While Reagan did see expansion of the debt - the GDP actually expanded at a far greater pace.
Revisionist history corrected.
From 1980-1988,
the debt increased 179%
GDP increased 83%.,
Unlike Obama, Reagan had to face down a very strong effort by Congress to oppose him. He managed to navigate those waters reasonably well - seeing a dramatic alteration in the American tax code, and far greater pressure placed on the Soviet Union.
It is true that Reagan did not have a Republican majority. However, he was able to achieve a lot of his legislative objectives (tax cuts, military expansion) thanks to a gaggle of "gypsy moth" Dems who voted with the Republican minority to give them the votes they needed to pass legislation.
The Reagan economy in fact extended well into the 1990's with the combined tech boom that resulted in the regulatory hands off approach to the emerging Internet technologies, as well as the considerable peace dividend which allowed tens of billions to then be available to initiate debt paydown.
The Reagan economy ended with a recession in 1991. In 1993 Clinton and the Dems increased the top tax rate from 31% to 40%, effectively ending "voodoo economics" and the Reagan revolution. Like today, Republicans predicted recession and disaster. What we got was the economy experienced its longest boom post war.
The critical error of Bush I was to cave into the Democrat demands for a tax increase. The media was pounding that particular recession as being far worse than it actually was and the Bush I administration lost its spine and attempted to work with the Democrat Congress in meeting their desire to increase taxes. This allowed a populist uprisings against Bush I that formed into the Perot movement - the fatal dagger in the Bush re-election hopes.
Bush1 inhereted huge and unsustainable deficits from Reagan and, unlike his son, understood he had to take action to correct it.
He passed a very moderate tax increase (from 28% to 31%). Of course, tax increase are the mortal sin of the party to make the rich richer, and many turned on him.
This allowed the relatively unknown Bill Clinton to emerge as the minority victor in that election cycle. By the time Clinton was taking the oath, economists later discoverd that the relatively minor and shallow recession was already over and the economy had been in recovery mode for a number of months prior - but it was too late for Bush I. The great recession of the early 1990's was a fabrication of both the Democrat Congress and the media who used it as a blunt tool to repeatedly whack Bush I over the head with.
The 1991 recession was minor. Real GDP decreased .02% that year. Though if you want to talk about "fabricated" recessions, during the "Clinton recession" of 2001 the real GDP actualy went
up .7%
Clinton then of course had a disastrous initial two years which resulted in a Democrat backlash and the Republicans taking back of Congress.
The economy did fine Clinton's first two years. It is true, Clinton and the Dems had the guts to do the right thing and pass an unpopular tax increase. That was the big factor in balancing the budget, but the "pass the buck" generation, egged on by Republicans pandering tax cuts, made them pay in 1994 and the Dems were voted out of control of Congress.
It was here we now see the resulting dynamics that led to the prosperity of the 1990s. Clinton, fearing re-election losses, veered quickly back into the political middle road - heeding the polling numbers that clearly showed Americans as being slightly right of center in their political positions. We saw a drastic altering of the Welfare State - a move Clinton initially opposed, but polling data demanding he ultimately support - which he did, albeit kicking and screaming the entire way.
Clinton resisted Republican demands to slash taxes, even threatening to shut down the Govt over it. He held them off with his veto, and thus stayed the course of decreasing deficits and the first surplus in many decades.
A unique opportunity the Republicans quickly squandered when they got one of their own in the white house.
So with savings from the peace dividend, welfare reform, the emerging tech boom, low interest rates, and the balanced budget acts, among other factors, America enjoyed a continued extension of Reagan economic prosperity, now conjoined with Clinton's political pragmatism.
Imagine that. Tax rates were almost 50% higher that under Reagan, and deficits came down, and the country prospered like it hadn't since the 60s. Ahhh, the good old days!
This model of leadership began to disintigrate under Bush II. While starting off with relative strength, his tax cuts, combined with terribly unsound increases in federal spending, were a recipe for economic trouble.
Hey, you got one right. Tax cuts plus spending increases (largely on the military) brought back records deficits in just a couple years.
That is not to say the Bush years were not without economic success - they in fact were.
Bush's best year was worse than Clinton's 6th best. There's success for you.
This is more an attribute to the size and strength of the American economy under the navigation of both the Clinton and Reagan administrations though than that of any Bush-specific policies. The Iraq War of course greatly altered the trajectory of the Bush II administration, polarizing the nation to a far greater extent than anything seen for generations, to say nothing of the fiscal costs that put additional strain on an economy that was slowly growing increasingly anemic. Once housing began to falter, for it was housing that had allowed the economy to continue to lurch forward for much of Bush II's tenure, the economic meltdown was inevitable, and came with great speed.
No bad!
And so now we come to this moment in time. What I have witnessed repeatedly is people responding favorably to Obama, but knowing little as to what they are responding to beyond the superficial likeability of the new President. When questioned on policy, they can point to little if anything that they are supportive of. Just last week when I informed a fervid Obama supporter that it appeared his much promised tax cuts to all but 95% of Americans was already gone, they were quite surprised. "Really?" they said. "I didn't hear anything about that." This individual gets most of their "news" from a bit of MSNBC and the Daily Show/Colbert one-two punch. As such, this individual represents so many Americans who are terribly underinformed and thus, incapable of forming relevent opinions of what is going on all around them.
Obama's spending spree is enormous -and fiscally frightening. I cannot understand how those who complain of the Bush II deficits, can then so easily support the Obama budget. There is no logic to it. The Obama deficits are already outpacing Bush II. What took eight years will only take Obama a handful of months. And if the economic recovery is less than projected, these deficits will be even more frightening to this nation's security - and your children's future.
What Obama needs is the very thing both Clinton and Reagan had that required them to work hard to achieve their respective agendas, and that is tangible political opposition. Obama does not have that - much as Bush II did not have that until the final two years of his own presidency.
I very much hope that 2010 will see a much-needed increase in Republican Congressional opposition, as I truly believe that would be in the best interests of all Americans.
Obama inhereted an economy that was facing a compelete credit freeze for the first time since the great depression. Unsupervisioned and unregulated mortgage practices left financial instutions that deregulation had allowed to become so gigantic that their fairlure threatened to bring the entire economy down into another great depression.
Faced with this economic disaster, the Obama administration, like Bush's before it, is doing everything it can on the monetary and fiscal side to juice the economy and lending and keep the economy from going over a cliff. If we don't we can thank them for that.
But that won't keep the "loyal opposition" from doing everything in its power to undermine Obama. They know the nation's success means they are out of power, and they know that an Obama administration means an end to the make the rich richer policies that the last administration has so effectively implemented.
If Obama was doing nothing they'd blame him for the depression. Whatever he does they will complain about and say its unnecessary. None of this should surprise anyone.
I'll provide supporting data for any of my factual assertions on request. It comes from the CBO, BEA, and Treasury Dept.
