Psycho, Reaganomics

[OCA]

Hey Sicko why don't you be a man for once in your tenure here at USMB and try and dispute these undisputable and irrefutable facts that Reaganomics was the greatest economic system we had in the 2nd half of the 20th century. But i'm guessing you'll probably cut and run like the yellow bastard you are, same as you did last night.

Everybody wave bye to Psycho, cause as soon as he reads this link he's gone.

http://www.usmessageboard.com/forums/showthread.php?s=&threadid=4204&highlight=reaganomics

 

[OCA]

Its very convenient to ignore this Psycho when it refutes everything you believe economically, isn't it? Hell if I was a misguided yellow coward like you i'd ignore it too.

 

[Psychoblues]

Now, now, OCA. Don't project yourself as so pitiful. You can hold your own regardless your one-sided references that have been refuted over and over again by most all respected and non-partisan entities. You go right on with your unresearched ideologies and your obvious inexperience, but I'm here to help you when I can. You don't have to be so belligerent or ignorant. Help is available for you.

Psychoblues

 

[OCA]

I guess i'm just the latest in a long line of debates you knew you couldn't win so you ran. I guess I should take my own advice and not waste keystrokes on an old junkie, can ya dig it Psycho?

 

[Psychoblues]

Yeah, I can dig it, OCA. Don't waste anymore keystrokes on this old Democrat/Drunk. But don't call me out again either. I don't respond eloquently to empty and ridiculous innuendo and simple slander. But do remember, help is available for you, don't let the Angels of Possibility pass you by. Can you dig that?

Psychoblues

 

[OCA]

Hey Psycho go check out that independent review of Reaganomics compared to Bubba's economy, it wipes it out in every aspect, or are you afraid?

 

[OCA]

Well here ya go Psycho, since you are such a pussy and obviously won't hit the link i'll paste it here for ya. Have fun trying to refute this cowboy!

Real Truth About Reaganomics

Economic Growth. The average annual growth rate of real gross domestic product (GDP) from 1981 to 1989 was 3.2 percent per year, compared with 2.8 percent from 1974 to 1981 and 2.1 percent from 1989 to 1995. The 3.2 percent growth rate for the Reagan years includes the recession of the early 1980s, which was a side effect of reversing Carter's high-inflation policies, and the seven expansion years, 1983-89. During the economic expansion alone, the economy grew by a robust annual rate of 3.8 percent. By the end of the Reagan years, the American economy was almost one-third larger than it was when they began. [13] Figure 1 shows the economic growth rate by president since World War II. That rate was higher in the 1980s than in the 1950s and 1970s but was substantially lower than the rapid economic growth rate of more than 4 percent per year in the 1960s. The Kennedy income tax rate cuts of 30 percent that were enacted in 1964 generated several years of 5 percent annual real growth.

Economic Growth per Working-Age Adult. When we adjust the economic growth rates to take account of demographic changes, we find that the expansion in the Reagan years looks even better and that the 1970s' performance looks worse. GDP growth per adult aged 20-64 in the Reagan years grew twice as rapidly, on average, as it did in the pre- and post-Reagan years.

Median Household Incomes. Real median household income rose by $4,000 in the Reagan years--from $37,868 in 1981 to $42,049 in 1989, as shown in Figure 2. This improvement was a stark reversal of the income trends in the late 1970s and the 1990s: median family income was unchanged in the eight pre-Reagan years, and incomes have fallen by $1,438 in the anti-supply-side 1990s, following the 1990 and 1993 tax hikes. [14] Most of the declines in take-home pay occurred on George Bush's watch. Under Bill Clinton's tenure, there has been zero income growth in median household income.

Employment. From 1981 through 1989 the U.S. economy produced 17 million new jobs, or roughly 2 million new jobs each year. Contrary to the Clinton administration's claims of vast job gains in the 1990s, the United States has averaged only 1.3 million new jobs per year in the post-Reagan years. The labor force United States has averaged only 1.3 million new jobs expanded by 1.7 percent per year between 1981 and 1989, but by just 1.2 percent per year between 1990 and 1995. [15]

Hours Worked. Table 1 confirms that hours worked per adult aged 20-64 grew much faster in the 1980s than in the pre -or post-Reagan years.

Unemployment Rate. When Reagan took office in 1981, the unemployment rate was 7.6 percent. In the recession of 1981-82, that rate peaked at 9.7 percent, but it fell continuously for the next seven years. When Reagan left office, the unemployment rate was 5.5 percent. This reduction in joblessness was a clear triumph of the Reagan program. Figure 3 shows that in the pre-Reagan years, the unemployment rate trended upward; in the Reagan years, the unemployment rate trended downward; and in the post-Reagan years, the unemployment rate has fluctuated up and down but today remains virtually unchanged from the 1989 rate.

Productivity. For real wages to rise, productivity must rise. Over the past 30 years there has been a secular downward trend in U.S. productivity growth. Under Reagan, productivity grew at a 1.5 percent annual rate, as shown in Figure 4. This was lower than in the 1950s, 1960s, and 1970s but much higher than in the post-Reagan years. Under Clinton, productivity has increased at an annual rate of just 0.3 percent per year--the worst presidential performance since that of Herbert Hoover.

Inflation. The central economic evil that Ronald Reagan inherited in 1981 from Jimmy Carter was three years of double-digit inflation. In 1980 the consumer price index (CPI) rose to 13.5 percent. By Reagan's second year in office, the inflation rate fell by more than half to 6.2 percent. In 1988, Reagan's last year in office, the CPI had fallen to 4.1 percent. Figure 5 shows the inflation and interest rate trend.

Interest Rates. In 1980 the interest rate on a 30-year mortgage was 15 percent; this rate rose to its all-time peak of 18.9 percent in 1981. The prime rate steadily fell over the subsequent six years to a low of 8.2 percent in 1987 as the inflationary expectation component of interest rates fell sharply. The prime rate hit its 20-year low in 1993 at 6.0 percent. The Treasury Bill rate also fell dramatically in the 1980s--from 14 percent in 1981 to 7 percent in 1988. In the 1990s, interest rates have continued to migrate gradually downward, as shown in Figure 5.

Savings. The savings rate did not rise in the 1980s, as supply-side advocates had predicted. In fact, in the 1980s the personal savings rate fell from 8 percent to 6.5 percent. [16]In the 1990s the average savings rate has fallen even further to an average of 4.9 percent [17]--although the rate of decline has slowed.
The decline in the personal savings rate in the 1980s was disappointing, but two factors mitigate the implications of these statistics. First, the drop in the savings rate was partly a natural response to demographic changes in America--namely, the baby boomers entering their peak spending years. Second, the savings rate data fail to account for real gains in wealth, which clearly are an important form of savings. The real value of capital assets and property doubled from 1980 to 1990. The Dow Jones Industrial Average nearly tripled from a low of 884 in 1982 to 2,509 in 1989. These increases in the value of stocks, bonds, homes, businesses, and so forth added to Americans' balance sheets hundreds of billions of dollars of wealth that are not accounted for in the savings rate statistics. [18]






Total Revenue Growth. Nominal federal revenues dou-bled in the 1980s from $517 billion to $1.031 trillion. From 1981 to 1989 real federal revenues climbed by 20 percent. As a share of GDP, however, federal tax revenues fell by 1.0 percentage point during that period.

Income Tax Receipts. Even income tax revenues grew substantially in the 1980s. In 1981 income tax receipts totaled $347 billion; in 1989 they totaled $549 billion, a 58 percent increase. In fact, income tax collections grew only slightly slower in the 1980s than in the 1990s despite income tax rate reductions in the Reagan years and increases in the Bush-Clinton years. Real income tax revenues rose by 16.3 percent from 1982 to 1989 after the top income tax rate had been reduced from 70 percent to 50 percent in 1983, and then to 28 percent in 1986. According to the latest (August 1996) Congressional Budget Office (CBO) forecast, real income tax revenues will have grown by 17.9 percent from 1990 to 1997, following the raising of the top income tax rate from 28 percent to 31 percent in 1990 and then to 39.6 percent in 1993. [19] On a purely static basis, the 1990 tax increase raised $380 billion less in income tax revenues from 1991 to 1995 than had been predicted. [20]

Federal Spending. The federal budget was not cut under Reagan. In fact, it was 69 percent larger when Reagan left office than when he entered it--22 percent larger in real terms. As a share of GDP, federal outlays declined by less than 1 percentage point. [21]




Fable 10: In the 1980s the Rich Got Richer and the Poor Got Poorer

During the 1980s the bucket of liberty and economic freedom rose, while the bucket of income equality fell. Upper-tier Americans significantly expanded their share of national wealth, while low-income citizens lost ground. Reagan policies were critical to the shift. [48]

During the Reagan years, the total share of national income tilted toward the wealthiest Americans. From 1980 to 1988 the wealthiest 5 percent of Americans increased their share of total income from 16.5 to 18.3 while the poorest fifth saw their share fall from 4.2 to 3.8 percent. [49]

Yet it is not true that the gains by the wealthiest Americans came at the expense of low-income Americans. From 1981 to 1989, every income quintile--from the richest to the poorest--gained income according to the Census Bureau economic data (see Figure 11). [50] The reason the wealthiest Americans saw their share of total income rise is that they gained income at a faster pace than did the middle class and the poor. But Reaganomics did create a rising tide that lifted nearly all boats.




Fable 11: The Poor and Minorities Lost Ground under Reagan's Economic Policies

The 1980s was the first decade since the 1930s in which large numbers of Americans actually suffered a serious decline in living standard. [51]

The poorest 20 percent of Americans experienced a 6 percent gain in real income in the 1980s and have suffered a 3 percent loss in income in the 1990s. Figure 13, which compares the income trends for the poorest fifth of Americans over the past 20 years, shows that the poor did the best during the Reagan years. Black Americans saw their incomes grow at a slightly faster pace (11.0%) than whites (9.8%) in the Reagan years (see Table 9).




Fable 12: The Rich Saw Their Tax Bills Go Down in the 1980s While Everyone Else Paid More

Contrary to popular rhetoric, the wealthiest Americans did not pay less taxes; rather, they paid more taxes after the income tax rate cuts in 1981. In constant dollars, the richest 10 percent of Americans paid $177 billion in federal income taxes in 1980 but paid $237 billion in 1988. The remaining 90 percent of households paid $5 billion less in income taxes over this period. [52] They earned more and they paid more. In fact, Federal Reserve Board member Lawrence Lindsey has shown that taxes paid by the wealthy were substantially higher than they would have been if the top tax rate had remained at 70 percent.[53] Figure 14 shows that the share of total income taxes paid by the wealthiest 1 percent of all Americans actually rose from 18 percent in 1981 to 25 percent in 1990. The wealthiest 5 percent of Americans saw their tax share rise from 35 to 44 percent. So the rise in the deficit was clearly not a result of "tax cuts for the rich."



Conclusion

The 1980s were years of economic progress, not decline. Real GDP grew by about one-third in the 1980s. The economic gains were widely distributed among income groups, with every income quintile, from the richest fifth to the poorest fifth, gaining ground in the Reagan years.

The Reagan tax cuts were not a primary cause

of the eruption of the deficit in the 1980s. The main two causes were an unexpectedly sharp reduction in inflation in the early 1980s that led to large real increases in federal spending, and a nearly $1 trillion military build-up during the last phase of the cold war.

Most significantly, the economy of the 1980s outperformed that of the 1990s in virtually every measurable category. Economic growth was higher, job creation was faster, incomes rose much faster, and productivity climbed at a healthier pace.

Here you go Demos, try and debunk it if you like and hit the link if you'd like to learn more truth.

Jimmy sorry it was so long

http://www.cato.org/pubs/pas/pa-261.html

 

[Psychoblues]

Can you give me any of this in a single paragraph? I take after the shrub and get pretty bored while surmising the details and/or after 25 words or so. Jeesh, you're giving the most important person in the world a substantial break, can't you afford one for one much less fortunate/educated?

Psychoblues

 

[OCA]

Skim it Psycho its all one big giant economic gift that Ronnie and the Repubs bestowed upon us.

In short, every single economic and social class prospered under Reagan unlike Clinton which the Democrats would like you to believe. The deficit was not caused by Republicand but rather Tip O'Niell and the Democrat controlled congress which actually increased spending across the board. Reagan did not cut social programs, did not starve people, quite the contrary, government actually grew a little under him. Reagan once again proved that cutting taxes, like JFK before him, is the only real way to grow an economy.

 

[crazy canadian]

If the gov't all of a sudden had a whole lot of free money to give around, could they then cut taxes?

 

[OCA]

Originally posted by crazy canadian
If the gov't all of a sudden had a whole lot of free money to give around, could they then cut taxes?

Actually it doesn't take "free money" as you put it, that would cause inflation. Actually it has been proven that tax cuts actually increase revenues as more cash in the pocket of the citizen creates more economic opportunities and new business for one, the other is consumers spend more and keep the money circulating which drives an economy more than any other factor.

 

[JIHADTHIS]

Originally posted by crazy canadian
If the gov't all of a sudden had a whole lot of free money to give around, could they then cut taxes?

That's your (assuming your a taxpayer) money to begin with. It ain't free, and if they don't need it, it should not have been confiscated in the first place:

 

[OCA]

I forgot to put in that with tax cuts and new business opportunities unemployment naturally falls as the new businesses need employees and all those employees and employers pay federal taxes so the revenues increase.

 

[Psychoblues]

Yeah, and I forgot to add that when Ford Motor Company received their 8 digit tax rebate in 1984 and moved 15 plants to Brazil and beyond and the American consumer didn't see a single cent in price reduction, oh never mind. I guess minimum wage is good, if it'll only hold out for a few more years.

It sure is hard to lead the blind that are so convinced they can see.

Psychoblues

 

[Avatar4321]

first, Why on earth are we having this debate. Reaganomics worked. all you have to is look at the economy during the Carter administration and then take a look at it after Reagan came to power. He gave us nearly 25 years of a booming economy. During that economic boom we managed to balance the budget for a time. Amazing isnt it? Yet we still see people arguing that tax cuts dont work. But the evidence is in they do. Reagan, Guilianni, and President Bush all have proven that tax cuts work. Not only do they work, its the right thing to do. Its the peoples money. Not the governments. I dont understand how anyone can let the government take 30%+ of their income and be ok with that.

Second, if you are worried about the spending start harassing your congressmen about it. Senator Daschle says he doesnt even know where half the budget goes. Is this a man who is taking his stewardship seriously? If your representatives dont respond. dont vote for them.

 

[Annie]

More on the same:

http://www.opinionjournal.com/extra/?id=110005190

A PRESIDENT PASSES

The Real Reagan
He was a leader of impressive skill and stunning vision.

BY KEN ADELMAN
Wednesday, June 9, 2004 12:01 a.m. EDT

(Editor's note: This article appeared in The Wall Street Journal, Oct. 5, 1999.)

Edmund Morris's "memoir" of Ronald Reagan has raised eyebrows by its use of various fictional devices to probe the former president's inner life. But while Mr. Morris (and his critics) may puzzle over Mr. Reagan's essence, I still marvel at his actions. What I witnessed personally--not quasifictionally, not at a one-step remove--was a leader of impressive skill and stunning vision.

The first epiphany came early in his administration, when we gathered in a formal National Security Council meeting in the Cabinet Room. Secretary of State Alexander Haig opened by lamenting that the Law of the Sea Treaty was something we didn't like but had to accept, since it had emerged over the previous decade through a 150-nation negotiation. Mr. Haig then proceeded to recite 13 or so options for modifying the treaty--some with several suboptions.

Such detail, to put it mildly, was not the president's strong suit. He looked increasingly puzzled and finally interrupted. "Uh, Al," he asked quietly, "isn't this what the whole thing was all about?"

"Huh?" The secretary of state couldn't fathom what the president meant. None of us could. So Mr. Haig asked him.

Well, Mr. Reagan shrugged, wasn't not going along with something that is "really stupid" just because 150 nations had done so what the whole thing was all about--our running, our winning, our governing? A stunned Mr. Haig folded up his briefing book and promised to find out how to stop the treaty altogether.

That set the tone for the first Reagan administration.





Arms-control negotiations were at the heart of Mr. Reagan's second term. In November 1985 came the first superpower summit in six years. The new Soviet ruler, Mikhail Gorbachev, was nearly a generation younger than the president, reportedly brighter and surely more conversant on technical issues.
The summit took place in a private chateau in Geneva. Mr. Reagan arrived first. As Mr. Gorbachev's limo pulled up, the president bounded down the stairs looking young and eager, without topcoat or hat. Slowly out of his car emerged Mr. Gorbachev, bundled for the brisk weather with big hat, thick scarf and huge overcoat. Compared to the sprightly man in his 70s, the Soviet leader looked as cold and lumbering as the country he ruled.

After shaking hands and posing for the cameras, Mr. Reagan pointed at the chateau in a gesture of welcome. They climbed the stairs together, Mr. Gorbachev a bit slower, and Mr. Reagan slipped his hand under Gorbachev's arm--just in case he needed some support to make it to the front door. The Soviet delegation got the picture. "I felt like we lost the game during this first movement," pressmeister Sergei Tarasenko recounted years later. "We started with the wrong move."

While Mr. Tarasenko watched with disappointment from one side, we watched with trepidation from the other. So far, so good; the president personified a vigorous and forward-looking America. But that was stagecraft. How would our man do on statecraft in the high-stakes summit sessions?

Just fine, it turned out. Mr. Gorbachev, as expected, made the best negotiating points. But the president made all the important points. No, we weren't giving up the Strategic Defense Initiative. Yes, we do consider our democratic system superior. No, you can't keep your 100,000-plus troops in Afghanistan. Yes, we can have another summit in Washington. Always graceful, the president was somehow always on the offensive. On each topic they debated (heatedly at times), it was Mr. Reagan who seized the moral high ground, leaving Mr. Gorbachev surprised and off-balance.

That must have bothered Mr. Gorbachev during the nine months before he proposed the come-as-you-are, October 1996 snap summit in Reykjavik, Iceland. It was a strange and wondrous event. The two leaders met in the supposedly haunted Hofti House. Secret Service agents manned their communications gear in one half of the basement; KGB agents did likewise in the other half (which inconveniently had the only bathroom). On the floor above, a U.S. Air Force officer stood holding the "football," the briefcase containing the president's nuclear launch codes. Eight feet away, a Red Army officer held a similar briefcase, presumably containing similar wares. I never saw either officer acknowledge the other all weekend long.

As has since become legendary, Mr. Gorbachev began by unloading a briefcase full of proposals. In arms control, as in other technical realms, Mr. Reagan "kept aloof from all details, drew magnificent plans, and let others to find magnificent means," as Horace Walpole said of British statesman William Pitt.





We found magnificent means during a negotiating session that began at 8 p.m. and ended a little after 6 a.m. the following day. That night alone we made more progress on reducing strategic arms than we had in the previous four years. Later that morning, the president told us that he and Mr. Gorbachev had agreed on key provisions for a "zero option," which for the first time would eliminate an entire class of nuclear weapons. The two leaders signed the INF treaty 14 months later.
But nothing was set yet, and Mr. Gorbachev staked all his concessions on gaining one single concession from the president--confining SDI to "the laboratory." We all came up with gimmicks to counter the move--defining laboratory to include the universe and the like--but Mr. Reagan established the policy: No concessions on SDI, however strong the pressure to do so.

Negotiations between the two leaders went into overtime. Periodically the president would climb the stairs to consult with us on the second floor. Finally, after reading a redraft and suggesting that we change one item to toughen our position, he headed for the door with our final offer in hand. We wished him luck. But just as the president reached for the doorknob, he hesitated. "Do any of you fellows think we're giving away too much?" he asked. "Are we protecting everything we should?"

It was a most impressive question. Some 3,000 journalists from around the world waited on the Hofti House lawn for an arms-control "breakthrough." But Mr. Reagan cared more about U.S. security interests. And he understood how crucial SDI was not only to America's safety but also to the Soviet Union's undoing.

Within minutes, a huge Secret Service agent flung open our meeting-room door to say, "They're breaking!" We grabbed our papers and raced downstairs. I spotted Mr. Gorbachev and then the president leaving the parlor for the front door. Mr. Reagan's face, red and angry, told me all I needed to know.

The president escorted the general secretary to his limousine--no gentle arm-holding here. Mr. Gorbachev tried to console. He said he couldn't imagine anything else they could have done. Mr. Reagan, still steaming, looked him in the eye and said, "Well, you could have said yes!"


Some dozen years later, when visiting the U.S., Mr. Gorbachev was asked how it happened. How he came into office ruling the communist Soviet Union, and left office with no Soviet Union and no communism. What was the turning point?
Without hesitation, he answered: "Oh, it's Reykjavik."

Mr. Adelman was President Reagan's director of the Arms Control and Disarmament Agency.

 

[OCA]

Originally posted by Psychoblues
Yeah, and I forgot to add that when Ford Motor Company received their 8 digit tax rebate in 1984 and moved 15 plants to Brazil and beyond and the American consumer didn't see a single cent in price reduction, oh never mind. I guess minimum wage is good, if it'll only hold out for a few more years.

It sure is hard to lead the blind that are so convinced they can see.

Psychoblues

Yep Psycho hard to deal with that reality, which was the bottomline for Americans was real sweet under Reagan. Attack the corporations, hey its all you guys got left, right?

 

[Psychoblues]

Thanks, Kathianne. I still enjoy favorable laments concerning the "Great Communicator". Ronald Reagan will always remain a hero to me, regardless the critisisms against him.

Psychoblues

 

[Annie]

You're quite welcome Psycho. I was so impressed with your post. Some things do bridge ideologies.