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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Elroy Jetson who wrote (26560)1/17/2005 1:23:11 AM
From: JF QuinnellyRead Replies (2) of 306849
 
Rather than cutting spending to pay for tax cuts, Reagan simply increased spending his spending spree and the tax cuts to the national credit card.

As President he didn't have the final say on spending. That being the result of a Congressional act during the Nixon Administration, the result of which compels Presidents to spend all the money that Congress appropriates. Prior to this a President could 'impound' money that Congress had appropriated. The old option was similar in effect to a line item veto.

Tip O'Neil had agreed to a dollar for dollar reduction in spending for each dollar of rate cuts. O'Neil reneged, and he did have the final say on spending. Reagan's sole option would have been to veto the entire budget, not a practical solution.

Had O'Neil honored his dollar for dollar agreement the Treasury might well have run a sizable and unexpected surplus, since each dollar cut ended up costing the Treasury around 35% instead of a full dollar.
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