In 1980, amid a seriously dysfunctional economy, Reagan campaigned for president on an economic recovery program with four specific components.The first was across-the-board reductions in tax rates to provide incentives for saving, investment, entrepreneurship and work.
The second component was deregulation to remove unnecessary costs on the economy. In today's world, that would especially mean removing the onerous restrictions on energy production -- allowing drilling offshore and onshore for oil and natural gas, revival of the nuclear power industry, and construction of more electric power plants.
Third was the control of government spending. In 1981, Reagan forced through Congress not only his famed, historic tax cuts, but also a package of budget cuts close to 5% of the federal budget -- equivalent to roughly $150 billion today. In constant dollars, nondefense discretionary spending declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to 1983. Moreover, in constant dollars, this nondefense discretionary spending never returned to its 1981 level for the rest of Reagan's two terms. By 1988, this spending was still down 14.4% from its 1981 level in constant dollars.
Even with the Reagan defense buildup, which helped win the Cold War, total federal spending declined to 21.2% of GDP in 1989 from 23.5% of GDP in 1983. That's a real reduction of 10% in the size of government relative to the economy. The fourth component of the Reagan recovery plan was tight, anti-inflation monetary policy, which was spectacularly successful. Inflation was cut in half to 6.2% in 1982 from 13.2% in 1980, and cut in half again to 3.2% in 1983.
We know such policies work because they turned around in just two years an economy far worse than today's. We were suffering from multiyear, double-digit inflation, double-digit unemployment, double-digit interest rates, declining incomes, and rising poverty. In fact, what we suffer with today is not the worst economy since the Great Depression, but the worst economy since Jimmy Carter -- the last time liberals were dominant politically and intellectually.
It is truly tragic our nation didn't learn from this lesson. Slightly more than half of our people elected the biggest moron to ever hold the Presidency who is doing EXACTLY THE OPPOSITE of the Reagan prescriptions.
We are in for at least a decade of going sideways, just when the baby boom generation is retiring. This must be a master strategy to make all of us baby boomers wards of the state in our retirement. We never dreamed we'd retire being serfs of colossal government.
“This must be a master strategy to make all of us baby boomers wards of the state in our retirement.”
As well as clean out your retirement savings...and making sure you can’t access any healthcare benefits and thereby prolong your social security dependency.
Read the stimulus bill that just passed tonite. You will not only end op broke but they are going to ration away your healthcare so you don't become a burden to Social Security.
SOILENT GREEN IS PEOPLE!!!!!!!!!!!!!!!!!!!!
Nice article, thanks for the link.
Sounds like Obama has everything backwards from what worked before.
The Dems try to present the plan as some help finally to the poor and middle class. But their tactics for helping are wrong (maybe not all wrong, but mostly).