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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: bentway who wrote (26520)1/16/2005 11:58:06 PM
From: JF QuinnellyRead Replies (2) of 306849
 
You left off the Republican's magic, voodoo economic solution, use "economic stimulus" (debt) to "grow your way out of debt"!

That may well be Dubya's policy, but it never was Reagan's. Reagan's economists complained about "the myth of the supply siders", which attributed to them a policy they didn't advocate. The Reagan era deficits were a combination of an unexpectedly dramatic decline in the inflation rate, which resulted in lower than projected nominal tax receipts, and Tip O'Neil reneging on budget cuts he had agreed to move through Congress. The rapid fall in inflation was the larger factor. Taxes were raised in 1982 to address the ballooning deficit.

Lawrence Lindsey attempted to measure the impact of the Reagan tax rate cuts when he was at Harvard. The only rate cut that conceivably "paid for itself" was the capital gains rate cut- and that cut was made by the Carter Administration. The Reagan cuts stimulated economic growth, which recouped some of the money lost to the Treasury due to the lower rates, but the cuts didn't pay for themselves. Growth recouped some 65% of "lost revenue". A 35% reduction in spending for each dollar cut could have balanced the budget.
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