Posted on 08/05/2011 5:35:20 AM PDT by reaganaut1
I have been reading about fiscal policy under Ronald Reagan in my father's splendid book, Presidential Economics. What I have learned or re-learned is that Reagan was confronted with a giant problem in his 1980 campaign.
The problem was budget deficits from the Johnson/Nixon/Ford/Carter years along with high inflation and a stubbornly high unemployment rate.
The conventional economic advice called for raising taxes or monetary restraint to lower the inflation. But the problem there was that those measures would almost surely also generate higher unemployment.
Along came what my father calls "the economics of joy," which was supply-side economics. This promised that lowering taxes would create so much more labor in the economy and so much higher productivity that employment would grow, output would grow, and everything would be taken care of without having more unemployment. Also, the supply-siders said that lower taxes would raise output so much that the budget deficit would disappear as higher economic output generated more tax revenue at lower rates.
My father does some math so show that the supply-siders' hoped-for addition to hours worked would have been basically impossible on a scale sufficient to balance the budget or offset the lower tax rates. There just were not enough hours in a year to do it.
However, Presidents are not supposed to delve into small details and so Mr. Reagan thought that the supply-siders were right and he got a major tax cut passed.
The result was worse unemployment and larger deficits.
However, Ronald Reagan was a highly intelligent, adaptive President. He raised taxes, signaled his intention to raise them enough to keep the budget deficit under control, and the economy revived magnificently. Alas, the deficit problem was very far from being solved.
(Excerpt) Read more at spectator.org ...
“The recession started in 1980. Reagan was not President for even one day in 1980, and his tax cuts did not take effect until 1983.”
- this.
Really, Ben? So the term, "gridlock", which was the Libturd Media buzzword for The Reagan Administration was coined because Reagan wanted to raise taxes more than the RATS in The House and Senate did?
Ben Stein is SUCH a moron.
Tax rates were lowered. Revenue increased. Spending increased more than revenue - thus deficits increased.
Blame the tax rate lowering!!!!
Just when I thought I couldn’t possibly lose more respect for the moron.
Expelled!!! No intelligence in evidence.
His comments on Reaganism shows that he, Stein, no longer lives
in the real world, worse, forgot the history he lived through,
and has completely immersed himself into the moral relativism
of LaLaLand.
If he still goes to temple, I wonder if his rabbi is a Jewish Jeremiah Wright?
Exactly. The Wall Street Journal editorial for the first edition of 1983 was entitled something like “FINALLY, A TAX CUT.” The Dow bottomed out at about 700 in the fall of 1982. From then on, it soard as high as 2700. then the Dems took the Senate in 1987, and the Dow fell to 2200 in October of 1987. The next two days, Thursday and Friday, it lost about 100 each day, leaving investors to panic over the weekend. Monday was Black Monday. The next two days the Dow fell to about 1200, but it recovered by the end of the year.
It’s funny how the libs always choose to ignore the Carter 70s as though they never happened.
It can't be said enough. That didn't stop the Democrats (or Ben Stein, apparently) from blaming Reagan's tax cuts -- which hadn't even taken effect yet!
Reagan is the only president to have had an economics degree. And he'd received his education in the twenties before Keynesian nonsense had infected academia. He understood the dangers of inflation and let Volcker shrink the money supply even though it hurt him politically.
In 1983, Volcker eased and the final tranche of Reagan's tax cuts took effect. The economy soared almost instantly.
Ben Stein used to be interesting to read. Something's happened, though. He's now just a flat-out liar.
Ben Stein: So Conservative, He Not Only Endorsed Al Franken But Also Conributed To Franken’s Campaign!
Thanks for putting Franken over the top, Ben, you big conservative, you.
I thought taxes weren’t raised till 1986 when the Democrats screwed us over (yet again).
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