Below a Review of Reaganonomics to refresh your memory. The Limbaugh types like to boast about the Reagan economy but the bump was short-lived and resulted in massive debts and long recessions. It only SEEMED great for awhile because it was a lot better than the oil-embargo post-Vietnam Carter economy which was very bad, especially because of the Arab Oil embargo which fueled massive inflation.
Bush Sr's term was one long "malaise" recession as he tried to pay down the RR debt against the advice of the right-wing. But you don't want to remember that. Because Clinton fixed it by raising taxes, actually paying down debt and giving us the best economy of our lifetimes, much better than Reagan's.
Therefore, if GW Bush thinks he's going to fix our economy by doing what RR did, he's wrong, deceitful and unfair. If not the for artificially low interest rates now we'd be in the dumper. And they can't stay this low forever.
There was nothing broken about the Clinton economy, just Wall Street over-exhuberance. That is gone now, but the markets, dollar and global economic synergy are not likely to return to any glory with Bushies in power. They are much too fixated on helping the rich, military and Big Oil, while seeming to ignore a whopper of an out-of-control debt load which will devalue the US economy for a long time to come. We may have almost as many dollars, but the dollars will be worth less and state and local taxes will make up for the federal tax cuts. That especially hits the lower income and middleclass. Plus they lose value in education and health care. The rich get the best deal, but still no boom times like CLinton which helped everyone equally.
As George Soros said, the Bush Factor will keep markets an the dollar low, because oil, war and debt do not make a healthy economy. What we really need are clean high-paying jobs and global peace. That means high tech needs to come back strong, one sector Bush seems to disdain.
By Andrew Walker
BBC Economics correspondent
US President George W Bush has unveiled an economic stimulus package incorporating $670bn of tax cuts and increased government spending over the next 10 years.
This won't be the first time that a US government looks to cut taxes as a way of boosting the economy.
Back in the 1980s there was Reaganomics. President Ronald Reagan's tax cuts were also aimed at boosting growth.
In retrospect they were deemed a failure by many economists. So what risk is there that the plan about to be unveiled by fellow Republican George W Bush could end up similarly derided?
Decisive action
Back in early 1981 when the US had just had a recession and was about to have another, President Reagan told Congress it was time to act.
Will tax cuts inject new life into the spluttering economy?
"We can no longer procrastinate and hope that things will get better, they will not. Unless we act forcefully, and now, the economy will get worse," he said.
"Can we who man the ship of State deny it is somewhat out of control?"
And the decisive action was to be cuts in taxes and nearly all areas of government spending, with just one exception.
"The Department of Defence, it's the only department in our entire program that will actually be increased over the present budgeted figure," President Reagan said.
Free lunch?
In the event the tax cuts and extra defence spending duly materialised, but the cuts in other budgets did not.
The result was a rising deficit in the government's finances.
By 1986 David Stockman, President Reagan's former budget chief, was saying changes were needed.
"We have conducted the greatest free-lunch fiscal policy of modern times, we may not have intended it, but that is unquestionably the outcome," he said.
"We have doubled the national debt in four or five years, and it will keep rising unless this policy is changed."
Cutbacks
And in the same year, 1986, the President himself was back in Congress negotiating measures to curb the deficit.
Is this Reaganomics all over again? ?
"We have agreed to save $43bn over three years from the non-defence portion of the budget," President Reagan said.
"Second, we have agreed to close certain tax loopholes to raise revenues by $48bn over three years. There will be no increase in tax rates."
"Third, we have agreed to further reductions in defence spending, which will slow our defence build-up somewhat, but will not seriously reduce our national security to a point of unacceptable risk."
But it didn't have much impact and it wasn't until the 1990s and President Clinton, that the deficit came down decisively.
Legacy
Reaganomics is thus widely remembered in terms of increased government borrowing, and the increased interest bill it created for American taxpayers.
But William Niskanen, who was an adviser under President Reagan, says that apart from the deficit, the legacy was overwhelmingly positive.
"It had very beneficial effects, the rate of economic growth picked up, the rate of inflation came down from over 10% to about 4% and the interest rates came down by a good bit more than that," he said.
"So it corrected what was a very serious problem at the end of the Carter administration within about two years, and then over the course of the eight years the total economic growth was at a higher rate than during the prior eight years."
Risks
And today, President George W Bush wants to cut taxes and spend more on defence.
So is this Reaganomics all over again?
"It isn't anywhere near as dramatic in either sense," says Mr Niskanen.
"It isn't as big a rate cut or it isn't a general tax reform but over time I think economic growth will be higher with the Bush proposal than without it," he said.
But there are risks.
The government finances have already swung from generous surplus to deficit.
The shortfall is likely to get bigger if Congress agrees to what President Bush wants. |
