Reagan vs. Clinton. Economic trends - conservative myths bite the dust.

Patrick Ziegler ^ | Feb 12, 2002 | Patrick Ziegler

[BJungNan]

Receipts during the Reagan years increased by $310 billion and by $870.8 billion under Mr. Clinton. This chart show a sharp and steady increase in revenue under Mr. Clinton which may have helped him return us to fiscal responsibility.

Two conservative myths bite the dust in this category. First, tax increases do NOT decrease revenue and tax cuts do not increase revenue more than tax increases. Conservatives also argue Mr. Reagan doubled revenue. This is NOT correct.

[Pistolshot]

Isn't it amazing when the Dumorats have to reach ALL THE WAY BACK TO REAGAN for an issue to drum up?

[backhoe]

Not only that, but anyone who thinks having the government consume- or take- more of citizens and businesses money is good doesn't have their head screwed on straight...

[soccergirl]

Reagan fought and won the Cold War, which required deficit spending. The Democratic Congress thwarted his efforts to reign in spending, otherwise the senerio would have been much different.

Clinton's budgets proposed $200 billion deficits as far as the eyes could see. Fortunately, America elected a fiscally responsibile Republican Congress in 1994 which lead the way to balanced budgets.

The current war on terror and the Democratic Senate will surely cause temporary deficits, until fiscal conservatives can again control Congress and the war spending can be curtailed.

[GBA]

There must be more to this argument than how it is stated here. And besides, these are false comparasons. It would be more accurate to examine Reagan's tax cuts and the resulting jump in revenues in light of the extremely high taxes at the time. His fiscal policies were the spark and fuel from which started the fire. A more accurate current comparison with Reagan would be in Putin's establishment of a reasonable flat tax and the resulting increase in Russian tax revenues.

Clinton inheirited a bonfire economy, despite how he and his cronies characterized it as it being the worst economy in I forget how many years. That was a lie, big surprise: Clinton lied. At that point, even his tax increases, the largest in I forget how many years, wouldn't do much to slow down the roaring economy, just like the firefighters and all their efforts aren't able to do much to stop the wildfires in Arizona.

Given enough time, however, tax increases will put out the economy's fire. If it hadn't been for the Republican control of congress, lest we forget where tax legislation comes from, Clinton would have gotten all he wanted and the economy probably would have tanked. Too bad Reagan didn't have the same Congress Clinton had.

[steve50]

You should thank G@d for the false tech bubble of klintoons. It was all we had, without it his revenue numbers would be dismal.

[Huck]

I remember Rush Limbaugh predicting horrible consequences if Clinton's tax hikes were enacted. Being young and not knowing who to believe, I decided it would be a test. I remember thinking that I would see what happens and judge the truthfulness of Limbaugh against it. Well, the consequences were hardly dire.

Of course, once the economy started booming, conservatives advanced two new arguments: this was actually still the Reagan economy and the private sector was fueling this boom via the internet revolution, which had nothing to do with the tax increases. But if the private sector was able to flourish under the Clinton policies, how detrimental could they have been? Unemployment was close to nonexistent. How much bigger can an economy be? We had to import thousands of workers as it was.

And if it was the Reagan boom continued, as even many on the Wall Street Journal OpED page argued, then is this the Reagan recession? Or do we give Clinton credit for that?

I have asked these questions before and have yet to get any good answers for them. As an observer, it is clear to me that the Clinton tax policies did not hinder the economy from growth and productivity. They did not hinder wealth creation or job creation. A lot of what the GOP said back in 92-93 about what would happen turned out to be pure buncombe.

[Huck]

At that point, even his tax increases, the largest in I forget how many years, wouldn't do much to slow down the roaring economy

That's not what the GOP said at the time. They said the world would come to an end if we passed Clinton's tax plan. Do you have a chart that shows the growth rate in 92 and93? I am looking but can't find one.

[Jimmy Valentine]

Well it is a fact that there was some hyperbole in all of the commentary. Consider this though:

1. The economy recovered under Reagan and except for a two quarter flat spot under George H.W. Bush, has continued to do well.

2. Clinton funded a lot of his programs with monies pared from the military budget.

3. Clinton's tax increases are really being felt now, with the hangover from the Tech. Stock/Dot. Com euphoria (speculation) that ran most of the nineties. That overleveraging of market capitalization, coupled with the too high tax burden is what is causing the pain now.

Lastly, Ronald Wilson Reagan has not been Preaident of the United States since the end of 1988. It say a lot to me about the effectiveness of his presidency and the quality of the man, that the Liberals have to reach back so far to demonize him.

Regards,

[mdwakeup]

As always, it isn't necessarily facts that will carry the day when it comes election time. If the Bushies don't start paying some attention to the economy, I wouldn't want to be in their shoes when Dems start asking people, for example, to look at their 401(k) balances at the end of 2000 and compare them to their current balances. It could be a devastating turnabout on "Are you better off now than you were four years ago?"

[TheRedSoxWinThePennant]

more revisionist history I would like to know where he got his info that said who controls the purse strings the congress dont think for 1 minute if dems retained control of congress there would been massive federal spending dick morris and even snugglufogous admit clinton was dragged kicking and screaming to sign the balanced budget amendmanet

[BillCompton]

These graphs are very interesting, but they are not presented fairly. They should be stretched out with Reagan at the left, Bush in the middle and Clinton on the right. In this way, we can see the whole trend line. Just for perspective, the graphs should have Carter included.

You cannot create an equivolent situation between the economy when Clinton took office and the one Reagan adopted. Stagflation. Malaise. W.I.N. (Wip Inflation Now-Ford) The rust belt. America held hostage. Communisism in Central America. Gas lines. America in real decline. Recession after recession. Europe in great peril.

Reagan plunged the economy into deep recession by working with Paul Volker on tight fiscal policy. That was needed to ring inflation from the economy. The stock market was not the important part of the economy then. Real Estate was a huge percent of America's wealth. Through accelerated depreciation and capital gains reductions, people started selling and buying land. This lead to much economic activity that was "created." This is where wealth comes from. This is the engine.

For those too young to remember, the recessions early in Reagan's first term was deep and long lasting. Why wasn't he voted out of office? Because prices were not shocking people everytime they went to the store. Inflation is a real problem in an economy. The poll-driven Clinton never would have had the courage to do something so unpopular. The bottom line is that Clinton inherited a healthy economy, notwithstanding the very mild recession that got him elected.

[RightOnTheLeftCoast]

Gee, then I guess we can conclude that the amazing recovery of the '80s and '90s was thanks to that macroeconomic wizard, Jimmy Carter.

Here's a scholarly but readable analysis of the current recession and when, precisely, it began. It is based on econometric data from the late, lamented yardeni.com and features many graphs archived from that site (warning: it's a 1Mb .pdf download but, IMHO, well worth the read). The timing of the downturn places its commencement squarely in Clinton's watch. (Let's put it this way: the recession began in the officially-endorsed March, 2001 the same way a ski-jumper's flight "begins" when he flies off the ramp. The downhill slide commenced much earlier.)

A particularly interesting excerpt: "...without exception, all the economic indicators shown turned South in early 2000. This marked the true beginning of the current recession."

The only wonder is that economics journalists persist in their Clinton-worship and continue to get away with it.

[steve50]

The klintoon economy was the tech bubble, the artificial wealth created by it did spark spending and increase tax revenue. The accounting law changes a Republican congress gave us in 95 allowed more smoke and mirrors in the other sectors. Eventually, stocks have to reflect their true value which they are on their way to. With PE's at 40 we still have a way to go.

[tcostell]

There must be more to this argument than how it is stated here.

You're right there is.

One of the key reasons for the rapid economic expansion under Clinton (which gets a suprisingly little amount of play here on FR) was that the real-dollar cost of oil dropped to a 30 year low thanks to Kuwaiti over-production after the gulf war. This reduced energy cost had the same affect on the US economy as a tax cut would. Reagan was given a terrible situation, and turned the corner with it, Clinton was given the best economic condition in the last century, and managed not to screw it up (but not for lack of trying). Good for him, I guess his legacy is assured.

[Benrand]

WHy did Yardeni shut his site down?

[BushCountry]

The old saying, "Never argue with an idiot," applies here! So, let this thread fade into non-exsistance by not replying. They do not believe what they are implying, because no-one can possibly be that stupid. This thread is just to start a fight, and not a very creative one at that. Do better next time please.

[Huck]

Well it is a fact that there was some hyperbole in all of the commentary. Consider this though:

Some was hyperbolic enough to be exactly wrong.

1. The economy recovered under Reagan and except for a two quarter flat spot under George H.W. Bush, has continued to do well.

That sounds like spin to me. I am no economist, but as I recall, the economy under Reagan went through a bad recession, then boomed, then there was a market crash. The overall growth picture may not capture all of that. I don't know. I wish we had some good charts to look at. But I don't see why you can't say the economy under Clinton followed a similar track to Reagan's: recession at the outset, followed by a boom, then a crash.

2. Clinton funded a lot of his programs with monies pared from the military budget.

So? At least he funded them.

3. Clinton's tax increases are really being felt now, with the hangover from the Tech. Stock/Dot. Com euphoria (speculation) that ran most of the nineties.

I would need some proof to accept that. Can you show me how the high valuations leftover from the tech boom are a result of Clinton's tax policies? Seems to me that was the free market run amok. And in what way are his increases being felt now? Which increases? Who is feeling them? My wife is still feeling Clinton's tax credits. She is putting herself through college with the help of the Clinton education tax credit.

That overleveraging of market capitalization, coupled with the too high tax burden is what is causing the pain now.

Overleveraging of market capitalization? Is that a fancy way of saying getting caught holding the bag? Or being left standing when the music stops? I can't see what bad investing and corporate mismanagement has to do with the tax policies. Can you show me the connection? Hell, at this point, a better argument would be that Wall Street was making up all of its earnings. It was mostly a corrupt lie bought into by a corrupt aviricious public.

Lastly, Ronald Wilson Reagan has not been Preaident of the United States since the end of 1988. It say a lot to me about the effectiveness of his presidency and the quality of the man, that the Liberals have to reach back so far to demonize him.

Maybe. But the conservatives have been saying that the boom in the 90's was the Reagan boom. They try to have it both ways. Anything good stems from Reagan. Nothing bad does. It just makes it very hard for a novice trying to learn to believe anything they say. After you see the likes of Limbaugh or certain party leaders telling such whoppers, it makes it hard.

[Smartaleck]

The Republicans, Newt and the Contract with America occured during Clinton's fourth year in office. Look at the charts in view of that.

[GBA]

Nope, I sure don't. I believe that had Clinton gotten all he wanted he wouldn't have gotten a second term and the GOP's prediction, as you state it, most likely would have come to pass. Clinton had several things working in his favor economy-wise, mostly his timing, his staying out of Alan Greenspan's way, and a Republican congress making sure he didn't get all he wanted.

Let me ask you something. If it were somehow possible to switch Reagan and Clinton so that Clinton and his policies came after Jimmy Carter, what shape do you think the economy would be in right now? Do you remember the double digit intrest rates, the outrageous taxes, and the inflation? If you want to see the worst economy in I forget how many years, a look at Carter's term would be a great place to start. I think that was when the "misery index" was invented.

Reagan came at the right time and we still benefit, despite Bush the elder and Clinton.