Reaganomics is Dead

[The Rabbi]

there are exceptions that prove the rule and then there are things that masquerade as rules. Only a few years ago people were saying it is a rule that property always increases in value.

That is a complete non-sequitur.

complete? wow!

Utterly and totally. It is like saying that because some people say that the rule is if the woman is carrying big it will be a boy then the rules of physics don't really apply.

 

[code1211]

Only a Liberal or a moron can claim we need Gubbamint Spending because there's "no income" in a $13 TRILLION Economy.

It is not about no income.

It is about falling income.

When they say "there's no income," they mean there is no income growth.

Maybe I should stop reading the OP and attached articles

"So are Republicans fighting the last war? What good are tax cuts when people have no income to tax? In this crisis we've run into the same problem we had in the Great Depression: a liquidity trap. Money isn't circulating. The stimulus package may have been over-sold by Obama, but the principle was correct. We need government spending to get out of the trap."

If anyone is old enough to remember priming a pump, you will recall that it takes about a pint of water to create the conditions needed for the pump to be able to move any amount of water so long as the handle is worked.

That is what a stimulus should be. The pint of water that allows the gallons of water to be pumped. How to do this? Incent spending. Whatever the incentive is, it must be simple, clear, easy to figure and significant enough to be an incentive.

It must also be long term enough to get the job done. I have said here before that improvements to one's housing, whether rental or owned is what is needed. I thought a 50% tax credit on spending might work. Maybe a 30% is better.

Using the 30% incentive: If the government used 2 Trillion dollars, the amount it seems likely that Obama will have approved prior to the bought by bribe election of 2010, this would elicite an additional spending spree of private funds of 4.6 Trillion dollars for a total spent of 6.6 trillion dollars or about half of recent annual GDP totals.

Every dollar spent gets a tax credit of 30%. Too late for this now and if this method had been used, it could not have been channeled into the graft, pay back and bribe machine that is the stimulus bill. No way to buy the next election? Who needs it?

It makes one wonder what we could accomplish if we were not represented by the thieves who own multiple million dollar houses in various countries paid for by the salary of a public servant. We can rest easy knowing that Charlie Rangle and the rest of the Ethics Committee members will be our watchdogs.

 

[The Rabbi]

I'm sorry. What kind of stimulus is that? Once the work is done, it is done. WHy should government pay to improve the property of private individuals? And what if I a) own no property, or b) have property in top shape such that it needs no improvement.
This plan rewards the lazy and unthoughtful and punishes the prudent. And we already have enough such plans.

In any case government cannot give one person money without taking it from someone else.

 

[JakeStarkey]

Listen to the losers talk like economists. That is funny! You suckers almost cracked the economy with your greed.

 

[Richard-H]

Reganomics actually died in 1929. He just dug up an old corpse that the neo-conservatives have been romancing for the past 30 years.

Most people were just too ambivalent to care.

Finally, the stinking corpse just got too rotten for everyone to bear. Let's bury it once and for all!

 

[Neubarth]

If the economic conditions are right, Reagan's policies can be very productive. Extended into other economic realities, they can fail miserably. There is no single remedy to economic hard times. It all depends upon what brought us there in the first place.

I voted for Reagan both times that he won. Towards the end of his second term, we could easily see that too much of one thing was too much.

 

[The Rabbi]

If the economic conditions are right, Reagan's policies can be very productive. Extended into other economic realities, they can fail miserably. There is no single remedy to economic hard times. It all depends upon what brought is there in the first place.

What economic realities would cause Reagan's policies (whatever those were) to fail miserably?

 

[Neubarth]

If the economic conditions are right, Reagan's policies can be very productive. Extended into other economic realities, they can fail miserably. There is no single remedy to economic hard times. It all depends upon what brought is there in the first place.

What economic realities would cause Reagan's policies (whatever those were) to fail miserably?

Eight years of too much of the same thing.

 

[The Rabbi]

If the economic conditions are right, Reagan's policies can be very productive. Extended into other economic realities, they can fail miserably. There is no single remedy to economic hard times. It all depends upon what brought is there in the first place.

What economic realities would cause Reagan's policies (whatever those were) to fail miserably?

Eight years of too much of the same thing.

So eight years of expanding GDP, low unemployment and low inflation would make Reagan's policies fail miserably?
What about 8 years of high inflation, high unemployment, and high taxes?

 

[Toro]

Only a Liberal or a moron can claim we need Gubbamint Spending because there's "no income" in a $13 TRILLION Economy.

It is not about no income.

It is about falling income.

When they say "there's no income," they mean there is no income growth.

Maybe I should stop reading the OP and attached articles

"So are Republicans fighting the last war? What good are tax cuts when people have no income to tax? In this crisis we've run into the same problem we had in the Great Depression: a liquidity trap. Money isn't circulating. The stimulus package may have been over-sold by Obama, but the principle was correct. We need government spending to get out of the trap."

I understand the confusion, but I hear this all the time from all sorts of people. He means no income growth. Clearly, if there was no income, GDP would be zero. Nobody means that. Well, nobody except maybe Terral.

 

[Toro]

The problem with declaring the Reagan economic model dead is that spending was never cut.

When anyone accomplishes both tax and significant spending cuts, then we can sit around arguing the merits of the results.

Reaganonomics wasn't about cutting spending. It was about cutting taxes. Cutting taxes would spur economic growth and generate enough tax revenue to offset the increased spending. That may be true if tax rates are 60% or higher but it didn't apply to the US where effective tax rates were lower. Bush the Elder called it Voodoo-economics, and he was right. That's why Reagan raised taxes, and gave the country the biggest tax increase ever after giving it the biggest tax cut ever, though the increase was about half the cut.

Yes, it was about cutting spending. Failure to do so is well known as one of Reagan's greatest regrets.

Therefore, the Reagan model really has never been tried.

The extreme promises of supply-side economics did not materialize. President Reagan argued that because of the effect depicted in the Laffer curve, the government could maintain expenditures, cut tax rates, and balance the budget. This was not the case. Government revenues fell sharply from levels that would have been realized without the tax cuts.

Supply-side economics - Wikipedia, the free encyclopedia

The belief by some proponents of Reaganomics that the tax rate cuts would more than pay for themselves was influenced by the Laffer curve, a theoretical taxation model that was particularly in vogue among some American conservatives during the 1970s. Arthur Laffer's model predicts that excessive tax rates actually reduce potential tax revenues, by lowering the incentive to produce; the model also predicts that insufficient tax rates (rates below the optimum level for a given economy) will also lead directly to a reduction in tax revenues, although this point is often overlooked[28].

Reaganomics - Wikipedia, the free encyclopedia

It is well known that are among the variables that influence the decisions made by consumers/workers and firms. In the late seventies, the label "Supply Side Economics" was applied to the argument that lower tax rates would improve private sector incentives, leading to higher employment, productivity, and output in the US economy. George Bush, in the days when he was an opponent of Ronald Reagan in the 1980 primaries, referred to an extreme version of this theory espoused by Reagan as "voodoo economics." In this version a cut in tax rates was predicted to result in an increase in tax revenue, and thus not increase the government deficit (the famous Laffer Curve effect). We're going to run through the arguments for such incentive effects, and try to evaluate the policy.

Supply Side Economics

From David Stockman's book, [ame=http://www.amazon.com/Triumph-Politics-Reagan-Revolution-Failed/dp/0380703114/ref=sr_1_1?ie=UTF8&s=books&qid=1257890681&sr=8-1]The Triumph of Politics,[/ame] which is a great read on the internal battles in the administration, and how those who said that you didn't need to cut spending because the tax cuts would increase tax revenues.

Looking back, the only thing that can be said to have been innocent about the Reagan Revolution was the objective of improving upon what we inherited. The inflation-battered American economy of 1980 was no more sustainable or viable than is the deficit-burdened economy of 1986. Likewise, the bloated American welfare state budget of 1980 was not very defensible; it merited at least a strong and principled challenge.

But the Reagan Revolution’s abortive effort to rectify these inherited conditions cannot be simply exonerated as a good try that failed. The magnitude of the fiscal wreckage and the severity of the economic dangers that resulted are too great to permit such an easy verdict. In the larger scheme of democratic fact an economic reality there lies a harsher judgment. In fact, it was the basic assumptions and fiscal architecture of the Reagan Revolution itself which first introduced the folly that now envelops our economic governance.

The Reagan Revolution was radical, imprudent, and arrogant. It defied the settled consensus of professional politicians and economists on its two central assumptions. It mistakenly presumed that a handful of ideologue were right and all the politicians were wrong about what the American people wanted from government. And it erroneously assumed that the damaged, disabled, inflation- swollen US economy inherited from the Carter Administration could be instantly healed when history and most professional economist said it couldn’t be.

By the time of the White House debate of early November 1981, it had become overwhelmingly clear that the Reagan Revolution’s original political and economic assumptions were wrong by a country mile. By then the veil of the future has already parted and we were viewing reality from the other side. What we saw invalidated the whole plan—right there and then.

The ensuing years only amplified what we had already learned by the eleventh month.... We were not headed toward a brave new world, as I had thought in February. We were not headed toward a vindication of the President’s half-revolution, as Don Regan and the supply siders fatuously insisted in November. Where we were headed was toward a fiscal catastrophe.

David Stockman, The triumph of politics

 

[Oddball]

Yeah, yeah, yeah.

That still doesn't refute that Reagan's economic models aimed to cut spending and bureaucracy as well....That he failed to do so is pretty much irrelevant.

The claim that growing tax receipts was a way to fund growing gubmit, as the end game of Reagan's economic policies, is just silly.

 

[Toro]

Yeah, yeah, yeah.

That still doesn't refute that Reagan's economic models aimed to cut spending and bureaucracy as well....That he failed to do so is pretty much irrelevant.

The claim that growing tax receipts was a way to fund growing gubmit, as the end game of Reagan's economic policies, is just silly.

It is silly but that is what Reagan argued on the campaign trail. In the primaries, Bush the Elder called it Voodoo Economics.

Using the principles of supply-side economics, Reagan insisted that reducing taxes would not only spur supply but create so much revenue due to increased employment and production that the country would be making money instead of losing it. With the triple promise of lower taxes, higher employment, and cheaper products, it is easy to see why voodoo economics was an attractive proposal in theory.

What is Voodoo Economics?

 

[Oddball]

Yeah, I get that part.

Still, the end aim was not to grow bureaucracy.

 

[Procrustes Stretched]

Yeah, yeah, yeah.

That still doesn't refute that Reagan's economic models aimed to cut spending and bureaucracy as well....That he failed to do so is pretty much irrelevant.

The claim that growing tax receipts was a way to fund growing gubmit, as the end game of Reagan's economic policies, is just silly.

Reagan's own OMB man. The main financial point man on Reaganomics.
David Stockman:

Stockman was quoted as referring to the Reagan Revolution's legacy tax act as: "I mean, Kemp-Roth [Reagan's 1981 tax cut] was always a Trojan horse to bring down the top rate.... It's kind of hard to sell 'trickle down.' So the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory." Of the budget process in his first year on the job, Mr. Stockman is quoted as saying: "None of us really understands what's going on with all these numbers," which was used as the subtitle of the article.

The fiscal misunderstandings had ramifications. With the national debt benchmarking at $1.0 trillion in October 1981, not counting trillions in accumulating net interest carrying costs, the national debt was put on a political trajectory via the legacy of the Reagan Revolution budgets, towards the $9.1 trillion it reached by the end of 2007. The legacy of sizable budget deficits added up in the national debt and interest costs alone on the debt clicked in at $1.17 billion per day for fiscal year ending 2007; $430 billion for the year

 

[Procrustes Stretched]

Yeah, I get that part.

Still, the end aim was not to grow bureaucracy.

yeah right::::::::avid Stockman disagress with you, and he unlike you, was there.

 

[JakeStarkey]

Yes, it was to grow bureaucracy and make the GOP more powerful.

That is the only sane conclusion.

 

[The Rabbi]

Yeah, yeah, yeah.

That still doesn't refute that Reagan's economic models aimed to cut spending and bureaucracy as well....That he failed to do so is pretty much irrelevant.

The claim that growing tax receipts was a way to fund growing gubmit, as the end game of Reagan's economic policies, is just silly.

It is silly but that is what Reagan argued on the campaign trail. In the primaries, Bush the Elder called it Voodoo Economics.

Using the principles of supply-side economics, Reagan insisted that reducing taxes would not only spur supply but create so much revenue due to increased employment and production that the country would be making money instead of losing it. With the triple promise of lower taxes, higher employment, and cheaper products, it is easy to see why voodoo economics was an attractive proposal in theory.

What is Voodoo Economics?

Reagan was elected by a landslide twice. Bush Sr failed his re-election bid, largely over his economic policies.

 

[thehairyfiddler]

Um doggie the Republicans have only had control of both house of congress for ten of the last 60 years and in the first 6 years of that they cut spending as much as they could. President for puposes of domestic spend are of small consequence if their party doesn't control congress.

 

[CrusaderFrank]

Um doggie the Republicans have only had control of both house of congress for ten of the last 60 years and in the first 6 years of that they cut spending as much as they could. President for puposes of domestic spend are of small consequence if their party doesn't control congress.

In the USA, Congress control spending