nat'l debt/Reagan pros and cons

[Dude#1279435]

My feeling is we here in America just don't care about it. I've heard there's bills requiring us to meet a spending quota, but I also wonder if spending so much is about maintaining infrastructure as the world's leader (ie military) in defending global threats?

Pros and cons on Reagan? One would be the kicking off of higher and higher debt. The other by some believed the prosperous Clinton years were due to Reagan's policies not taking effect till later. Pretty vague though and not supported with much. About all I can remember is the general feeling of optimism Reagan had for the country and how that reflected to others. Having had many jobs in the 90s I can remember quitting one entry level job for another in no time. I'm not really sure though my perception of things then matches though. Any thoughts?

 

[highfigh]

My feeling is we here in America just don't care about it. I've heard there's bills requiring us to meet a spending quota, but I also wonder if spending so much is about maintaining infrastructure as the world's leader (ie military) in defending global threats?

Pros and cons on Reagan? One would be the kicking off of higher and higher debt. The other by some believed the prosperous Clinton years were due to Reagan's policies not taking effect till later. Pretty vague though and not supported with much. About all I can remember is the general feeling of optimism Reagan had for the country and how that reflected to others. Having had many jobs in the 90s I can remember quitting one entry level job for another in no time. I'm not really sure though my perception of things then matches though. Any thoughts?

Congress pisses away incredible amounts of money on pet projects- look into that. I have seen some videos where someone showed large placards with a photo of the project, its cost and whether it was finished, stopped beforehand or if the project was killed. I seriously doubt they're using all of the $1.9T on Covid relief. Congress doesn't give a rat's ass- they have their agendas and we're not it.

 

[Dude#1279435]

I shouldn't be quite so hard on Republicans. There's been fewer recessions since the 70s. The housing bubble is the only one I can think of in recent times. I think Reaganomics helped keep that trend going.

 

[highfigh]

I shouldn't be quite so hard on Republicans. There's been fewer recessions since the 70s. The housing bubble is the only one I can think of in recent times. I think Reaganomics helped keep that trend going.

Repealing Glass-Steagall was one of the main reasons for that and Clinton signed it. OTOH, he had a Republican Congress.

 

[Dude#1279435]

Where I disagree in the second column is I didn't feel anyway the true effects of Reagan's economic plan happened till the 90s. I appreciated that with a Democratic congress he didn't budge on tax cuts. I can remember as a kid quitting one job and having another by the end of the day. I had so many jobs in the 90s it was ludicrous. Not a healthy job plan but an example for me anyway of how robust the economy was. OF COURSE higher paying jobs weren't there. That requires experience and/or a degree. But as a kid working in restaurants, temp jobs and whatnot there was no shortage of work to my memory. I'd felt you can't just change the economy overnight and what happened later were the true effects. I thought he set the stage for what is now where the tax bracket ought to be. Reaganomics in hindsight to me in the 80s was this "neon" celebration of economic recovery. It wasn't about savings, though that might have been the attempt. It was a celebration of it, and even if weren't aware of it since you didn't like Reagan or the Republicans.

Reaganomics

Reaganomics refers to economic policies put forward by US President Ronald Reagan during his presidency in the 1980s. The policies were

corporatefinanceinstitute.com

Results of Reaganomics
Economists still argue the results of Reaganomics until this day. Naysayers call it “voodoo economics” and supporters call it “free-market economics.” However, from the early ‘80s to the late ‘90s, the Dow Jones Industrial Average (DJIA) rose fourteen times, and forty million jobs were added to the economy.

Reaganomics did ignite one of the longest and strongest periods of economic growth in the US. The result of tax cuts depended on how fast the economy was growing at the time and how high taxes were before they were cut. Cutting taxes only increases government revenue up to a certain point. Once taxes get low enough, cutting taxes will decrease revenue instead.

Tax cuts were effective during President Reagan’s time because the highest tax rate was 70%. The effect would’ve been much weaker if the tax rate was less than 50% like it is in the present time.

The increase in interest rates initially pushed the economy into a recession as high interest rates caused demand for the US dollar to increase, thus increasing the value of the US currency. As the price of USD increased, exported goods became more expensive and imports increased. However, the economy did eventually become less volatile, and the economy entered into a period of strong growth.

Reaganomics - Econlib

Reagan’s 1981 Program for Economic Recovery had four major policy objectives: (1) reduce the growth of government spending, (2) reduce the marginal tax rates on income from both labor and capital, (3) reduce regulation, and (4) reduce inflation by controlling the growth of the money supply.

www.econlib.org

In retrospect the major achievements of Reaganomics were the sharp reductions in marginal tax rates and in inflation. Moreover, these changes were achieved at a much lower cost than was previously expected. Despite the large decline in marginal tax rates, for example, the federal revenue share of GDP declined only slightly. Similarly, the large reduction in the inflation rate was achieved without any long-term effect on the unemployment rate. One reason for these achievements was the broad bipartisan support for these measures beginning in the later years of the Carter administration. Reagan’s first tax proposal, for example, had previously been endorsed by the Democratic Congress beginning in 1978, and the general structure of the Tax Reform Act of 1986 was first proposed by two junior Democratic members of Congress in 1982. Similarly, the “monetarist experiment” to control inflation was initiated in October 1979, following Carter’s appointment of Paul Volcker as chairman of the Federal Reserve Board. The bipartisan support of these policies permitted Reagan to implement more radical changes than in other areas of economic policy.

Reagan failed to achieve some of the initial goals of his initial program. The federal budget was substantially reallocated—from discretionary domestic spending to defense, entitlements, and interest payments—but the federal budget share of national output declined only slightly. Both the administration and Congress were responsible for this outcome. Reagan supported the large increase in defense spending and was unwilling to reform the basic entitlement programs, and Congress was unwilling to make further cuts in the discretionary domestic programs. Similarly, neither the administration nor Congress was willing to sustain the momentum for deregulation or to reform the regulation of health, safety, and the environment.

Reagan left three major adverse legacies at the end of his second term. First, the privately held federal debt increased from 22.3 percent of GDP to 38.1 percent and, despite the record peacetime expansion, the federal deficit in Reagan’s last budget was still 2.9 percent of GDP. Second, the failure to address the savings and loan problem early led to an additional debt of about $125 billion. Third, the administration added more trade barriers than any administration since Hoover. The share of U.S. imports subject to some form of trade restraint increased from 12 percent in 1980 to 23 percent in 1988.

There was more than enough blame to go around for each of these problems. Reagan resisted tax increases, and Congress resisted cuts in domestic spending. The administration was slow to acknowledge the savings and loan problem, and Congress urged forbearance on closing the failing banks. Reagan’s rhetoric strongly supported free trade, but pressure from threatened industries and Congress led to a substantial increase in new trade restraints. The future of Reaganomics will depend largely on how each of these three adverse legacies is resolved. Restraints on spending and regulation would sustain Reaganomics. But increased taxes and a reregulation of domestic and foreign trade would limit Reaganomics to an interesting but temporary experiment in economic policy.

The Reagan economic program led to a substantial improvement in economic conditions, but there was no “Reagan revolution.” No major federal programs (other than revenue sharing) and no agencies were abolished. The political process continues to generate demands for new or expanded programs, but American voters continue to resist higher taxes to pay for these programs. A broader popular consensus on the appropriate roles of the federal government, one or more constitutional amendments, and a new generation of political leaders may be necessary to resolve this inherent conflict in contemporary American politics.