June 10, 2004
SATISFACTION OOZES FROM HER PORES:
Reagan's link (Larry Kudlow, June 10, 2004, Townhall)
More than any modern president, Reagan understood the link between economic growth at home and American strength overseas. It was the Gipper's most brilliant insight. He acted swiftly to show our enemies that we would produce the necessary economic resources to do whatever it would take, for however long was necessary, to triumph over the communist menace.Immediately upon assuming office, he reversed the economic policy of the decline years. He brought down marginal tax rates, restoring the incentives necessary for economic growth. He gave Federal Reserve chairman Paul Volcker the strong ground to stand on, allowing him to harden the value of the dollar and slay inflation.
At bottom, what became known as Reaganomics was a new pro-growth policy mix of tax incentives at the margin and stable money. But there was more. The Californian launched a massive military build-up totaling about $1.5 trillion. He deregulated oil prices, proving the conventional wisdom wrong as energy became much cheaper. He launched U.S.-Canadian free trade. He was unyielding in his opposition to the air-controllers' strike, firing thousands of these government workers and ending the anti-growth union stranglehold on private industry. He created individual retirement accounts and 401(k)s, giving birth to the investor class. He also slashed social spending by reducing domestic program levels (excluding Social Security and health care) by nearly $50 billion in 1981. That amount would come to about $90 billion today.
By 1986, Reagan's tax-reform plan left two marginal rates of 28 percent and 15 percent, a long stone's throw from the 70 percent top rate he had inherited. His plan also cut about 2,000 pages from the tax code.
Unfortunately, it would appear the tax code can only be permanently reformed via constitutional amendment. Posted by Orrin Judd at June 10, 2004 8:38 AM
OJ
I agree that it would be nice to "constitutionally" restrict the Government in taxing and even spending for that matter, but that may be approaching utopian fantasy.
Make note
"He deregulated oil prices, proving the conventional wisdom wrong as energy became much cheaper."
Seems "some" conservatives have forgotten that lesson, as they seem prone to add extra taxes to oil, thereby screwing up the price signals the market is sending.
Posted by: h-man at June 10, 2004 9:26 AMh:
We want the oil cheap so that we can tax it. Reagan was the biggest tax hiker in our history.
Posted by: oj at June 10, 2004 9:38 AMSomebody explain to me why pump-priming deficit spending by Reagan was good and worked, and by FDR was bad and didn't.
Posted by: Harry Eagar at June 10, 2004 2:12 PMThe New Deal was an ongoing experiment in arbitrary business and economic regulation in combination with high taxes and anti- free enterprise rhetoric. Running a business and meeting a payroll is tough enough. It took a world war for the US economy to recover from FDR's naive demagoguery. I'm sure FDR meant well but he was in over his head and was easy prey for all of the half-baked theories of the time.
Deficit spending has little to do with it.
Posted by: Tom Corcoran at June 10, 2004 4:37 PMHarry:
FDR should have cut taxes, stabilized the currency, fought the unions & attacked Hoover's big government programs.
Posted by: oj at June 10, 2004 4:52 PMHarry,
Somebody tell me why Reagan is always and forever given sole responsibility for the deficit. Did congress and the senate go on sabbatical for 8 years?
Amending the Constitution wouldn't stop tax increases, or distortions meant to favor one group or another, any more than campaign finance reform means that the '04 election will cost less than the '00.
The only routes to a simple tax code are if enough powerful and influential people want such a thing, or, the masses demand that the Federal government stop giving them things, and also stop taxing them.
Both are possible, neither is likely.
Posted by: Michael Herdegen at June 10, 2004 10:10 PMBecause Reagan ran for president saying he'd cut spending, and not just cut it, gut it.
You could criticize FDR on the same grounds. He ran as an economizer, too.
You guys still haven't explained why the economy cratered in '29 ('22 in the cow states) in the first place. Government spending had been slashed, regulation was exiguous to non-existent.
The economy crashed anyway.
Why was that?
Posted by: Harry Eagar at June 11, 2004 1:33 AMHarry:
Because the Fed tightened into a deflation and the government boosted taxes. A normal recession turned into a Depression.
Posted by: oj at June 11, 2004 8:24 AM