The American public is not stupid…and once their eyes are opened, they toss the bums out…While Keynes had convinced many that government spending was the path to prosperity, that inflation and unemployment could not rise simultaneously. Inflation raises its head only beyond the full employment mark when demand exceeds supply and no idle resources are available to increase output (demand-pull inflation). Inflation and Unemployment | The Freeman | Ideas On Liberty a. A cautionary tale from LBJ’s ‘Great Society’ discredits the progressive principle of more services via ever-expanding government. And, in fact, unemployment and inflation did occur simultaneously. “Carter cannot be blamed for the double-digit inflation that peaked on his watch, because inflation started growing in 1965 and snowballed for the next 15 years.” Carter ruined the economy; Reagan saved it 3. Before Reagan, Americans accepted the promises of expanding government. a. In 1965, the deficit was just 0.2 % of annual GDP b. The Federal Register (which publishes government rules, regulations, meetings, etc.) was 13,266 in 1962 pages http://lls.dc.org/sourcebook/docs/fed-reg-pages.pdf c. Polls showed that only 30% of the public thought that government has grown to large. David Frum, “How We Got Here; The 70’s: The Decade That Brought You Modern Life- For Better or For Worse,” p. 283. d. Four years into the ‘Great Society,’ deficits were up to almost 3% of GDP. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2008/pdf/hist.pdf e. The Federal Register was 51% larger in 1968 4. LBJ and Congress had enacted hundreds of new subsidies, welfare programs, housing programs, urban programs, and educational programs. Federal Aid to the States: Historical Cause of Government Growth and Bureaucracy | Chris Edwards | Cato Institute: Policy Analysis a. Folks who thought that government had grown too big had grown to 40%. Frum, op.cit. 5. Factors that led up to Reagan’s huge electoral landslide, ten times that of Carter, include: a. Eleven consecutive years of deficits and government expansion. b. Federal spending in 1980 was 21.7% of GDP c. The Federal Register was over 87,000 pages. 6. The Reagan electoral victory in 1984 set a new record: the highest total ever received by a presidential candidate, 525! What do you suppose this means for 2012?