Young Conservative needs help in Liberal-Dominated History Class

self | May 8, 2003 | myself

[goodnesswins]

HUH? I thought Reagan reduced income taxes from about 70% at the highest rate, to somewhere around 35%....any other "raises" in taxes came out of Congress....maybe they're referring to Soc Sec and other taxes???

[InvisibleChurch]

thank you

[goodnesswins]

HUH? What are YOU smokin'? Freepers have some of the best historical information and are some of the best informed I've ever "met." Of course, you still have to do some research....but it's sure a great starting place.

[t4texas]

I think the classmate was (enviously) referring to surplus of libido and bs.

[Jean S]

I know, it's spelled advice, read the entire thread, you'll see that this has beeen resolved.

[t4texas]

Ever hear of a guy named Al Gore? Remember him? Ho! Ho!

[chance33_98]

I know, just seeing if you're awake ;)

[Dianna]

HUH? I thought Reagan reduced income taxes from about 70% at the highest rate, to somewhere around 35%....any other "raises" in taxes came out of Congress....maybe they're referring to Soc Sec and other taxes???

Reagan DID decrease tax rates. I have no idea what these tax increases would be, and if true, I am surprised that I've never seen mention of it. On the face of it, it makes no sense. Why reduce tax rates and increase others?

[rwfromkansas]

lol..."responses"

[Chewbacca]

You also have to understand that one aspect of the growth in the economy during the 90's was all the spending done by business to combat the Y2K bug in computer coding.

Once that issue was out of the way, all the overhired personnel were let go, and the overproduction of computer related equipment came to a halt. This is what has caused the Tech industry crash. Companies took on alot of debt to fix a problem that never really surfaced as a major threat. That debt has come back to haunt them.

[ggekko]

It is ncessary to understand the rudiments of supply side theory before you attempt to defend it. I recommend the following website for background reading:

www.polycomics.com

.

The white papers on this site are somewhat technical so a brief summary of the ideas involved would be appropriate here. In the broadest sense supply side economics repudiates key tenets of the Keynesian economic theory which government policymakers had adhered to during most of the post-WWII era. The Keynesian theory focused on stimulating consumer buying power through the manipulation of the money supply and government fiscal policy. Adherence to Keynesian theory was re-examined when Keynesian policy mechanisms failed to revive the sputtering US economy during the late 1970s.

Supply side economics is founded upon a couple of basic economic truths:

Big Economic truth #1

---

Raising tax rates above a certain level
DECREASES net revenues to the Government.

The truth of economic truth #1 has been demonstrated scores of times by Congressional Budget Office projections that predicted net increases to Government revenues from tax increases that actually resulted in decreases to Government revenues when the increase in taxes were implemented. This happens because most tax increase DECREASE the rate of economic growth which ultimately hurts revenues to the Treasury.

If you make this basic point about supply side economics you will inevitably be hit with the accusation that "Regan caused huge deficits with his tax cuts; this assertion is Liberal Big Economic lie #1:


Big Liberal Economic Lie #1

---

As Supply Side theory indicated Regan's tax cuts which brought the top individual tax rate from 70% of income to 28% of income caused revenues to the Tresury to SURGE. Under Regan in the 1980s Government revenues doubled. This windfall was squandered by a Democratically controlled Congress that recklessly increased spending on domestic programs. Regan cut taxes and the ecomic growth rate WENT UP, just as theory predicted. Reagn also submitted 8 BALACED BUDGETS to the profligate Democrtic Congress which they assiduously ignored.

Similarly in the 1990s when the Republicans gained control of Congress they CUT TAXES after Clinton had raised them in 1993. When discussing the 1990s economy you are also likely to encounter Big Liberal Economic Lie #2:


Big Liberal Economic Lie #2

---

Big Liberal Economic Lie #2 asserts that Clinton caused the 1990s boom by raising taxes in 1993 thereby lowering long term interest rates. In actual fact, however, when Clinton raised taxes in 1993 the stock market lost 20% of its value, LONG TERM INTEREST RATES WENT UP, and the economic growth rate declined. This turn of events is again exactly what the supply side theory have predicted.

This leads us to what actually caused the 1990s boom: the expansion of productive capacity in the economy through the establishment of incentives for producers. This idea describes Supply Side Economic Idea #2:


Big Economic Truth #2

---

Non-inflationary growth is caused by creating positive incentives to increase the productive capacity of the economy. All other factors being equal incentives for producers are more important than interest rates or other economic factors in creating economic growth. Without production the economiy will collapse.

Good luck with your class and don't let the liberals in it rewrite history.

[groanup]

"AFAIK, the debt post-Reagan was enormous. Surely its effects are still with us."

If income is less than expenses then debt must be incurred if spending is to continue. Income increased as a result of the supply-side tax cuts because of increased economic activity. (See government statistics 1980-1990). Spending, on the other hand, increased at a greater rate.

[groanup]

Good post. 1994 was a flat year for the S&P and a BAD year for bonds. (Remember Orange County?). But 1994 also ushered in the Contract for America which paved the way for a continuation of the secular bull market in both bonds and stocks.

[groanup]

"Why reduce tax rates and increase others?"

Reagan reduced MARGINAL tax rates, that is, the tax on the next dollar you earn. If you earn 30,000 and pay 5,000 in taxes why would you sacrafice to earn 35,000 if you wind up paying 10,000 in taxes? Marginal tax cuts stimulate. If Reagan raised Federal gasoline taxes it would tend to drag on the economy but not change anyone's behavior. If marginal tax rates are raised the potential is for everyone to change their behavior and avoid the next brackett. I know I faced that a couple of times.

[familyofman]

"The only good thing about deficits is that deficits RESTRICT THE FURTHER GROWTH OF GOVERNMENT.."
Ok, if your contention is accurate, please give examples to support your position. Or, are you talking only in theoretical terms - which is what almost all economic discussions are. No one likes to confuse a good debate with facts.
Why not reduce spending when there is a deficit? We can also reduce various tax incentives, like the new & improved Senate tax-cut bill is proposing. List of possible cuts: oil depletion allowance; all farm subsidies; require payment for water supplied to desert states; discontinue accelerated depreciation; eliminate preferential treatment to executive compensation; eliminate tax-deductibilty of donations.....add your own (NEA, CPB, Amtrak, airline bailouts).

[keithtoo]

Yes, we'd all like the government to first and foremost decrease spending when there is a deficit. History tells a different story.

If you'll remember during the 80's, their were no MAJOR spending initiatives by the Dim's because they knew that the deficit was too big and too much on everyone's mind.

At the end of the 90's however, everything from prescription drug programs, to new spending on education (at the Fed level) and socialized health insurance was on the table. It was a race to see who could spend the 'surplus' the quickest.

[Agamemnon]

A more honest budget accounting was put in place during Reagan's terms. Does any one really believe that Carter had a 60 Billion deficit in 1980? Items accounted formerly as "off-budget" were under Reagan accounted for as "on-budget."

Reagan's Admin. brought alot of the smoke and mirrors of the phony Soc Sec "trust fund" to light as well.

I look forward to the day when the lie is put to the whole Soc Sec scam for all to see and appreciate. Just know the exposure therof first took place on Reagan's watch.

Last point: Tax cuts under Reagan more than doubled revenues. Blame the Congress for spending those revenues AND MORE which resulted in the reported deficits. Rememeber, the President can't "spend" anything, only Congress.

[Austin Willard Wright]

This is really sickening. I remember the days when conservatives hated deficits and wanted to achieve balanced budged through spending and tax cuts. Now...conservatives have completely sold out to the spend and and debt Keynesian left which brought us the New Deal and Great Society. Very sad.

[Capitalism2003]

When they start talking about how "big" this tax cut is, point out to them that we live in a 10 trillion dollar economy. Even with moderate growth, the USA will produce 140 TRILLION DOLLARS in wealth over the next decade. The entire Bush tax cut of 2001 is less than 1% of GDP. If we really want to help the economy, we must restrain SPENDING...especially the spending that reduces the incentive to work. When you tax something, you get less of it. When you subsidize something, you get more of it. Today we punish work and reward dependance. It's time we get our priorities straight as a nation...reduce the burden of government and allow people to prosper.

[Agamemnon]

Look under the Social Security bail out of 1983 worked out with Ways and Means crook Dan Rostenkowski and "beloved" (now room temperature) Senator Moynihan.

Also the TEFRA act of 1982 where Congress promised Reagan $2 of spending cuts for every $1 tax increase. Congress passed it, renegged on the agreement and we just got the tax increase.

There was the 5-cent a gallon add'l gas tax passed for "infrastructure improvements" around 1983 also (that we still pay today) in addition to Clinton's add'l 5-cent-a-gallon tax from 1993.