The two presidential administrations faced or are facing two different economic problems. Reagan was president when the Federal Reserve squeezed inflation away. The economy suffered for a bit, then bounded back - probably spurred by the spending derided below.
Obama became president when the West entered a period of massive deleveraging. Everyone is paying down debt. Our houses are worth less than we're paying on them. Escalating healthcare costs are consuming increases in productivity. The only way out may be fiscal stimulus, but it goes against the culture of paying down debt. Today's problem is entirely different from that of 1980, and will take longer to correct. --- In FairfieldLife@yahoogroups.com, "Rick Archer" <rick@...> wrote: > > From: FairfieldLife@yahoogroups.com [mailto:FairfieldLife@yahoogroups.com] On > Behalf Of sparaig > Sent: Friday, August 26, 2011 11:31 AM > To: FairfieldLife@yahoogroups.com > Subject: [FairfieldLife] Re: Anyone have a good rebuttal to this article? > > > > > > Google: reagan tax cut myth > e.g. > > http://www.cbsnews.com/8301-503544_162-20030729-503544.html > > "And while Reagan somewhat slowed the marginal rate of growth in the budget, > it continued to increase during his time in office. So did the debt, > skyrocketing from $700 billion to $3 trillion. " > > that's an increase of 400 percent over 8 years. > > People are bitching about Obama's increases to the debt, which are a tiny > fraction of Reagan's. > > Lawson > > My conservative friend responded: > > Exactly, you are stuck in your liberal bias. Too bad. Living a lie isnât > good your health. The debt increased under Reagan because the congress was > controlled totally by democrats. Every budget Reagan sent up there was > thrown out. Letâs see, Reagan under the Dems had an increase of less than > $300 billion a year. Obama, again under most Dems has had a $1.5 trillion > increase in debt per year. If $300 billion a year is bad, isnât $1.5 > trillion 5 times worse? Also, you want more revenue and have the ârichâ > may more, right? Under Reagan tax revenues increased by a very large amount > and upper income people paid a lot more: > http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm > > > > But again, I guess facts simply donât matter. What seems to matter is to > punish success and reward failure. What a crazy world you live in. > Rewarding success leads to more success. Rewarding failure leads to more > failure. This simply economic logic seems to baffle liberals. > > > > > > --- In FairfieldLife@yahoogroups.com <mailto:FairfieldLife%40yahoogroups.com> > , "Rick Archer" <rick@> wrote: > > > > > > Obamanonics vs. Reaganomics > > > > > > One program for recovery worked, and the other hasn't. > > > > > > * By <http://online.wsj.com/search/term..html?KEYWORDS=STEPHEN+MOORE > > <http://online.wsj.com/search/term.html?KEYWORDS=STEPHEN+MOORE&bylinesearch=true> > > &bylinesearch=true> STEPHEN MOORE > > > > If you really want to light the fuse of a liberal Democrat, compare Barack > > Obama's economic performance after 30 months in office with that of Ronald > > Reagan. It's not at all flattering for Mr. Obama. > > > > The two presidents have a lot in common. Both inherited an American economy > > in collapse. And both applied daring, expensive remedies. Mr. Reagan passed > > the biggest tax cut ever, combined with an agenda of deregulation, monetary > > restraint and spending controls. Mr. Obama, of course, has given us a $1 > > trillion spending stimulus. > > > > By the end of the summer of Reagan's third year in office, the economy was > > soaring. The GDP growth rate was 5% and racing toward 7%, even 8% growth. > > In 1983 and '84 output was growing so fast the biggest worry was that the > > economy would "overheat." In the summer of 2011 we have an economy limping > > along at barely 1% growth and by some indications headed toward a > > "double-dip" recession. By the end of Reagan's first term, it was Morning > > in America. Today there is gloomy talk of America in its twilight. > > > > My purpose here is not more Reagan idolatry, but to point out an > > incontrovertible truth: One program for recovery worked, and the other > > hasn't. > > > > The Reagan philosophy was to incentivize productionââ¬"i.e., the "supply > > side" of the economyââ¬"by lowering restraints on business expansion and > > investment. This was done by slashing marginal income tax rates, > > eliminating regulatory high hurdles, and reining in inflation with a > > tighter monetary policy. > > > > View Full Image > > > > > > > > stevemoore <http://si.wsj.net/img/BTN_insetClose.gif> > > > > stevemoore > > <http://si.wsj.net/public/resources/images/ED-AO139_stevem_G_20110825162903.jpg> > > > > > > The Keynesians in the early 1980s assured us that the Reagan expansion > > would not and could not happen. Rapid growth with new jobs and falling > > rates of inflation (to 4% in 1983 from 13% in 1980) is an impossibility in > > Keynesian textbooks. If you increase demand, prices go up. If you increase > > supplyââ¬"as Reagan didââ¬"prices go down. > > > > The Godfather of the neo-Keynesians, Paul Samuelson, was the lead critic of > > the supposed follies of Reaganomics. He wrote in a 1980 Newsweek column > > that to slay the inflation monster would take "five to ten years of > > austerity," with unemployment of 8% or 9% and real output of "barely 1 or 2 > > percent." Reaganomics was routinely ridiculed in the media, especially in > > the 1982 recession. That was the year MIT economist Lester Thurow famously > > said, "The engines of economic growth have shut down here and across the > > globe, and they are likely to stay that way for years to come." > > > > The economy would soon take flight for more than 80 consecutive months.. > > Then the Reagan critics declared what they once thought couldn't work was > > actually a textbook Keynesian expansion fueled by budget deficits of $200 > > billion a year, or about 4%-5% of GDP. > > > > Robert Reich, now at the University of California, Berkeley, explained that > > "The recession of 1981-82 was so severe that the bounce back has been > > vigorous." Paul Krugman wrote in 2004 that the Reagan boom was really > > nothing special because: "You see, rapid growth is normal when an economy > > is bouncing back from a deep slump." > > > > Mr. Krugman was, for once, at least partly right. How could Reagan not look > > good after four years of Jimmy Carter's economic malpractice? > > > > Fast-forward to today. Mr. Obama is running deficits of $1.3 trillion, or > > 8%-9% of GDP. If the Reagan deficits powered the '80s expansion, the Obama > > deficitsââ¬"twice as largeââ¬"should have the U.S. sprinting at Olympic > > speed. > > > > The left has now embraced a new theory to explain why the Obama spending > > hasn't worked. The answer is contained in the book "This Time Is > > Different," by economists Carmen Reinhart and Kenneth Rogoff. Published in > > 2009, the book examines centuries of recessions and depressions world-wide. > > The authors conclude that it takes nations much longerââ¬"six years or > > moreââ¬"to recover from financial crises and the popping of asset bubbles > > than from typical recessions. > > > > In any case, what Reagan inherited was arguably a more severe financial > > crisis than what was dropped in Mr. Obama's lap. You don't believe it? From > > 1967 to 1982 stocks lost two-thirds of their value relative to inflation, > > according to a new report from Laffer Associates. That mass liquidation of > > wealth was a first-rate financial calamity. And tell me that 20% mortgage > > interest rates, as we saw in the 1970s, aren't indicative of a > > monetary-policy meltdown. > > > > There is something that is genuinely different this time. It isn't the > > nature of the crisis Mr. Obama inherited, but the nature of his policy > > prescriptions. Reagan applied tax cuts and other policies that, yes, took > > the deficit to unchartered peacetime highs. > > > > But that borrowing financed a remarkable and prolonged economic expansion > > and a victory against the Evil Empire in the Cold War. What exactly have > > Mr. Obama's deficits gotten us? > > > > Mr. Moore is a member of the Journal's editorial board. > > > > > > _____ > > No virus found in this message. > Checked by AVG - www.avg.com > Version: 10.0.1392 / Virus Database: 1520/3859 - Release Date: 08/26/11 >
