ditchpilot
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Godfather
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How Reagan's Tax Cuts Saved Clinton and Gore
August 2001 -- "US Presidents are commonly thought to influence the economy only during, or shortly after, their actual terms in office. Not true. Entitlement programs instituted by FDR and LBJ still profoundly affect our economy today. And Ronald Reagan's historic tax cuts of 1981 are still largely in effect and are still pumping huge amounts of additional money into the economy. However, Bill Clinton and Al Gore got most of the credit during their administration for the continuing economic boom unleashed by the Reagan tax cuts. That undeserved credit may have gotten Clinton re-elected and saved him from being removed from office. It almost got Gore elected too.
When Reagan took office in 1981, the US economy was in shambles. We have difficulty remembering how bad the economy was under Carter, but it was described in terms of the "misery index," and the word "stagflation" was coined to refer to the double-whammy of economic stagnation combined with runaway inflation. The automotive industry was on the verge of collapse under the pressure from Japanese competition and an oil crisis. The American way of life itself seemed to be in serious jeapordy. It wasn't the Great Depression, but it was as close as we've come to it since.
The top tax rate was 70% when Reagan took office. He got it cut in half to 35%. At the same time, he eliminated many tax shelters that the rich routinely relied on to avoid paying taxes altogether, forcing them to invest in the free market and actually pay taxes. Shortly after the tax cuts were enacted, the economy took off for an unprecedented period of peacetime growth. The misery index plummeted as unemployment fell, inflation slowed, and interest rates dropped, leading to a seven-year boom that the liberal media cynically dubbed "the decade of greed."
Eight years later George Bush swept into office on Reagan's coattails and a pledge of "no new taxes." Although he tried to keep his pledge, Bush ultimately succumbed to unrelenting pressure by the Democratically controlled Congress to increase taxes. Not surprisingly, the economy went into a mild recession, though nothing like the recession of a decade earlier. Unemployment was well below what it had been under Carter, and inflation was completely under control. Nevertheless, the liberal media shamelessly dubbed it the "worst economic period of the last fifty years."
The media hype succeeded at getting their man, Bill Clinton, elected. Although barely reported, the Bush recession had actually ended before Clinton even took office, with a vibrant 3.9% annual growth rate in the last quarter of Bush's administration. In other words, the second phase of the great Reagan economic boom had already begun before Clinton even moved to Washington. But of course that didn't stop the liberal media from giving Clinton credit for it and dubbing it the "decade of prosperity."
How can we be sure the economic boom presided over by Clinton was actually due to Reagan? It's simple. Even though Clinton increased tax rates, the top rate after his tax hikes was still less than 40%, down a full 30% from the 70% rate before Reagan's tax cuts. In terms of the money left after taxes, that's a huge jump from (100-70=) 30% to (100-40=) 60% -- a doubling of the amount of money that continues, year after year, to go into the private economy rather than the federal budget. It hardly takes an economist to understand the huge effect on economic growth of doubling after-tax income.
Clinton also got credit for eliminating the federal deficit, of course. It is no coincidence, however, that the deficit didn't start coming down until the Republicans took control of Congress in 1994. As for the touted "Reagan deficits," the indisputable fact is that revenues grew tremendously during Reagan's two terms -- but spending by the Democratically controlled Congress grew even faster, at an astronomical rate. And contrary to the liberal media spin, the lion's share of the growth of the federal budget under Reagan was not on defense, but rather on social entitlement programs such as social security and Medicare.
Contrary to Democratic demogogery about "tax cuts for the rich," incidentally, the rich actually paid higher taxes after Reagan's tax cuts. How could that be? Simple. Along with cutting tax rates, Reagan also eliminated many tax shelters and loopholes. Before Reagan, the rich avoided paying taxes by investing in windmills and other boondoggles blessed by the federal government (the "targeted" tax cuts that Al Gore wanted to reinstate). After Reagan, the rich shifted their investments to the free market, greatly stimulating the private economy and causing the information technology boom.
There's more to the story, of course, but everything else is really secondary. In fairness, Clinton actually did a few things himself to help the economy, such as opening up free trade and keeping the Federal Reserve Board under competent leadership. On the other hand, if Clinton had not been restrained by the Republicans, who took control of Congress in the middle of his first term, he would have raised taxes even more than he did, and his wife would have nationalized the health care industry.
When Clinton was impeached, his party argued that he should be given a pass because he was doing a good job managing the economy. Without the huge economic boost from Reagan's tax cuts, Clinton might well have been removed from office, or might have failed to win re-election. Gore would have suffered a humiliating defeat in the election to succeed him, or might have failed to even win the nomination. But don't hold your breath waiting for the liberal media to start reporting the truth. If America wants the Reagan economic boom to continue, they need to figure out for themselves what caused it in the first place."
The above excerpt was from an August 2001 article written by Samuel T. Francis of the Washington Post
OK, maybe I didn't get it all right but yes Clinton did raise tax rates but the rates were still lower than what Reagan's rates were in comparison.
-It is better to keep your mouth shut and appear stupid than to open it and remove all doubt. --Mark Twain
August 2001 -- "US Presidents are commonly thought to influence the economy only during, or shortly after, their actual terms in office. Not true. Entitlement programs instituted by FDR and LBJ still profoundly affect our economy today. And Ronald Reagan's historic tax cuts of 1981 are still largely in effect and are still pumping huge amounts of additional money into the economy. However, Bill Clinton and Al Gore got most of the credit during their administration for the continuing economic boom unleashed by the Reagan tax cuts. That undeserved credit may have gotten Clinton re-elected and saved him from being removed from office. It almost got Gore elected too.
When Reagan took office in 1981, the US economy was in shambles. We have difficulty remembering how bad the economy was under Carter, but it was described in terms of the "misery index," and the word "stagflation" was coined to refer to the double-whammy of economic stagnation combined with runaway inflation. The automotive industry was on the verge of collapse under the pressure from Japanese competition and an oil crisis. The American way of life itself seemed to be in serious jeapordy. It wasn't the Great Depression, but it was as close as we've come to it since.
The top tax rate was 70% when Reagan took office. He got it cut in half to 35%. At the same time, he eliminated many tax shelters that the rich routinely relied on to avoid paying taxes altogether, forcing them to invest in the free market and actually pay taxes. Shortly after the tax cuts were enacted, the economy took off for an unprecedented period of peacetime growth. The misery index plummeted as unemployment fell, inflation slowed, and interest rates dropped, leading to a seven-year boom that the liberal media cynically dubbed "the decade of greed."
Eight years later George Bush swept into office on Reagan's coattails and a pledge of "no new taxes." Although he tried to keep his pledge, Bush ultimately succumbed to unrelenting pressure by the Democratically controlled Congress to increase taxes. Not surprisingly, the economy went into a mild recession, though nothing like the recession of a decade earlier. Unemployment was well below what it had been under Carter, and inflation was completely under control. Nevertheless, the liberal media shamelessly dubbed it the "worst economic period of the last fifty years."
The media hype succeeded at getting their man, Bill Clinton, elected. Although barely reported, the Bush recession had actually ended before Clinton even took office, with a vibrant 3.9% annual growth rate in the last quarter of Bush's administration. In other words, the second phase of the great Reagan economic boom had already begun before Clinton even moved to Washington. But of course that didn't stop the liberal media from giving Clinton credit for it and dubbing it the "decade of prosperity."
How can we be sure the economic boom presided over by Clinton was actually due to Reagan? It's simple. Even though Clinton increased tax rates, the top rate after his tax hikes was still less than 40%, down a full 30% from the 70% rate before Reagan's tax cuts. In terms of the money left after taxes, that's a huge jump from (100-70=) 30% to (100-40=) 60% -- a doubling of the amount of money that continues, year after year, to go into the private economy rather than the federal budget. It hardly takes an economist to understand the huge effect on economic growth of doubling after-tax income.
Clinton also got credit for eliminating the federal deficit, of course. It is no coincidence, however, that the deficit didn't start coming down until the Republicans took control of Congress in 1994. As for the touted "Reagan deficits," the indisputable fact is that revenues grew tremendously during Reagan's two terms -- but spending by the Democratically controlled Congress grew even faster, at an astronomical rate. And contrary to the liberal media spin, the lion's share of the growth of the federal budget under Reagan was not on defense, but rather on social entitlement programs such as social security and Medicare.
Contrary to Democratic demogogery about "tax cuts for the rich," incidentally, the rich actually paid higher taxes after Reagan's tax cuts. How could that be? Simple. Along with cutting tax rates, Reagan also eliminated many tax shelters and loopholes. Before Reagan, the rich avoided paying taxes by investing in windmills and other boondoggles blessed by the federal government (the "targeted" tax cuts that Al Gore wanted to reinstate). After Reagan, the rich shifted their investments to the free market, greatly stimulating the private economy and causing the information technology boom.
There's more to the story, of course, but everything else is really secondary. In fairness, Clinton actually did a few things himself to help the economy, such as opening up free trade and keeping the Federal Reserve Board under competent leadership. On the other hand, if Clinton had not been restrained by the Republicans, who took control of Congress in the middle of his first term, he would have raised taxes even more than he did, and his wife would have nationalized the health care industry.
When Clinton was impeached, his party argued that he should be given a pass because he was doing a good job managing the economy. Without the huge economic boost from Reagan's tax cuts, Clinton might well have been removed from office, or might have failed to win re-election. Gore would have suffered a humiliating defeat in the election to succeed him, or might have failed to even win the nomination. But don't hold your breath waiting for the liberal media to start reporting the truth. If America wants the Reagan economic boom to continue, they need to figure out for themselves what caused it in the first place."
The above excerpt was from an August 2001 article written by Samuel T. Francis of the Washington Post
OK, maybe I didn't get it all right but yes Clinton did raise tax rates but the rates were still lower than what Reagan's rates were in comparison.
-It is better to keep your mouth shut and appear stupid than to open it and remove all doubt. --Mark Twain
Last edited:
Please enlighten me and tell me how you have determined that I’m stupid. Is it because I dare go against your beliefs? Oh, please use some big words so we all know how smart you are.uke:
No, no, no!
If he sends big words, we won't be able to understand him.
CapnVegetto
The Prince of all Saiyans
- Joined
- Mar 24, 2005
- Posts
- 1,981
Sad thing is that you are all wrong.
There is only ONE way to stimulate an economy. One way.
It is to INCREASE DEMAND.
If you cut taxes on the rich, they aren't simply going to just throw that money back into business just because the government tells them to. There has to be a way for them to make a profit on that money that they invest. There has to be DEMAND.
Crude Example: Whirlpool makes dishwashers. If Whirlpool can't make enough dishwashers to meet demand, they spend money to buy land, build a structure, buy parts to make dishwashers, hire workers to put them together, hire managers to run the plant, buy trucks to ship them, hire more marketers to market them, etc. They're not going to invest the $500 mil or so it costs to do this unless they feel that there is a reasonable expectation to get a return of more than they put in. Simple economics. You can't just simply cut taxes on the rich and expect this to happen. They aren't rich because they throw their money away. They are rich because they are smart with their money and have made it grow.
So how do you increase demand? There's only one way to do it. You have to give people the means to increase demand. Put more money in peoples' pockets. How do you do that? Tax cuts, Bush stimulus checks, whatever. But it has to be across the board.
I personally think the biggest screwup with TARP was that the money was given to huge banks directly. Why not give the money to the people on the condition that it is only used to pay off unsecured debt? Set up a government program or something to ration out the money. Everybody wins. The banks end up getting the money anyway, which saves their asses, and the population sheds debt so they now have more money in their pockets to spend, increasing demand, fixing the economy. What was TARP worth? $600 billion? What was the stimulus worth? $800 billion? Use a combination of hardcore payroll tax cuts for business owners, tax cuts for EVERYBODY, (not just middle class or rich or poor), and a seperate fund for helping people shed unsecured debt. Demand increases, the economy gets better.
At least that's what I think.
There is only ONE way to stimulate an economy. One way.
It is to INCREASE DEMAND.
If you cut taxes on the rich, they aren't simply going to just throw that money back into business just because the government tells them to. There has to be a way for them to make a profit on that money that they invest. There has to be DEMAND.
Crude Example: Whirlpool makes dishwashers. If Whirlpool can't make enough dishwashers to meet demand, they spend money to buy land, build a structure, buy parts to make dishwashers, hire workers to put them together, hire managers to run the plant, buy trucks to ship them, hire more marketers to market them, etc. They're not going to invest the $500 mil or so it costs to do this unless they feel that there is a reasonable expectation to get a return of more than they put in. Simple economics. You can't just simply cut taxes on the rich and expect this to happen. They aren't rich because they throw their money away. They are rich because they are smart with their money and have made it grow.
So how do you increase demand? There's only one way to do it. You have to give people the means to increase demand. Put more money in peoples' pockets. How do you do that? Tax cuts, Bush stimulus checks, whatever. But it has to be across the board.
I personally think the biggest screwup with TARP was that the money was given to huge banks directly. Why not give the money to the people on the condition that it is only used to pay off unsecured debt? Set up a government program or something to ration out the money. Everybody wins. The banks end up getting the money anyway, which saves their asses, and the population sheds debt so they now have more money in their pockets to spend, increasing demand, fixing the economy. What was TARP worth? $600 billion? What was the stimulus worth? $800 billion? Use a combination of hardcore payroll tax cuts for business owners, tax cuts for EVERYBODY, (not just middle class or rich or poor), and a seperate fund for helping people shed unsecured debt. Demand increases, the economy gets better.
At least that's what I think.
ttflyer
Well-known member
- Joined
- Jan 20, 2007
- Posts
- 131
I agree with most of what you said. TARP is another story. As much as I hate it, the entire banking system was insolvent at the time and the government HAD to give them that money so they could cover their losses. The reasons are criminal, but it was what it was... Also, most of them have paid it back, plus interest, so we as citizens are not out all that much...
As to the $800 BILLION stimulus, it was wasted. It did no lasting good at all. Why? Because both parties used the money to try and buy votes instead of help the economy. Had the government instead divided that money up among the people, they could have sent almost $3,000 to every man, women, child, illegal alien, and probably a bunch of dead people... Had they sent it out as "debit" cards with an expiration (say one year) so people HAD to spend it (not pay off debit or save), the economy would have shot through the roof and BHO would be coasting into his second term right now. But they are all too dumb for that...
The real answer to this whole mess is TERM LIMITS... Nothing more complicated then that.
timmay
Well-known member
- Joined
- Jul 26, 2003
- Posts
- 227
Left or right Sarah Palin is an idiot. Anybody willing to vote for her should have their voting privileges revoked. Watch the links and argue that I am wrong. By the way I lean more to the right.
http://latimesblogs.latimes.com/was...they-werent-gonna-be-takin-away-our-arms.html
http://popwatch.ew.com/2010/02/08/sarah-palin-crib-notes/
Look at the words she had to write down to remember. Not exactly chemical calculations.
cynic
Well-known member
- Joined
- Apr 7, 2004
- Posts
- 1,541
You are correct.
Well they might, or they might not, or they might put money into the business by building a factory in Asia.
That is the crux of the problem. Google terms like inflation adjusted median income or look here - http://www.census.gov/prod/2009pubs/p60-236.pdf (pg 7)
The middle class has lost buying power and the jobs are not coming back. So the question is, how do you increase the EARNING POWER of the traditionally middle class union worker that is now competing with slave labor in foreign lands.
Tarrifs? Isolationism / anti-globalization?
If you want to hike taxes on the rich the money should do something to help the middle class long term like improve access to education. I have no idea if that would help.
A slight drop in the tax for the middle class won't do it. They are loosing ground. You could drop it down to 0 and it won't fix the problem.
Please enlighten me and tell me how you have determined that I’m stupid. Is it because I dare go against your beliefs? Oh, please use some big words so we all know how smart you are.
Careful, you're messing with a Piper Seneca captain!
cynic
Well-known member
- Joined
- Apr 7, 2004
- Posts
- 1,541
Right. Because it's REALLY difficult to sit in an ERJ and remember to pull the gear up before Vle. I mean... it's not like a monkey could do your job... I mean... you have an FMS... an FMS! It has waypoints AND you have to remember to talk on the radio at the same time. Could a monkey do that? I don't think so.
At least a monkey knows what Vle means. Monkey 1, Seneca captain 0.
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