Posted on 06/18/2004 6:31:03 PM PDT by wagglebee
Critics of President Reagan’s budget deficits should answer one simple question: Would you trade the collapse of communism, your smaller tax burden, some of your income -- and possibly your job -- in exchange for eliminating that $2.1 trillion in added debt?
Coverage of President Reagan’s legacy has been generally fair, with one exception. Many say, “Reagan masterfully won the cold war … but those budget deficits.” Or “America needed Reagan’s infectious optimism … but those budget deficits.”
Not all debt is bad. Mortgage debt and student loan debt are worthy investments. No one criticizes President Franklin Roosevelt for the massive debt that financed World War II. Yet the commentators criticizing President Reagan for the $2.1 trillion in added debt (all numbers are in today’s dollars) ignore how that debt won the Cold War, lowered the tax burden, and ignited the largest economic boom in American history.
Those who denounce the Reagan deficits should answer the following questions:
Would you bring back the Soviet empire? President Reagan spent $3 trillion on defense, well above the $2.2 trillion baseline. What did that extra $800 billion buy? The end of the Cold War -- saving, perhaps, a billion lives from nuclear extinction.
No less than former Soviet Union Foreign Minister Alexander Bessmertnykh has been quoted crediting President Reagan’s defense buildup for the accelerated collapse of the Soviet Union. The fragile communist economy, already stretched thin by substantial defense spending, could not keep up with America’s defense buildup. The possibility of American missile defense, and President Reagan’s powerful rhetoric, further persuaded the Soviets they could not win the Cold War, and induced the reforms that culminated in the collapse of the Soviet empire -- without America firing a single shot. It was the best $800 billion investment America ever made.
Would you raise the top income-tax rate back to 70 percent? Commentators also blame the 1980s deficits on President Reagan’s insistence on reducing taxes in 1981. Yet President Reagan inherited the worst economy since the Great Depression. Excessively high tax rates were discouraging work and investment and therefore damaging the economy while raising little revenue. President Reagan removed barriers to entrepreneurship by reducing tax rates, cutting red tape, and stabilizing the economy, thereby encouraging risk takers. The centerpiece of this policy was a radical series of across-the-board tax cuts that lowered the top income tax rate from 70 percent to 50 percent, and eventually to 28 percent. (It stands at 35 percent today.)
This tax relief unleashed a 20-year surge of entrepreneurship, as the U.S. economy tripled in size. The lasting impact of these policies can be seen in successive presidents, who ratified Reaganomics by refusing to even consider raising taxes back to their 1970s levels. Thus, America continues to benefit from lower tax rates.
Would you trade 2.8 million jobs? Before the Reagan tax relief, the unemployment rate averaged 7.7 percent. Since the tax cuts, it has averaged 5.8 percent -- a difference that translates into 2.8 million jobs per year.
Would you trade $15,000 of your annual income? In the two decades before the Reagan tax relief, the average household’s annual disposable income increased $13,000. In the 20 years following Reagan’s tax cuts, these incomes surged $28,000.
Would you trade the stock market boom? In the two decades before the Reagan tax relief, the S&P 500 increased 120 percent. In the 20 years following Reagan’s tax cuts, the market jumped 575 percent.
And don’t forget the 12 percent inflation rate and 21 percent interest rates that Reaganomics slew.
The Reagan tax cuts replaced the deepest recession since the Great Depression with the largest 20-year boom in American history. Tax revenues actually grew faster in the low-tax 1980s than in the high-tax 1970s, and rising incomes meant the share of taxes paid by the wealthy actually increased throughout the 1980s. Millions of people who had entered the 1980s in the lowest income quintile surged to the highest income quintile by 1990.
All a coincidence? As Reagan would say, “there you go again.”
Sure, President Reagan would have preferred to minimize the deficits by eliminating wasteful spending. However, the only way to persuade a Democratic Congress to accept a defense buildup and pro-growth tax cuts was to agree to their domestic spending demands.
Ironically, the 1980s budget deficits made the 1990s surpluses possible. The budget was balanced by surging tax revenues from a booming, low-tax economy and defense savings brought on by the end of the Cold War.
To paraphrase a classic President Reagan line: Are you better off today than you were in 1980?
To paraphrase a classic President Reagan line: Are you better off today than you were in 1980?
This guy just nails it.
Incidently, the lib's sainted president Franklin Roosevelt had to run up a deficit or two when he was trying to defeat the Nazis.
Yet another lib lie. Reagan's 8 proposed annual budgets would have produced a $130 billion dollar surplus if implemented. It was the house and senate who gave the US the deficit, not Reagan.
I recall the budget battles of the 80s--titanic struggles!
Reagan fought for lower spending--fought with all he had! The democratic controlled congress refused any and all cooperation.
The budget deficits weren't REAGAN's idea--they were the democrat idea.
Probably would be simpler to accuse the rats of "Goebbels like propaganda", but then I would be working for the RNC instead of the idiots that keep asking me for money.
The Democrats controlled congress. Reagan spent the first months of his time in office trying to control spending, but it was hopeless. So he concentrated on what he could control and made the best of it.
This constant harping on Reagan's deficit is really tiresome. I don't remember now who the Democrat majority leader and speaker were, but it was their deficit.
The President wields the sword, Congress holds the purse.
The deficits were 100% the fault of Congress.
Tip O'Neal?
Among the many technologies born from the Cold War would be the Internet, the carrier of this message. Had America spent the money on socialism instead we would have nothing to show for it but more beggars to feed.
Tip O'Neill was the Speaker for most of the 80's and I believe most of the time the Senate majority leader was none other than Robert KKK Byrd (aka the only living person in the world with more buildings, parks, hospitals, highways and etc. named for him than Saddam).
Funny how they call them Reagan deficits when Congress authorizes expenditures.
You might add that revenues to the US Treasury doubled during Reagan's administration. Although this is not a good thing since it makes government larger, the point is that his tax cuts did exactly what they were supposed to do - ignite economic activity and growth that has continued for the last 20 years. No, the problem wasn't tax cuts but rather that the Congress spent (and still spends) too much. This country is in trouble since people have discovered that they can vote themselves government largess.
Scott Bussinger
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