Posted on 03/23/2002 7:17:36 AM PST by NorCoGOP
RALEIGH, N.C. -- Several times this semester, I have witnessed a professor tell the class that because of Ronald Reagan's economic policies, the 1980s saw the worst U.S. economy since the Great Depression. In fact, this is something I've heard professors claim all through college. I know that some say these things as part of a wider effort to discredit not only Reagan, but also the very concept of limited government and neoliberal free market capitalism. I imagine others are just repeating what they've picked up from sources they had no reason not to distrust.
The facts are quite plain. The economy during the Reagan administration was stronger than at almost any other time in the 20th century. What do I mean by stronger? A number of indicators were quite positive during the Reagan years. Real GDP grew at an average annual rate of 3.2 percent, faster than at any time in the post-war period except the booming 1960s, when America completely dominated world markets. Even more impressive, that rate includes the 1981-82 recession, which was a necessary by-product of ending Jimmy Carter's disastrous high-inflation policies. When examined per working-age adult, growth under Reagan compares even more favorably with other administrations.
There is other evidence that Reagan's uniform 25-percent tax cut, tight monetary policy and government deregulation were exactly the right thing to do: the rise of real median household income by $4,000, compared to no change under Ford and Carter and an increase of only $3,000 after Reagan left office in the supposedly wonderful nineties. Not only that, but Reagan's policies appear to have reversed the increasing unemployment of the 1970s and reduced it from a high of 9.7 percent during the recession to a mere 5.5 percent, a level not seen since the economic boom of the 60s petered out. Since then, unemployment has fluctuated, and the 2001 average was 4.8 percent.
Moreover, under Reagan, U.S productivity grew at an average annual rate of 1.5 percent, up from the pathetic 0.6 percent of the Carter years and similar numbers under Clinton. One of the most notable successes of the Reagan administration was the slashing of inflation from 13.5 percent to 4.9 percent through tight monetary policy.
Were there any negative aspects to the economy under Reagan? Sure -- nobody's perfect. The example a lot of Reagan detractors like to bring up is the huge increase in the national debt. Of course, the primary cause of that was the military build-up that basically bankrupted the Soviet Union and helped us win the Cold War. I'm sure most people would agree that the continued existence of our country and the avoidance of nuclear holocaust are well worth going further into debt for a while.
What about the typical left-wing rant about the rich getting richer and the poor getting poorer? They must be thinking of the high tax rate, big government years of Ford, Carter, Bush and Clinton; that's when their charge was accurate. The Ford and Carter years saw incomes for the two poorest income quintiles drop and incomes for the top two rise, with no change for the middle quintile. The Bush and Clinton years saw increases in income only for the richest 20 percent of Americans and decreases for the rest of us. Under Reagan and his across the board tax cuts and elimination of some tax brackets, income for all Americans rose quite substantially. Yes, it rose faster the wealthier you were, but it rose for everyone, unlike under liberal administrations that pretend to be more concerned with the poor.
The most bizarre charge of all is that Reagan's tax cuts resulted in decreased taxes for the rich and more for the poor. I can only assume these people were accidentally transported here from an alternate universe since the 1980s saw the percentage of federal taxes paid by the rich increase while the percentage paid by the bottom 50 percent decreased. The top one percent of Americans went from bearing 18 percent of the federal tax burden in 1981 to 25 percent in 1990. The top five percent saw their share of the income tax rise from 35 percent to 44 percent. And the bottom 50 percent of American taxpayers? Their share of taxes actually decreased from 7 to 6 percent -- not a huge decrease, but it clearly disproves the argument that the rich got favorable treatment from Reagan while the poor got the shaft.
According to the Cato Institute's Steve Moore, "In the 1980s, incomes, employment, investment, wealth, consumer confidence, the stock market and tax-payments rose. Interest rates, inflation and bankruptcies plummeted." Does this sound like a disastrous policy to you?
For Libs, YES - it means we didn't NEED the government's help to become successful...Lib's think the only way to do it is with MASSIVE government....
That, and the deregulation induced financial crisis which cause bank failures out the whazoo. Papa Bush's bailout of the S&Ls added a whopping TRILLION dollars to our national debt. And the weasel bankers have no intention of paying back the taxpayers like Iaccoca and Chrysler did. I bet SOB's (son of bush) bailout of the airlines isn't going to be paid back either.) Gotta hand it to Ronald Reagan! At least the industries he bailed out had the good ethics to pay-back the taxpayers when their business conditions improved! Bush family cronies just take the money and run.
That prof, like most profs, does not know jack about the economy.
The stock market IS NOT the same thing as the economy.
Your adolescent rant and personal attacks do nothing to prove otherwise.
I wish GW BUSH and congress would not have pushed our tax cuts out four years. We need more tax cuts and we need them right now.
How in the world do you measure the economy? Let me guess, by the number of new train systems being built that will have to be taxpayer subsidized in perpetuity.
Well, this can be tricky. One has to exclude first the possibility that the reason of the shift in the tax burden was not caused by the shift of wealth. The maharajas always will pay more taxes than the poorest peasants for a simple reason that poorest are not able to support the state apparatus.
I would rather see how much tax burden is located on the top 1%, top 5% and top 50% of wealth. If one percent of the U.S. population owns sixty percent of the stock and forty percent of the total wealth "bearing 25 percent of the federal tax burden" maybe is TOO LITTLE! Do not forget also that such tax like Social Security is regressive (and being used to pay for other budget items including those subsidising lucrative government contracts).
Your position seems to supported by nothing more than Marxist class warfare. The best tax system is one that maximizes tax revenue while minimizing taxes as a percentage of GDP.
The economy is complex and is best measured by a multitude of factors, NOT a simple-minded fixation on the DJIA or NASDAQ indices. There are more revealing indicators such as the unemployment rate, rising wages and standard of living, low interest rates and inflation, housing starts, expenditures on durable goods, etc. etc. etc.
Let me guess, by the number of new train systems being built that will have to be taxpayer subsidized in perpetuity.
Why does anybody ever respond to your seriously?
Could you address my arguments? Well, I know, probably you cannot. "Class warfare" is not a Marxist invention, the societies were divided into slaves and slave owners, aristocracy and serfs, maharajas and peasants and this generated a lot of conflicts or "class warfare".
The one question is if a tiny group owning most of the wealth should pay a smaller part of the taxes than the rest while benefiting from the state?
The second question is if the increase in the stratification of wealth is good for the society as a whole and if so under what conditions?
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