 2 trillion being pumped into the economy in 1982? We would have owned the solar system. Now we cant even point to anything and say that stimulus created it. First he said there would be immediate relief. Now he's saying the summer. Tomorrow, he'll say the fall.
Thats troubling regardless of what side of the aisle you are on.
While we clearly are not going to have another 80s type boom, he needs to look for the middle ground between boom and catastrophe, and he may soon run out of trillion dollar checks to wipe his ass with while wondering what to do.
While I don't think we are headed in the right direction, if he would actually lead and start making some tough decisions I think he can possibly steer the ship in the right direction. His visions of a Soviet state have to go though. Its not too late to abandon that platform.
Re: Stimulus 101: Obama vs Reagan
The facts are not irrefutable, they are just delivered differently.
Totally different time, totally different situation, totally different issue. There is no 80s boom at the end of this tunnel, but a change in how people conduct business and make money.
I don't care who says it, or how many times, you don't ever generate money by cutting taxes. Never will happen.
Reagan walked out of his presidency in a bigger hole than Carter, and Obama will do the same, not because of his radical spending, but by the brain dead politics of finances he inherited from the Clinton/Bush administrations.
Re: Stimulus 101: Obama vs Reagan
you don't ever generate money by cutting taxes. Never will happen.
I'm pretty toasted at the moment, but hopefully this example will suffice...
Lets say you're a middle class(maybe upper) businessman in the 70s paying those insane Carter tax rates. To say you're not going to be spending much money would be an understatement. You're not gonna be investing much money in your business either. You're gonna sit on what little money he's letting you keep. So the government isn't getting money, you're not getting money, and the people on your payroll aren't getting much money(meaning the government isn't getting much money).
If you're business didn't choke to death before Reagan came in, you saw a massive decrease in your taxes. Meaning you have a bunch of money, your business is now in an environment to thrive, and you are able to pay your workers. You've basically just injected the economy with a bunch of cash, and of course the government sees an increase in money due to this. Which is why....
Tax revenues actually boomed from roughly $600 billion in 1981 to $1 trillion in 1989.
Taxes were cut, yet the governments piggy bank was overflowing.
Reagan walked out of his presidency in a bigger hole than Carter
Define "hole".
In 1976-80, people were being taxed literally to death(with nothing to show for it of course), their cars were parked in a mile long line at a gas station, had someone trying to push a radical agenda(comparable worth anybody?), list goes on and on.
As you already know(and the article also states it), the deficits were simply a byproduct of building up our military machine and bankrupting the Soviets. There were no economic disasters, huge fiscal blunders,etc. Imagine that decade if so much money didn't have to be spent on defense. We would have likely been running surpluses.
Sounds like a good hole to live in.
Re: Stimulus 101: Obama vs Reagan
Axlin08 wrote:you don't ever generate money by cutting taxes. Never will happen.
I'm pretty toasted at the moment, but hopefully this example will suffice...
Lets say you're a middle class(maybe upper) businessman in the 70s paying those insane Carter tax rates. To say you're not going to be spending much money would be an understatement. You're not gonna be investing much money in your business either. You're gonna sit on what little money he's letting you keep. So the government isn't getting money, you're not getting money, and the people on your payroll aren't getting much money(meaning the government isn't getting much money).
If you're business didn't choke to death before Reagan came in, you saw a massive decrease in your taxes. Meaning you have a bunch of money, your business is now in an environment to thrive, and you are able to pay your workers. You've basically just injected the economy with a bunch of cash, and of course the government sees an increase in money due to this. Which is why....
Tax revenues actually boomed from roughly $600 billion in 1981 to $1 trillion in 1989.
Taxes were cut, yet the governments piggy bank was overflowing.
Reagan walked out of his presidency in a bigger hole than Carter
Define "hole".
In 1976-80, people were being taxed literally to death(with nothing to show for it of course), their cars were parked in a mile long line at a gas station, had someone trying to push a radical agenda(comparable worth anybody?), list goes on and on.
As you already know(and the article also states it), the deficits were simply a byproduct of building up our military machine and bankrupting the Soviets. There were no economic disasters, huge fiscal blunders,etc. Imagine that decade if so much money didn't have to be spent on defense. We would have likely been running surpluses.
Sounds like a good hole to live in.
James they weren't "Jimmy Carters Taxes". Taxes on the upper class were always high in America. The Rockefellers & Vanderbilts & Carnegie's all seemed to thrive still. 
Anyway, don't glorify Reagan so much. Yeah, he reduced taxes for the rich, by 50%, but he also tripled the national debt from only 1 trillion to 3 trillion. That's basically like me tripling my salary by putting $100,000 worth of stuff on my credit card. Boy, that was a great year! 
Re: Stimulus 101: Obama vs Reagan
Ross Perot charts aside, a president "owns" the era he serves under. He doesn't get a free pass because a previous dipshit did the same thing. Do you give Bush a free pass because major tax cuts have been done before? No, you hold him responsible for his actions, good or bad.
We already know there was debt, and the reasons why. Yet there was still an unprecedented boom.
The day Reagan stops being glorified is the same day people stop trying to paint it as a failed presidency.
Re: Stimulus 101: Obama vs Reagan
Nobody is downing the ability of Ronald Reagan, and what he did. But to compare it to Obama's situation is beyond retarded.
There is no comparison. Two entirely different universes.
And as for definition of lower taxes = more revenue, that's another part of "trickle down economics", which is at the Republican core of business.
And maybe it works, all I know is in my life, I haven't seen it work, and i've known ALOT of businessmen. Typically, lower taxes, means more profit for the man running the business, who then in turn hoards the money, and spends it on more frivilous things, and rarely passes it on to the employee.
It never trickles down. It simply makes a fat man - fatter. That's been my experience.
Re: Stimulus 101: Obama vs Reagan
As for the Republican party, I think they should use the California situation as their rallying call. Granted, I live far away from there & know little about what's going on, and the public opinion. It sounds stupid considering it's a Republican Governor.. but it's also a Governor with little to nofuture in "Election" politics (I can't see him being a Senator). Therefore, start pulling out the punches. Like Bobby Jinal said in his horrific speech about cutting gov't programs (Granted, don't cut Earthquake research), cut wasteful spending, put a hiring freeze on all non-emergency (police, fire) government jobs, Reduce welfare spending no more free rides. Fight illegal immigration, show how it's detrimental to the state & govt's budget. Put up the wall across the states border, leaving them to flood in Ariz, N Mex & Texas instead.
In general people want this stuff, but they have to do it, not just talk about it in vague terms like "Fiscal Conservative" and "Cut excess spending". You got (I think) a soon outgoing governor, with a mess on his hands, in a state with alot of House seats and Electoral votes, and alot of media attention.
Oh yeah, legalizing weed wouldn't hurt either. Even though it goes against alot of what they believe, he could sign the bill, if other democratic state people allowed it to pass. I don't know the makeup of their state voting, but "Oh, they passed it, there wasn't much I could do and I didn't want to veto it" could be his excuse. Then exit stage left.
Re: Stimulus 101: Obama vs Reagan
Schwarzenegger will be a Senator... write it down.
Tons of sway, tons of connections, and can practically buy his way in.
The only thing he will never get is anything close to President. Meaning no VP nod's or Speaker of the House in a Rep majority.
As for 'actors', I think Chuck Norris will make a run at something in Texas in the next 10 years too.
Re: Stimulus 101: Obama vs Reagan
I'll make a simple plan: Trickle down economics with profit sharing at any business with ties to the gov't (including contractors). Leave minimum wage where it is (though raising it hurts lower income families in my opinion). The rich get richer when they actually earn it, the poor gets more money via higher wages and profit sharing, and if the gov't has to save your ass, the profits (after paying back the taxpayers) go to all of the employees, not just the executives or stockholders until said business is no longer on gov't life support. It's very simplistic, but not necessarily a bad place to start.
Like in most cases, the best solution lies between the dems and the repubs, but there are not likely to be any leaders that are ever going to gain national exposure by claiming to be completely in the middle. Neither party will allow that to happen.
Re: Stimulus 101: Obama vs Reagan
^ That's not a bad plan. A start at least. As a last resort, if a companies failing, it's stock already plunged & they need gov't life support, agree to those terms.
Axlin08 I never thought of that, but Chuck Norris will probably be a politician in the future. Or at least make a run at it.
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