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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: willcousa who wrote (211176)	12/19/2001 3:23:46 PM
From: DOUG H	Read Replies (1) \| Respond to of 769670

You're right. In the 80's Reagan knew 2 things. The Soviets were on the ropes and needed a knockout punch and that there was no way the Dems in Congress would cut back on any of the taxpayer heroin. We got a far less dangerous world (which clifton pissed away by being uhmmm, distracted) and a "peace dividend). None of the credit for these things goes to president loosezipper yet they are what made the economy of the 90's work.

To: willcousa who wrote (211176)	12/19/2001 3:26:02 PM
From: DuckTapeSunroof	Read Replies (2) \| Respond to of 769670

Not quite, the situations were not exactly analagous.... Top tax rate during the Eisenhouser admin. was around 90%... if memory serves. The 'Laffer curve' shows decreasing benefits (standard bell curve) as one drops rates starting from a lower base. Reagan was right to cut taxes, but he pissed away most of the economicly beneficial effects which could be expected from the lowered tax burdens by failing to reduce government expenditures. The budget went UP each year, and in his first 6 years he doubled the entire national debt that it had taken 200 years to accumulate. This caused the famous 'crowding out' effect where government debt issues sucked up private capital investment, raised long term interest rates, and depressed the higher growth rates that could have otherwise been expected from the cuts in taxation. This was most clearly seen in the later half of his second term, and into the Bush administration. The 'Laffer curve' is immaterial when government debt crowds out private investment, 1/3 of disposable government revenue goes to just paying interest on the immense national debt, and the entire economy is forced to bear higher interest costs. The debt run up in just those first 6 years, will take two generations to pay off. Reagan benefited a lot from timing. He entered office after a decade of economic stagnation and inflation (stagflation, anyone?). It was time for an economic rebound, and Fed chairman Volker (and lower oil prices) had broken the back of inflation. Ironicly, if Reagan ever had the guts to fight for reasonably balanced budgets at the same time he cut income taxes, than the 'Reagan miracle' might have actually happened. Instead he wanted his cake, and to eat it too. He ramped up military spending, made only minimal progress on controlling domestic entitlement spending, expanded corporate welfare payments, and ballooned the deficit. He kept expecting increasing government revenue to balance the budget by the 'magic' of the Laffer curve, but because spending was INCREASED, not decreased, and sky-rocketing Treasury debt was crowding-out private sector investment, we did not see that 'best of all possible worlds'. If one averages out the growth spurt in his (mostly) first term with the decrease in what would otherwise have been possible over the next 30 years caused by the necessity to divert revenues to unproductive purposes like paying down the debt... than it's an open argument whether we came out ahead, or we lost. With Reagan, one hand giveth, while the other hand taketh away.