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If tax cuts don't work .... (pg. 2)
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| occrider |
| quote: | Originally posted by Galapidate
Well, supply-side economics were not very effective and as a result Reagan had to raise taxes three times. He cut many programs as well that especially aided the poverty-stricken areas of the country. Tell me this isn't a failure. |
Well if you can reduce the welfare of the economy to consist of tax rates and welfare programs then I suppose you could consider it a failure. However, one would like to think that there's more to the economy than that. The successes and failure of Reaganomics is highly debated and I'll try to cover both sides of the issue ... but in the end it's not a clear cut failure in much the same way that it's not a clear cut success. First, let me set the stage for you upon the economic situation with which Reagan inherited.
The economy at the start of Regean's term could easily be described as an unmitigated disaster. It makes our minor economic bump pale in comparison. We were suffering from stagflation and an economic "malaise". Inflation was in the double digits and was upwards of 13% when Reagan took office. Unemployment was at 7% which defied all economic expectations at the time when many economists still believed in the validity of the Phillips Curve (inverse relation between unemployment and inflation). The dollar was weak, with the gold standard at a whopping $900 (a confidence indicator of currency). "Bracket creep" had raised income taxes for middle class families to 49% in 1980, and to top all of this off, the US was at the height of Cold War spending against the Soviet Union. Now does this look like an easy scenario to fix?
Having set the stage, you're probably associating the economic recessions at the start of the 80's as being a fault of Reaganomics, and it's not. They were largely a fault of Volcker who was chairman of the federal reserve. In this case however, the recessions were NECESSARY to revitalize the economy by reducing inflation. By using tight monetary policy Volcker (a genious) lowered interest rates from 13% to only 2.5% by the end of Regean's term. If you're not amazed by that then you're not an economist. The recession ended in 1983 with a boom in the economy that lasted until 87. Well I droll on ... unless you want me to get into the nitty gritty of Reagan's economic policies and their effects over the years (which I doubt) I'll just summarize a few key economic points.
- In 1980 real GDP declined by one-half a percent
- By 1988 it was rising at 3.9 percent
- The prime rate was 15 percent in 80 down to 9 percent in 88.
- Unemployment declined from 7 percent in 80 down to 5.4 percent in 88.
- Real median income rose from $34,200 in 80 to $37,000 in 88.
- Real national wealth rose from $11.9 trillion to $14.2 trillion from 80-88.
On the negative side of things, budget deficits rose from $74 billion to $155 billion and the trade deficit tripled. However, I would like to see if you could come up with a better policy to not only rescue a stagflating economy AND conduct a cold war at the same time. Although Reaganomics were not as successful as was anticipated (and that is one of the main criticisms), they could hardly be considered a failure.
Btw: On a side note despite the fact that many welfare programs were cut, the portion of the population below the poverty line was 13% between 1980 and 1988. How is that possible? Well the Reagan tax cuts excluded income taxes completely for much of the poor, thereby nullifying the need for some of the welfare programs cut. |
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| fuct4less |
| quote: | Originally posted by Nadi
If tax cuts dont work, then what do you guys propose to boost the struguling economy? |
WAR!!! |
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| DrummeRaver86 |
| quote: | Originally posted by fuct4less
WAR!!! |
Are you Dubya's long lost son? :D :toothless |
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| Galapidate |
| I bet he is :D |
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| Shakka |
If tax cuts don't work, you're all ed! bahahaha!
Great analysis of Reaganomics, Occrider. That just proved how easily different people interpret different sets of facts, or they speak with their emotions without really seeing the bigger picture. The only problem with Reagan's presidency was the crash landing it ended with, particularly with the market crashing in '87.
One could also say that different presidents just come at different times cyclically and don't really have any overall impact on the economy. To say, maybe the cycles of business we see function independently around or shape the politics of our leaders.
damn...just thought of an interesting theory...:disbelief |
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| occrider |
| quote: | Originally posted by Shakka
If tax cuts don't work, you're all ed! bahahaha!
Great analysis of Reaganomics, Occrider. That just proved how easily different people interpret different sets of facts, or they speak with their emotions without really seeing the bigger picture. The only problem with Reagan's presidency was the crash landing it ended with, particularly with the market crashing in '87.
One could also say that different presidents just come at different times cyclically and don't really have any overall impact on the economy. To say, maybe the cycles of business we see function independently around or shape the politics of our leaders.
damn...just thought of an interesting theory...:disbelief |
True his presidancy ended with the stock market crashing, however, the economic turbulences during his term was referred to as "creative destruction" or economic turbulences characteristic of a healthy economy. ************ of Reagan's faults however, he, or Volcker as some argued, transformed a truly ailing economy into one of economic normality.
And although I think Reaganomics was one of the few President's to impact the economy for better or for worse (FDR's new deal as an example of being another), your theory that President's rarely heavily influence the long run state of the economy is one I share.
Although I hate the national review, I do believe in the premise of this article:
| quote: |
Medieval Economics
How concern is the currency of the realm.
January 28, 2002 4:25 p.m.
an, do I hate the federal budget. Oh, I don't mean the one Bush is going to "unveil" tomorrow night, or any particular budget at all. In fact, I don't think I've liked a single budget since, I guess, Calvin Coolidge was in office — when my father was a twinkle in my grandfather's eye. As a matter of principle, for a guy like me, who'd like a much, much, much smaller federal government, pretty much every budget — Republican or Democrat — is a case of shuffling deck chairs on the Titanic.
It must agonize true libertarians just as it annoys me: You have to put a big chunk of principle in cold storage simply to take budget fights seriously at all. Since even the most "conservative" budget is still going to be draconian by any reasonable definition, you end up having to choose between the lesser of two evils. Like a guy with high cholesterol having to choose between a chicken-fried steak and a chocolate shake and a chicken-fried steak and a Diet Coke.
Then there's the inconvenient fiction that the president of the United States "runs" a $10 trillion economy. All of the metaphors and verbs used by the press leave you with the impression that the president sits in some giant cockpit, fidgeting with flashing lights and humming doodads as he "drives" the economy. Meanwhile, the White House itself, somehow, "creates" jobs. "The White House created 200,000 jobs in the last quarter…" Is there a Play-Doh job factory next to the White House bowling alley? And — gird your loins! — if the president is "asleep at the switch," the economy could "derail" and "plunge into a ditch." Of course, others see the president as some sort of farmer who can "grow the economy," so long as he "focuses like a laser" on doing just that.
When you think about it, such language betrays an almost medieval understanding of economics. If the king doth prosper, so doth the land. It reminds me of John Boorman's Excalibur. Once King Arthur is restored by the Grail, so too is all of England. Does any serious person believe that if a president "pays more attention" to the economy, it will necessarily do better than it will if he "ignores" the economy? Well, actually a lot of serious people seriously believe that. Me, I think too much meddling is always a bigger hazard than too little (see "Being and Nothingness" for my macro-view on this). Jimmy Carter was a micro-detail guy, and few people would say he ended the debate on how to manage the economy (let alone the White House tennis-court schedule, another detail he focused like a laser on).
Of course, it's not so much that political journalists have a medieval understanding of economics as that they have little understanding of any kind. And, even those who do know something about the dismal science invariably use economics to make political points. How else can so many smart guys on the right and the left look at precisely the same economic data and come to such wildly divergent, often antithetical, conclusions?
“Clinton Greed”?
Other than laziness, this is why I don't get too bogged down in Washington arguments about economics. The arguments never get settled. What I do think are interesting are the more explicitly political assertions about economics.
Take this Enron thing. Every day, I agree more and more that what Enron's management did wasn't merely immoral or unethical, it was illegal (contrary to what some in Congress think, the three aren't the same thing). It may turn out that someone in the White House did something very wrong, but I still doubt it. But I can't help but believe that this story would play very differently if a Democrat were in the White House, and we'd just finished eight years of a Republican presidency.
Compare, for a moment, the 1980s and 1990s. In the 1980s, the economy boomed. In the 1990s, the economy boomed. Both decades began with recessions and ended with recessions. Both saw financial scandals, bubbling-over-expansions in various sectors, etc., etc.
But, for some reason, relatively similar circumstances were portrayed very differently by the experts, and by the journalists who quote them. During the recession of 1981-82, "Reaganomics" was synonymous with economic failure. In what must have seemed a great nod to fairness, the New York Times White House correspondent, Steven R. Weisman, wrote in 1982: "[N]o economist lays the entire blame for the current recession at the doorstep of Reaganomics." The "entire blame." In 1984, when the economy was booming, Karen Arenson, also of the Times, concluded: "…the current economic recovery is clearly making Americans feel better; what is less obvious is what brought about the upturn and who should get the credit." Then, once it was clear that the economy was prospering, Reaganomics was redefined as not so much an economic failure as a moral one. Here's how William Schneider — now with CNN — put it in The New Republic in 1984: "Reaganomics is economic elitism. It is the view that hunger in America is merely anecdotal, that the homeless are homeless by choice, and that only the morally unworthy have been hurt by the Administration's policies." And, of course, the wealth being generated under Reagan was morally dubious. Consider that "junk" bonds (which James Stewart, author of Den of Thieves, called "the greatest criminal conspiracy the financial world has ever known") were constantly associated with Reaganomics generally. And never mind that junk bonds created MCI, Fed Ex, and other real businesses.
Steven Reed, a reporter for the Houston Chronicle, wrote in 1992, "Wall Street stock manipulator Michael Milken earned $550 million in 1987, and ghetto teens unable to find jobs joined gangs instead." That's true. But Bill Gates made a lot of money in various years of the 1990s, and ghetto teens who couldn't find jobs still joined gangs instead. Indeed, there were bigger "junk" bond sales in 1993 alone than there were from 1982 to 1986 — the term of Mike Milken's entire junk-bond career. But we rarely heard, anymore, about sudden wealth and ghetto teens. And we never heard about the "Era of Clinton Greed."
In fact, despite the fact that the dot-com bubble — we've learned — was vastly more speculative than the junk bubble, being super-rich wasn't immoral in the 1990s (even though executive compensation, income inequality, and all of the other things we associated with "Reagan greed" either got "worse," or at least didn't improve). Let's pick on Newsweek. In 1988, the magazine wrote that during the 1980s "The money culture ruled, and Ivan Boesky was some kind of hero." The Reagan years were "…a time when avarice got respectable, poverty expanded and wealth became a kind of state religion."
Fast forward to June, 1999. Newsweek ran a huge story on the beneficiaries of the Wall Street boom. And while it had a nice class-warfare title — "They're Rich (and You're Not)" — the authors reflected a more buoyant view of wealth. "In another, earlier era — the go-go 1980s — many Americans tended to make villains of such arrivistes. But the suddenly wealthy are no longer bogeymen… The rich, at long last, are very much like you or me: they're an idealized version of ourselves." The question occurs:
Who does Newsweek think demonized the "arrivistes" in the first place?
I'm picking on the media, but every single one of these stories pointed to some "expert" who "proved" what the journalists wanted to say. And, of course, it doesn't have to be economics. You can name almost any social ill — no matter how nebulously defined — and you'll find journalists who define the macro-situation through the prism of their micro-understandings of what conservatives and liberals are like (see this ancient G-File on homelessness, for example).
In fact, once you cut through all the verbiage and expert-ese, it invariably boils down to the fact that "concern" matters more than anything else. If a president is "concerned" (i.e., a Democrat) about the homeless or inequality, etc., the press no longer finds the topic interesting — and that makes it disappear, like magic. Which, I guess, proves that the medievalists were right after all.
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| fuct4less |
| quote: | Originally posted by DrummeRaver86
Are you Dubya's long lost son? :D :toothless |
hahaha. :haha: no i was just kidding. but lately its what your typical patriot would resort to. "they have oil! i say we bomb em!!!" *cough*iraq*cough* i actually was though hinting at how the american gov. handled things after 9/11, though. |
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| DrummeRaver86 |
| quote: | Originally posted by fuct4less
hahaha. :haha: no i was just kidding. but lately its what your typical patriot would resort to. "they have oil! i say we bomb em!!!" *cough*iraq*cough* i actually was though hinting at how the american gov. handled things after 9/11, though. |
Condi: OK Dubya, now what?
Dubya: You're asking me? How the hell am I suupoused to know what to do know? I'm only the President!
Condi: Oh...well, considering we're Republicans, let's declare war on someone!!
Dubya: Whatever you want...just tell me when you make a decision so I can get 3/4 of the credit for it. By the way, I'll be on my ranch in Texas. |
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| Galapidate |
| LOL! Speaking of Condi, her full name sounds like a Mexican entree :D |
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| DrummeRaver86 |
| quote: | Originally posted by Galapidate
LOL! Speaking of Condi, her full name sounds like a Mexican entree :D |
Mwahahahah!! Condi with rice.:rolleyes: :happy2: |
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| fuct4less |
| condi rhymes with ghandi...:haha: :haha: :haha: |
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