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Thursday, January 24, 2008
Ronald Reagan: Fiscal Disaster
Ronald Reagan: Fiscal Disaster
There's been a great deal of back of forth about Clinton and Obama and what they have said about Reagan. Personally, I've missed most of it. Being a stock market person I've been a little preoccupied over the last few weeks. But, I think it's time to chime in on the debate because the underlying facts -- those pesky things -- aren't very flattering to Reagan. In fact, the facts -- again, those pesky annoying things -- indicate that Reagan was a complete and total fiscal disaster.
First, let's go to the charts, shall we? It wouldn't be a Bonddad diary without charts and graphs. Let's start with Reagan's buying the "tax cuts pay for themselves" line of reasoning. Here is a graph from the St. Louis Federal Reserve of the year-over-year percentage change in tax receipts.
If you look closely at the tax receipts under Reagan and compare them to other periods you will notice a clear pattern: there is no meaningful difference between the yearly change in tax receipts under Reagan and any period before or after. This tells us a very important fact: tax receipts -- and the growth thereof -- is as much a function of overall economy growth as the actual tax rate.
OK -- let's see how much of a fiscal conservative Reagan was. Here is a graph of federal expenditures in red and federal receipts in blue.
Does anyone notice a pattern? In case you have a hard time figuring it out, let me provide some clarity.
-- Reagan -- the fiscal conservative -- never balanced a budget.
-- Reagan -- the fiscal conservative -- never came close to balancing a budget.
-- Reagan -- the fiscal conservative -- never even came remotely close to even thinking about balancing a budget.
So, how did Reagan pay for this? He mired the country is a mammoth explosion of Federal debt. Let's place this in historical context. Here is a graph of total federal debt going back to 1940, again from the St. Louis Federal Reserve.
Does anybody notice a pattern? The fiscally conservative party -- at least in theory -- have indebted this country since 1980 with a mammoth amount of debt.
Now -- let's look a little closer at the 1980s.
Saint Ronnie -- the great Saint who many are praising in one form or another -- nearly tripled the national debt. St. Ronnie -- the fiscal conservative who we all should bow down and worship -- paid for his massive expanse of the federal government (because he never balanced a budget) by pawning off the expense on the next generation. St. Ronnie used his great communication skills to tell us this was all somehow OK.
St. Ronnie was an asshole.
Comments (339)
kassandranobody (See profile | I'm a fan of kassandranobody)
Maybe its time for leaders from the young since they have the most to lose.
NJYankee (See profile | I'm a fan of NJYankee)
Tsunami (See profile | I'm a fan of Tsunami)
metamorphosis (See profile | I'm a fan of metamorphosis)
Obama is acknowledging that we need to do it again in order to get real change. He is right. We do need a governing majority all focused on common sense solutions to fix this country.
CharlesMac (See profile | I'm a fan of CharlesMac)
"St. Ronnie was an asshole."
Passion is a beautiful thing. You wear it well.
Novista (See profile | I'm a fan of Novista)
Having lived in Australia since 1974, I paid little attention to the Reagan years. But, being back in my home state of Florida in 2000, I developed an interest again in cause-and-effect.
More recently, watching the 21st century unfold, I find this anomaly:
Greenspan wrote succinctly in 1966 on the cause of the 1929 stock market crash: essentially that easy credit flowed into the stock market and led to the correction ... now, I ask myself, if he knew that then, why did he pursue the same policy? And I conclude, he was a tool, a puppet.
Similarly, I have a Chertoff reaction to the Reagan 'legacy' that leads me to the same conclusion.
Maybe that 'invisible hand of the market' exists and is invisible but it is not as amorphous as the experts reckon ... just sayin' ...
Chris1 (See profile | I'm a fan of Chris1)
Whenever I go on the Ronald Reagan freeway out of LA I insist on calling it National Freeway. His fiscal policies notwithstanding, at least his face hasn't soiled our currency -- yet.
thedirtman (See profile | I'm a fan of thedirtman)
MadAppraiser (See profile | I'm a fan of MadAppraiser)
American politicians and citizens are in the dark concerning the unimaginable heist of American taxpayer money while we are entertained by American presidential candidate"s political acumen, domestic/foreign nation building inefficiency, employment deficits, tax cutting accounting magic, educational deficits, and banking/economist theatre. American citizens will have to evaluate presidential politician"s national economic competence in terms of the presidential cabinet economist selection process to actively control measures to decrease the national debt.
timinhi (See profile | I'm a fan of timinhi)
Barbarossa03 (See profile | I'm a fan of Barbarossa03)
Janelynne (See profile | I'm a fan of Janelynne)
Instead, may Reagan be immortalized as creating the Reaganomics trickle down principle, that will give all the breaks to the people at the top and the overflow will trickle down to the rest of us. As we recall, it didn't trickle at Enron, is isn't tricking from the bankers who made bad loans, it never tricked down in NOLA, it isn't trickling to our schools or hospitals. Something, however, trickled down, but it wasn't the advantages, it wasn't the prosperity, and it wasn't the American Dream.
not one of the sheep (See profile | I'm a fan of not one of the sheep)
NURREDIN (See profile | I'm a fan of NURREDIN)
schatsie (See profile | I'm a fan of schatsie)
keep up the good work!
BuyMoreAmmo (See profile | I'm a fan of BuyMoreAmmo)
BuyMoreAmmo (See profile | I'm a fan of BuyMoreAmmo)
joebaggadonuts (See profile | I'm a fan of joebaggadonuts)
Thanks Bondad and thanks NURREDIN!!
Rockyman (See profile | I'm a fan of Rockyman)
veracity (See profile | I'm a fan of veracity)
...I believe you seriously understate the Russian angst of having US and/or NATO troops directly on their borders. As the war in Chechnya demonstrates, the Russian expansionist tendencies came long before the Soviet Union, communist party, or nuclear era. Indeed, one of the most "unknown" but important battles in world history, at least "unknown" in American public perceptions, was the Battle of Tannenberg 1410, which stopped the Germanic (Teutonic) expansion eastward into Slavic territory, although the Poles were unable to capitalize on their temporary alliance with Russians, Lithuanians, and even Tartars. (A battle which would foreshadow in ferocity & ruthlessness the "Eastern Front" war between Germany and Stalin's Russia in WWII).
But your "cost of running empire can debilitate the mother country" point is also valid, even if the Russians arent' exactly happy to have US/NATO troops and weapons in their former SSR colonies.
MilwaukeeDan (See profile | I'm a fan of MilwaukeeDan)
whsmith (See profile | I'm a fan of whsmith)
Mair1 (See profile | I'm a fan of Mair1)
Nooneyouknow (See profile | I'm a fan of Nooneyouknow)
richsmith (See profile | I'm a fan of richsmith)
I believe cartoons and charts work better with these folks than my rants.
Most of this blog makes sense except one detail described by your "tax receipt" chart. If you are reading these comments, notice the steep decline of tax revenue at the start of each first term of the Trixter, the Communicator, Shrub I and Shrub II. They are followed by revenue rise and the reestablishment of relative equilibrium after a year or year and a half. What happened there? I would assume a subsequent rise in taxes, and in the case of Shrub II I believe that was the case, but what happened in the other cases?
richsmith (See profile | I'm a fan of richsmith)
GhostOfSchlesinger (See profile | I'm a fan of GhostOfSchlesinger)
We can take back the WHOLE THING.
So, how to get there?
Barack Obama has proposed that we must first swallow a very painful chunk of truth about ourselves. We must first realize that we have failed to grapple with the most profound philosophical shift in American political history since the New Deal.
So, how was Ronald Reagan, via very intelligent (if only a little devious [inverted pinky to corner of mouth]) spinmasters, able to sell the average American worker on the idea that she should no longer cooperate with other workers to represent her own interests - indeed, that she should trust management to make all those pesky compensation decisions for her?.
And how was Ronald Reagan able to convince a majority of Americans that they should transfer their income, the hard-earned bread of their own sweat and toil, to the hands of a wealthy few? Yes, we know the results sucked. The wealthy spent the extra income on luxuries of the kind that create few jobs, leaving the "trickle" to the bathroom attendant at the country club. But how many of us believed it? Honestly?
How was it possible that we would cede our airwaves (our property) to one narrow segment of the political spectrum that now uses those airwaves to run a 24/7 Republican Party political ad called "talk radio."
How? How? And how!
But we did. And, whether by silence or agreement, we all melted in the face of this new-old idea. "All boats rise." They don't, by the way - ask your neighbor (oh, wait, they lost their home, nevermind). Social Darwinism ("survival of the fittest" writ large as social policy). Translation: War Veterans and mentally ill Americans homeless on our streets.
We could go on. And we'd agree. BUT what is our reply. NOT our policies. Only political philosophies founded upon visions woven from the fabric of eternal principles can breathe life into the epistle we must deliver to America. Then comes policy. And then comes a NEW New Deal for America.
BaltoAman (See profile | I'm a fan of BaltoAman)
The homeless aren't the only ones on the street, looking out my downtown window I see lot's of Mercedes and BWM's on it as well.
Not everyone is doing poorly here, because America leads the world in new industrial ideas and technological concepts. However we simply can't manufacture these ideas as cheaply as other countries can, therefore our working class suffers.
No American wants to work for $2 a day, like 100's of millions do in China each day.
If Sen. Obama has an answer to THAT, I'd love to hear it.
Rockyman (See profile | I'm a fan of Rockyman)
Nooneyouknow (See profile | I'm a fan of Nooneyouknow)
jimyoung1729 (See profile | I'm a fan of jimyoung1729)
When the unintended consequences are far more damaging than the gains, the propaganda and suppression of dissenters takes over (any system, anywhere). Reagan used more persuasive "propaganda" compared to Cheney-Bush wholesale suppression of dissenters, especially in public agencies. To me the press has become shabby apologists for unrealistic conservatives and allergic to inconvenient facts. An example is the impression that Clinton gutted the Military, implying Bush tried to restore it. How does that compare to DoD data that shows the tail end of Clinton saw 1,372,900 active duty military personnel on 30 June, 2000, compared to 1,372,905 on 30 June, 2007? (Never mind that Colin Powell, as Chairman of the Joint Chiefs called for massive reductions after the cold war.) For laughs, try a little multiple choice quiz I tried on conservative friends. Make a multiple choice question on how many active duty personnel were added to Clinton's 1,372,900, with answers of; a)500,000, b)50,000, c)5,000, d)500, e)50, and f)5 (throw in 5,000,000, if you like since one person reluctantly tried it) then hold up 5 fingers (the right answer, instead of a clue) and see if anyone can get it right. Everyone I tried it on will give up (or choose 5,000,000) before considering only 5.
legalclubs (See profile | I'm a fan of legalclubs)
Mormondude (See profile | I'm a fan of Mormondude)
(You know, fortune telling)
That's what really gets me about all this Monday morning quarterbacking. Nobody knows what the economy, or the tax revenues would have looked like without the tax cuts. Perhaps they would have been stronger for a year or two before plunging into a recession that never happened. We'll never know.
The only thing you can reliably extrapolate is spending, since that is not directly tied to the performance of the economy.
richsmith (See profile | I'm a fan of richsmith)
I am politically a "social democrat", of which Bernie Sanders is perhaps the only political specimen in the US. Economically, I am an archconservative. My only debt is the 10% value of my house (or maybe 7% or 8%, given the current deflation state of the last great US inflationary bubble, and we haven't even hit the "prime" wall yet) still owned by a lending institution. I have my own company (LLC - read small businessman), primarily to avoid taxes through expensing because it's perfectly legal. I don"t make the laws - the people who I vote against do. I also own 2% of an oil well in Texas from which I receive income for 4-6 barrels of oil and 40-60 MCf gas per month. I have sold all my security holdings and nearly all my mutual fund holdings " I"m going to sit this one out, even if the value of the dollar reaches that of toilet paper. Better to have some toilet paper than nothing.
Will the oil and gas I help produce pollute the environment? Yes. I worry more about the pollution that will be caused by use of the remaining 200-300 years of coal deposits than by 60 more years worth of oil, and the residue of the A-reactors that will be built on into the future. If I were advising Bengiman Braddock today, I"d say: "Megawatt size wind generators". Will the world survive? I think so. It did the dying out during the Precambrian extinction and during the extinction caused by the catastrophic comet strike of 60M years ago. Homo sapiens may not, but cats probably will, and roaches certainly will.
richsmith (See profile | I'm a fan of richsmith)
StephenDedalus82 (See profile | I'm a fan of StephenDedalus82)
GhostOfSchlesinger (See profile | I'm a fan of GhostOfSchlesinger)
Indeed, it's more than a little noteworthy that the same 1890's "Gospel of Wealth" hucksters that used to stand in town squares atop soap boxes have been reborn in the Age of Reagan to preen themselves on our plasma screens.
And they won't go away, nor will Reaganism (tax cuts, higher deficits, deteriorating infrastructure, a withering arts/intelligentsia community, censorship in the press, our jobs overseas, and our lives co-opted by the avarice of an elite few) until we are willing to reach forward and backward simultaneously.
Backward to our answer to Social Darwinism - namely, that "letting nature run its economic course" will lead to a lawless, brutish, impoverished society - and that the truth is that Darwinism involves evolution, WHICH includes the utilization, hence, evolution, of societies (not just individuals). Indeed, to "promote the general welfare" seems a principle of equal weight as "life, liberty and the pursuit of happiness."
Forward, to manifest that implicit idea of a balance between private and public interest in a 21st century context as (yes) ideas and finally policies.
legalclubs (See profile | I'm a fan of legalclubs)
I believe Obama's point was that Presidents have the ability to shape the country by inspiring, obtaining the trust of the American people, and implementing bold concepts. The comparison to Reagan is not to agree with his policies, but to say that Reagan put his very large stamp on America by making a radical departure from the past with the overwhelming approval of the American people (I believe Reagan won 49 states in 1984 in the largest landslide in history).
Obama may be the antihesis to Reagan with respect to policy, but his twin with respect to inspiration and boldness of ideas. I personally wouldn't mind seeing a liberal have that a Reagon-like ability to inspire the American people, afterall, wouldn't it be nice to see the Dems take down 49 states in 2008 with the corresponding power to implement key liberal ideas which were woefully neglected during Clinton's 8 years in office?
GhostOfSchlesinger (See profile | I'm a fan of GhostOfSchlesinger)
I guess what I'm saying, too, is that Obama's power to inspire is - I believe - a manifestation of a political gift that runs deeper than his soaring oratory runs high. I believe he is - as I write - grappling with the modes of discourse that will help us shatter the rehashed Gilded Age, "Gospel of Wealth," "All Boats Rise" mythology that seems to captivate America every few generations. It seems quite a difficult spell to break, as it relieves the "rugged individualist" of any larger social responsibility.
And, if we cannot provide a cogent answer (and there is one - one provided by presidents like TR and FDR [more formidable and more noble pair than Reagan, if you're one for understatement) in the language of our age. There's no short-cut to this - and that, thus far, is the problem with the candidates . . .
Other than Obama, who demonstrates the type process I WANT in a president - a Lincoln-esque (there, I've said it, and I can't wait to read the taunts, but I believe it) reserve and self-reflection that are a NECESSITY in a great leader. I believe he's struggling with building a much larger and newer bridge than Hillary's. And that's going to take time.
It's actually the rebuilding of the liberal-progressive bridge that runs from our Constitution to our civil liberties to the principles that give rise to the policies that represent a unified manifestation of something much deeper than the laundry lists being bandied about by candidates.
I, for one, am running back to my books to review TR's bio again AND revisit my history on the New Deal. For, I've a gut, we've a philosophical answer, a vision, that can appeal to Americans - not because it promises to "put money in their pocket," but because it inspires them to greater heights as a people and a nation.
shamanbart (See profile | I'm a fan of shamanbart)
Really, most of the problems America has are based in economics. Debt, poverty, real un- or underemployment, the horrible behavior of Wall Street, the outsourcing of manufacturing overseas, etc. Our social problems -- crime, racial problems, war, poor healthcare -- all seem to stem from that.
It would be an absolute revolution to undo many of the loopholes or bad laws or lack of laws that enable corporate America to plunder the national wealth. The tax cuts for the rich, the offshore companies avoiding taxes, the incentive to outsource jobs, the subprime mortgage funds, the REAL inflation that has skyrocketed in the last 10 years (housing costs, gas, healthcare -- major expenditures for most people), etc. Unfortunately, the only way to rein this behavior in is regulation -- which will get right-wingers up in arms.
Excessive home refinancing, tax deductions for home mortgages, easy credit cards -- all are structured for people to assume more debt, which is what they need to do because the cost of living has radically increased.
There are just SO many wrong turns the economic, energy, environmental, foreign and domestic policies have taken in the last 30 years, it's really mind-boggling.
foreffectivegovernment (See profile | I'm a fan of foreffectivegovernment)
He refuses to admit that Bill Clinton has that title, bestowed on him by Black people who recognized the things the Clinton Administration did for all Americans, including Blacks, instead of favoring Rich Whites as the Republicans do.
The fact that he reached out to disgruntled Republicans tells me he is just an opportunist. He even expects the older Black friends of the Clintons to support him in his quest for celebrity. I hope he fails so, I will vote for Hillary Clinton.
metamorphosis (See profile | I'm a fan of metamorphosis)
Their record is one of continuing Reagan's policies and perks for the rich while offering a democratic face to things. You have bought into the fantasy - hook, line and sinker.
Barack refuses to admit that Clinton was the first black president because Bill Clinton is a rich white dude.
Period.
splashy (See profile | I'm a fan of splashy)
Sciguy (See profile | I'm a fan of Sciguy)
UltraClassic (See profile | I'm a fan of UltraClassic)
If I'm not mistaken, was not a democratic congress in control? I also understand that domestic spending is the lion's share of what we spend money on despite Reagan's defense buildup.
Lastly, ending your piece with such a vile reference to Reagan was pretty uncalled for.
ibsteve2u (See profile | I'm a fan of ibsteve2u)
Uncalled for, or just bad timing?
No doubt if Hale Stewart had been able to foresee the future that Reagan would leave the nation and had called him an "asshole" in 1979, we might have been spared the wreck that Ronnie created...and Stewart wouldn't have run afoul of the "don't speak ill of the dead" Republican insurance policy.
olephart (See profile | I'm a fan of olephart)
You are mistaken. The Republicans controlled the Senate from 1981 to 1987. The conservative Boll Weevil Democrats, 1981 - 1983, voted with Republicans in the House to give effective control to the Republicans.
olephart (See profile | I'm a fan of olephart)
The domestic spending was in the budget before Reagan entered office yet the deficits were miniscule in comparison to his deficits. As for defense spending after he took office, his Secretary of Defense, Casper Weinberger, was nicknamed the "Secretary of Spending".
You need to turn off Fox and Rush and get out more.
tgood (See profile | I'm a fan of tgood)
Reagan's legacy is being expanded far beyond what the reality was. It isn't a slam against him when I say this, I personally liked him, but his credentials to lead the country were extremely flawed.
mediamarv (See profile | I'm a fan of mediamarv)
I liked him personally and his jelly beans (as Gov) but his CA and Pres administrations were a disaster for the middle class and union salaries.
BaltoAman (See profile | I'm a fan of BaltoAman)
The Republican candidates futile attempt to mirror the image of Reagan is telling. They have hit rock bottom and the desparation is palpable.
Even more telling is the lack of republican voters in the primaries, where Dem voters greatly outnumber sometimes by 2-1 over the Repubs (see Nevada.)
The Dems are enjoying their new-found popularity and have 2008 in the bag. Though I haven't actually heard ANY of them talking spending cuts in their platform.
Will we TAX our way to prosperity?
jrterrier (See profile | I'm a fan of jrterrier)
Garvagh (See profile | I'm a fan of Garvagh)
Ditto with the ABM system (which Bush wants).
Posted January 20, 2008 | 12:14 PM (EST)