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The Public Policy
Reaganomics’ Resurgence
We need to examine what we did the last time America fell into a downward economic spiral.
In my new book, America’s Ticking Bankruptcy Bomb, I argue that the first step in defusing the bomb, and averting the coming bankruptcy of America, is to restore America’s world leading economic prosperity. Only another economic boom can hope to generate enough revenue to finance essential continuing obligations. And only another boom can reduce dependency sufficiently to enable us to make the necessary spending cuts to reduce the overwhelming deficits, debt and other liabilities that threaten the survival of the American Dream.
The American Dream is not over. This economy has another economic boom inside it just straining to break out. The book argues that the best way to see how to ignite such a boom once again is to examine what we did the last time America fell into a downward economic spiral.
Reaganomics 1.0
When President Reagan was elected in 1980, America suffered double digit inflation, double digit interest rates, and soon double digit unemployment. Three worsening recessions starting in 1969 were about to culminate in the worst of all in 1981-1982, with unemployment peaking at 10.8%. Inflation raged at 11.3% in 1979 and 13.5% in 1980, or 25% in two years. The Washington establishment at the time argued that this inflation was now endemic to the American economy, and could not be stopped, at least not without a calamitous economic collapse.
The poverty rate started increasing in 1978, eventually climbing by an astounding 33%, from 11.4% to 15.2%. A fall in real median family income that began in 1978 snowballed to a decline of almost 10% by 1982. In addition, from 1968 to 1982, the Dow lost 70% of its real value, reflecting an overall collapse of stocks.
President Reagan campaigned on an explicitly articulated, four-point economic program to reverse this slow motion collapse of the American economy, which he implemented once elected:
1. Cut tax rates to restore incentives for economic growth, particularly incentives for increased production achieved by allowing producers to keep a higher percentage of what they produce. That encompasses incentives to start new businesses, expand businesses, and create jobs.
2. Cut government spending, embodied first in the 1981 Reagan budget cuts much vilified by the Left at the time. In constant dollars, non-defense discretionary spending declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to 1983. Moreover, in constant dollars, this non-defense discretionary spending never returned to its 1981 level for the rest of Reagan’s two terms! Even with the Reagan defense buildup, which won the Cold War without firing a shot, total federal spending declined from a high of 23.5% of GDP in 1983 to 21.3% in 1988 and 21.2% in 1989. That’s a real reduction in the size of government relative to the economy of 10%.
3. Anti-inflation monetary policy holding money supply growth to money demand, to maintain a stable value of the dollar.
4. Deregulation, to reduce costs for businesses and consumers.
These economic policies amounted to the most successful experiment in world history. The Reagan recovery started in official records in November 1982, and lasted 92 months without a recession until July 1990, when the tax increases of the 1990 budget deal created a short, shallow recession. This set a new record for the longest peacetime expansion ever, the previous high in peacetime being 58 months.
During this 7-year recovery, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third largest in the world at the time, to the U.S. economy. In 1984 alone, real economic growth boomed by 6.8%, the highest in 50 years. Nearly 20 million new jobs were created during the recovery, increasing U.S. civilian employment by almost 20%. Unemployment fell to 5.3% by 1989.
The shocking rise in inflation during the Carter years was reversed. Astoundingly, inflation from 1980 was reduced by more than half by 1982, to 6.2%. It was cut in half again for 1983, to 3.2%, never to be heard from again until recently.
Real per capita disposable income increased by 18% from 1982 to 1989, meaning the American standard of living increased by almost 20%, in just 7 years. The poverty rate declined every year from 1984 to 1989, dropping by one-sixth from its peak. The stock market more than tripled in value from 1980 to 1990, a larger increase than in any previous decade.
This economic recovery flowered into a 25-year, generation-long economic boom, which Art Laffer and Steve Moore rightly call in their book The End of Prosperity, “the greatest period of wealth creation in the history of the planet.” Steve Forbes rightly called it an “economic golden age.” This success was not just a matter of fortuitous correlation. Reversing the accelerating downward economic spiral of the 1970s into this unprecedented boom arose directly out of the timeless economic reasoning described above. This reasoning shows why these policies and their spectacular results are still instructive for today.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Letter to the Editor View all comments (81) | Leave a comment
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Bill Hussein O'Stalin| 6.22.11 @ 6:36AM
Although I agree with many of your comments Reagan was no tax cutter.
Reagan passed some of the biggest tax increases in history and had little real effect on long term spending.
Reagan also increased the scope and size of government. Instead of eliminating the Departments of Energy and Education, two campaign promises he was elected on, he actually added a department, the Department of Veteran Affairs.
Don't forget it was Reagan who appointed the abortion loving Sandra Day O'Connor, which flies in the face of his conservative reputation.
Also, your implication that he cut spending doesn't hold up to reality. Reagan increased the size of government as noted and the debt went from 700 billion to 3 trillion.
Ironically, this increase in spending may have paved the way for Clinton because George H.W. Bush tried to be Reagan with tax cutting but was forced to raise taxes, violating a campaign pledge.
In essence, a lot of what you wrote will help immensely and will turn the government in the right direction.
Reagan made a lot of good statements but in reality he loved or appeared to love big government.
Handy| 6.22.11 @ 7:20AM
You are correct. Congress spent the money, but Reagan never vetoed a budget, either.
Reagan could have accomplished so much more, although the Cold War preoccupied him. Domestically, he left a lot of political capital on the locker room floor.
Michael Tomlinson| 6.22.11 @ 8:30AM
The only President who never raised taxes was President George W. Bush.
So what are the facts about the Bush Presidency before the Democrats took over Congress in 2007 and wrenched a booming economy off course. In the wake of a recession that began roughly 7 weeks after President Bush took office and 9/11, America experienced 6 years of uninterrupted economic growth and a record 52 straight months of job creation that produced more than 8 million new jobs. During the Bush presidency, the unemployment rate averaged 5.3%. We saw labor-productivity gains that averaged 2.5 % annually — a rate that exceeds the averages of the 1970s, 1980s, and 1990s. Real after-tax income per capita increased by more than 11% and from 2000 to 2007, real GDP grew by more than 17 %, a gain of nearly $2.1 trillion. President Bush proposed policies that triggered the kind of sustained growth that saw the deficit fall to 1 % of GDP ($162 billion) by 2007.
If we returned to the best elements of the Reagan and Bush Presidencies combined with strong cuts to the Federal bureaucracy and budget the US would be solid gold.
Bill Hussein O'Stalin| 6.22.11 @ 9:22AM
Actually, Obama has helped pass one of the biggest tax cuts in history by extending the Bush Tax cuts. That may be a bitter pill to swallow but Obama has actually cut more taxes then Ronald Reagan and in fact, he may be a bigger tax cutter than George W. Bush simply by extending the Bush tax cuts.
His intent is to reverse course next year and for that he will pay the price. But he's also a politician so he may come back and extend and enhance them. Here's something to ponder from Goldman Sachs about Obama:
http://floppingaces.net/2011/0.....re-stupid/
Measured against the CBO alternative scenario, the President’s proposal relies more heavily on increased revenue than the other proposals. It assumes that the $1 trillion in proposed revenue increase (over 12 years) does not include the additional $700bn (over ten years) from allowing the upper-income tax provisions to expire; the President’s spending cut proposal is on the same general scale as the external commissions, though somewhat smaller, at around 1.5% of ten-year GDP.
Alan Brooks| 6.22.11 @ 10:14AM
"But he's also a politician"
You DON'T say.
Golly gee.
"His intent is to reverse course next year... he may come back and extend and enhance them."
But um er that is to say on the other hand he might, however...
You're a real man of decisiveness, aren't you Mr. O' Stalin.
Bill Hussein O'Stalin| 6.22.11 @ 11:15AM
Politicians are flags in the wind.
Apparently everyone knows that but Alan Brooks.
Handy| 6.22.11 @ 2:18PM
William, William, William,
You usually make more sense. How does extending current tax rates qualify as a tax cut? Have you thought about the return of the death tax? The increase in cap gain and dividend rates?
Those skunks at Goldman don't pass the smell test. That's Paulson and Rubin territory. Don't drink their kool-aid.
JP| 6.22.11 @ 2:57PM
A tax cut extension is not a cut, but an extension. No one received additional cuts. And they are pegged to expire in 2013.
If you go down memory lane, Reagan inherited an economy with runaway inflation; bracket creep was happening so quickly that every years tax payers saw thier taxes go up automatically; real GDP growth was negative as the price of commodities was bleeding most businesses dry. For 11 years the US had stagflation.
Reagan ended all of that. But, he certainly didn't end Progressive Government. The GOP had a very short window to get Reagan's policies in place. By 1987 it was all over.
Bill Hussein O'Stalin| 6.22.11 @ 3:51PM
Whether it's an extension or not, it's still a piece of legislation promoted by and signed by Obama. You can slice it and dice it anyway you want, but he still passed a massive tax cut. Obama also lowered payroll taxes which was another massive tax cut. Those are facts. If you don't have facts you look look stupid and some of the posters at TAS apparently don't realize not having the facts does not help their cause.
As far as Reagan he's dead and Obama is alive and kicking. Obama is the problem not Reagan. Sheesh!
As far as the Goldman statement it's obvious reading skills are lacking.
They are pointing out that Obama's budget is going to lead to higher taxes because of his miscalculations or possible miscalculations on Obama's part. The outcome is not certain.
Handy| 6.22.11 @ 5:42PM
I used to think you were fairly intelligent.
Bill Hussein O'Stalin| 6.22.11 @ 8:10PM
Facts are facts and no war is won with false information.
Jack London| 6.22.11 @ 7:34PM
Thanks Bill - finally a conservative here who is calling it as it was on Reagan, GW Bush and Obama. Facts are facts, afer all.
lydia | 6.23.11 @ 10:39AM
As for me and mine, I am stocking up on the necessities of life and planning a move to the rural mountain West. I will continue to vote and work for Constitution supporting candidates, but I do intend to keep my powder dry.
I am a 28 years old doctor, mature and beautiful.and now I am seeking a good man who can give me real love , so i got a username Andromeda2002 on--s'e'ek'c'ou'ga'r.c óm--.it is the first and best club for y'ounger women and old'er men, or older women and y'ounger men,to int'eract with each other. Maybe you wanna ch'eck 'it out or tell your friends!
Handy| 6.22.11 @ 7:11AM
All of your suggestions are great, but there is no way any of them will happen. Even if they did, people no longer trust the government. The incentives will not apply. Folks will just try to shield whatever wealth they have managed to accumulate.
For many, if not most, the American Dream is over, and they know it. If only 10% of the real producers decide to "Go Galt," the economy will never recover. Obama has done far more damage than mere numbers indicate. He has finally revealed that the government is at war with the citizens. No politician, not even a Reagan, will be able to restore the trust necessary to ignite a boom.
Don't expect Greek-style riots though. Just a lot of shuttered buinesses and more vagrancy. Oh sure, government employees and union sissies will have their lame demonstrations, but they will fall on deaf and unsympathetic ears.
Nothing short of repealing the income tax and a return to the gold standard will fix this mess.
Handy| 6.22.11 @ 4:25PM
Because Ferrara is a coward and will not participate in the comments to his article (not just mine), I will answer myself.
Assuming a victory for fiscal sanity in 2012 and that all Peter's prescriptions are passed unanimously, there is no assuarance that, come 2016 or 2020, they won't be reversed. The citizens have been down this road before, and they won't fall for the scam again. People are in defilade, and they will not expose themselves to enemy fire from Washington, DC anytime soon. Charlie Brown may fall for Lucy's football trick every year, but the American people are fed up.
Your mattress is a safer store of value than a checking account. The interest you earn on savings won't cover your ATM fees. Real estate? When rents drop below your monthly mortgage payment, wouldn't you just walk away? When you need to buy Hamburger Helper, won't you cash in that 401K, even if it means penalties which you'll never be able to pay? Oh no, Bre'r IRS agent don't throw me in that federal prison!!! Guess what? "Three hots and a cot" might start looking good very soon.
Ferrara and other Polyannas think that the old "tweak and pinch" methods will still work. He's like the Wizard of Oz, convinced his levers are still operable. They aren't.
America as we once knew it is over. Working hard, if you can even find work, is a losing proposition. Employing people (assuming you can fnd anyone who is qualified) is even worse.
So, Mr. Ferrara, tweak, pinch and pull whatever levers you wish, but there has been a sea change. Reagan's policies worked because people trusted him. But a mere 22 years after he left office, those policies have been turned on their head.
The same old crap won't work anymore.
Purpleguy| 6.22.11 @ 7:24AM
And, yet, President Clinton presided over THE largest and longest period of recovery and economic expansion in history - and HE raised taxes. Bush II lowered taxes and we got the deepest recession since the Great Depression. It is not simply lower taxes that creates economic boom times. It's millions of people with billions of dollars to spend that does it - the great middle class can create or destroy the economy, since nearly 70% of the economy is based on consumer spending. It just makes sense. The rich are wealthier than ever and the corporations are swimming in Trillions of dollars. Where are the jobs?
Reagan's so called miracle is disputed even by his own Budget Director, David Stockman. And, the intelligence community's own reports dispute Reagan's contribution to the downfall of the Soviet Union, that was tetering on the brink of collapse anyway - btw, it was Gorbachev's policies, not Reagan's that ended the Cold War. Reagan had the rhetoric down to a tee, but not the policies.
al| 6.22.11 @ 8:35AM
millions of people with billions of dollars to spend can't spend it if they don't have it. there's nothing wrong with tax cuts--every one of them enacted by JFK, Reagan and Bush 43 brought more revenue into the treasury. it was the spending--and still is.
Michael Tomlinson| 6.22.11 @ 8:35AM
Give it up Purpleguy the Republican Congress saved the floundering and incompetent Clinton. Put down the dobie and grow up.
The real legacy of Bill Clinton was the subprime mortgage time bomb he put into the heart of the American housing market that exploded in the midst of the booming Bush/Republican economy and has destroyed the lives and wealth of tens of millions of middle-class Americans.
David Stockman resigned early and soldout quick to the Democrats like one of Barack Obama's homosexual male Vietnamese prostitutes. Sort of like the male slut Bill Clinton. Wonder what STD's he's hiding in those unreleased medical records. Gotta be herpes.
As for Gorbachev he couldn't even save his beloved Soviet Union. He was a second rate Russian with an ugly birthmark.
Purpleguy| 6.22.11 @ 8:40PM
Hahaha - did you ever hear of Sen. Phil Gramm who pushed the demise of Glass-Steagal that stood since the 1930's which allowed? Clinton didn't create the subprime mortgage fiasco all by himself, and moreover, that is only a contributory factor to our issues today - it is NOT the main reason the financial system and economy collapsed. It derives from the greedy shadow banksters on Wall Street who used those mortgages to slice and dice them into CDO's and the corresponding CDS's that caused the downfall. You can learn all about it in "Too Big to Fail" book and movie, if you don't believe me.
Booming Bush Economy? Are you kidding me? Did you miss the jobless recovery in the early 2000's? Have you missed the movement of wealth to the top 1% over that decade? Surely, none of us here are in THAT 1%, are we?
"David Stockman resigned early and soldout quick to the Democrats like one of Barack Obama's homosexual male Vietnamese prostitutes. Sort of like the male slut Bill Clinton. Wonder what STD's he's hiding in those unreleased medical records. Gotta be herpes." - You're social conservatism is showing, but it is astoundingly disgusting that you even can come up with such bs.
BTW - Nice defense of Reagan - NOT
George S| 6.22.11 @ 10:32AM
This is why liberals make no sense...
...if "millions of people with billions of dollars to spend" is what creates good economies, then how does increasing taxes put those billions of dollars into those people's hands?
...if taxes are lowered, why do The Great Middle Class cease spending the extra money, which then destroys an economy?
...how can corporations "swim in trillions of cash" when tax cuts cause people to stop spending and tax increases put less cash in their pockets? Where do they get that money they're sitting on?
...why did GWHB's tax increases cause the economy to go south, prompting candidate Clinton's "It's the Economy, Stupid" yet rebound and grow when Clinton raised taxes?
...if Gorbachev ended the Cold War, why would he do so? Ted Kennedy assured him that Democrats in the Congress didn't agree with Reagan's soviet policy. So what prompted Gorbachev to tear down that wall?
...why was the Soviet Union teetering on collapse? Isn't collectivism -- where there are no wealthier than ever rich or corporations ruining things -- a better economic system than capitalism? Comrade Obama says it is.
Nunya| 6.22.11 @ 6:06PM
Excellent points, all. Nicely done.
Jack London| 6.22.11 @ 7:38PM
You can't be this stupid George. You've made some intelligent comments before but these just make you look like a candidate for the funny farm.
George S| 6.22.11 @ 8:57PM
Stupid questions are frequently the most probative because they are asked from a lack of understanding. That's why I dread answering direct questions from children, for the truth can be at odds with their parent's beliefs or prejudices. But often those questions are asked when things just don't make sense: like how raising taxes puts more money in people's pockets so they can spend it and make the economy grow.
As for the funny farm, I would gladly take a few weeks vacation there if they have Padron cigars and Macallan Fine Oak 21 year old fire water.
Purpleguy| 6.22.11 @ 9:20PM
Yes, it is counter-intuitive, but if you really studied the results of raising taxes on the rich and also the raising of the minimum wage on job creation, you'd be surprised that all you've been told is bunk about tax cuts. The entire rationale for tax cuts is always ideological, not economic. The right believes tax cuts work, so therefore they must. But let me pose this question - since we've been under the Bush tax cuts throughout the decade - where did the jobs go? And since they were extended in December - where are the jobs now? It's magical thinking and some day I hope you will wake up.
It's confidence that makes all the difference in the economy. The word credit has as it's origin the word in French for "belief" .
Purpleguy| 6.22.11 @ 9:09PM
As usual, right-wing arguments are a 1/2 assed mix of fact and fiction simpleton statements.
1) it's not increasing taxes on the middle class, but on the wealthy I'm talking about ... Over history, tax increases result in job creation. The rich invest to dodge taxes, they don't need to make any more money - but they do want to hang on to what the have. By investing they get a tax dodge, but also create jobs. Entrepreneurs are a small, but important part of the economic engine.
2) OMG - I didn't say cutting taxes destroys an economy. But if you cut taxes and spend like a drunken sailor, especially when the tax cuts you gave went overwhelmingly to the rich, you can destr0y the economy.
3) OMG - unbelievable - have you not seen the corporate profits being reported over the last year or 2? A lot of that profit is derived overseas from the Multinational corporations, and are less beholden to us. Have you not heard of the 2 Trillion dollars sitting on the sidelines in corporate hands? Ask Exxon where it got all it's profits from or GE if your curious. Im sure you can find out
4) It was the Savings and Loan crisis that affected the GWHBush economy, not tax hikes - not unlike our recent financial collapse.
5) Who said Gorbachev wanted to end the Cold Car? It was economics and his attempt to modernize the Soviet Union - glasnost and perestroika in foreign policy that hastened the end of the Soviet Union. The new Polish Pope, John Paul II and the Solidarity movement in Poland contributed as well. And, sure 40 years of American containment over multiple presidencies assisted the demise. But Reagan didn't win the Cold War - he inherited the accolades and deserves some credit, but not all of it.
6) No one, including Obama, said capitalism is not a better economic system than what the Soviets had - you needn't throw out that red herring.
The CIA reported that the Soviet Union was tetering on collapse due to economic and other internal pressures .. not unlike what we could experience if the Republicans don't authorize further unemployment benefits for those that are jobless.
Here's an idea - let's spend an equal amount on defense as any 3 countries in the world - we'd save 500 billion a year of an 800 billion budget, and with a little extra effort, cuts and revenue increases (taxes) we can balance our budget. How about it?
Bob Grant| 6.22.11 @ 11:20AM
Purple,
What you say is mostly correct but please tell the full story about Clinton.
Yes, he did preside over a budget surplus but mostly due to reaping dividends from sound choices made during the Reagan era: the cold war victory (Peace Dividend); tax incentives for R and D (Technology Dividend); a tight monetary policy (Strong Dollar Dividend); deregulation (High GDP Growth Dividend); a sound energy policy, namely lifting price caps (Low Fuel Cost Dividend); ....just to name a few.
All of this resulted in low inflation and high GDP which, with the exception of the short-lived recession in '90, was delivered to Clinton on a silver platter.
This, coupled with the fact that his political aspirations took precedence over ideology (no intentions of "transforming" the country) was what the Clinton legacy was all about.
Drunken Sailor| 6.22.11 @ 11:40AM
Lets not forget the Dot.com boom which really increased revenues.
JP| 6.22.11 @ 3:02PM
Clinton got lucky. The Boomers were in the prime earning years, and the economy didn't boom until 1996 (and no taxes do not create booms). The boom was over by 2000.
Clinton also gave us the all of the tools needed for the real estate boom. It was under Clinton that Fanny/Freddie thrived. It was Clinton who removed the oversight of these 2 entities. It was Clinton's Treasury that enabled not only Fannie and Freddie, but Fremont Mortgage, Countrywide to create trillions of dollars in toxic mortgages.
Bush's tax cuts didn't create the mortgage meltdown and today's recession. Three Dems have thier hands all over it: Clinton, Dodd, Frank (and add Rubin, Jim Johnston, and Raines).
Bill Hussein O'Stalin| 6.22.11 @ 8:15PM
The Clinton surplus was a myth, the government always had a deficit during the Clinton years so there was no surplus. There was almost a revenue surplus in 1998 but that was achieved by borrowing 160 billion from the Social Security Trust Fund.
Mike| 6.22.11 @ 7:34AM
Peter,
There are two similarities and two differences in the economic landscape then and now. The similarities: high unemployment and stagnant income growth, except for the top of the economic ladder. The differences: we do not have double digit inflation, nor do we have double digit interest rates.
You fail to mention two important components of Reagan's program: he compromised and he raised taxes even while peddling the Supply Side Theory myth.
Looking at the Simpson-Bowles, Rivlin-Dominici, Ryan and Progressive Caucus budget plans one finds that they have this in common: they do not threaten to undermine our fragile economy with massive spending cuts in the near future and they lay out a multi-year plan to cut deficits and bring the national debt down to around 40% of GPD.
Michael Tomlinson| 6.22.11 @ 8:37AM
Kennedy, Reagan and Bush proved supply-side economics works. If coupled with real cuts to the Federal bureaucracy and budget the US will dominate the century and beyond.
Purpleguy| 6.22.11 @ 9:14PM
Are you kidding me - the size of government grew under both Reagan and Bush ... Im not sure about JFK. Go look it up. Even Reagan's budget director, David Stockman disputes the trickle-down theory as bunk and magical thinking.
Indiana Alex| 6.22.11 @ 9:00AM
There they go again with the idea that cutting government spending will somehow harm the economy...
There are two assumptions that you have to embrace in this misguided sense of government's importance to a vibrant economy.
The first would be that the government is spending money in a way that benefits the overall economy. This is terribly false, with Big Wind being an incredibly blatant example of a misallocation of resources. The second would be the recent stimulus, which embodies the well known truth that government spending is directed by political, rather than economic decision making. Government can fail again and again with its attempts to "invest", and there are no consequences, other than opportunity cost for the rest of the economy.
The second assumption is that if the government doesn't spend the money, it won't be spent. This is also a mistaken assumption. Not only does government horribly misallocate potential investment capital, it also crowds out potential real investors who must make decisions based on econmics, and would be punished or rewarded accordingly based on economic success if given the opportunity.
Now the final point should be obvious to those who were paying attention during the last century, though it is clear that Liberals are world class when it comes to ignoring history. As the article points out, the economy accelerated when government spending AS A PERCENTAGE OF GDP dropped dramatically.
One need only look outside the window to see the impacts of government spending AS A PERCENTAGE OF GDP after it has increased dramatically.
Cutting government spending would be the best prescription for the current economic slumber. I know liberals aren't inclined to follow logic, but if you believe government spending is a positive force in the economy, wouldn't you think that Obama's policies would have caused an economic boom?
Oh yeah, it's Bush's fault. Ho Hum.
Butch | 6.22.11 @ 5:14PM
"Big wind." Love it. Don't forget "Big Sunshine."
Nunya| 6.22.11 @ 6:18PM
Mike, please study some economic theories other than the failed Keynesian model. Also, please do some research into the actual inflation rate (not the one that excluded the cost of food and energy that gets reported nowadays).
As to your statement about how "Progressive Caucus budget plans ...do not threaten to undermine our fragile economy with massive spending cuts in the near future", where do you get this crap? From the DNC website? Who taught you that government spending CREATES anything?? Think of it like this: Take money from your left pocket, spend some of it, and then put it in your right pocket. Did it increase? No? Hmmm.... Funny, but that's EXACTLY what government spending is--taking from someone who has it, then they have to keep some of it to pay for themselves, and then they spend the rest. The government HAS NO MONEY OF ITS OWN, it has to TAKE it from someone. Left to their own accord, those that have it taken from them will do a better job in spending it, and will certainly be more judicious in the manner that the money is spent. Keynes was an idiot, and his followers are also. His theories have been tried over and over again, and like the definition of insanity more people continue to try them expecting different results. It's entrepreneurs and businessmen that create jobs, not government. It's the free market that builds wealth for the general population, not some bureaucrat in DC allocating funds to spend.
Wake up.
Mimi| 6.22.11 @ 8:04AM
Peter....We are in a dark place now...you have shown us where the window of light is. Do the democrats realize they have, with such failed policies now and more to come brought us to this DARK place ? Like the loss they endured in Nov. 2010 ... Their destructive DENIAL persists.
I hope, like Levins, Liberty and Tyranny your BOOK is a gigantic best-seller and a must read by everyone! Good luck with it, and THANKS for sharing it with US.
Justin | 6.22.11 @ 8:38AM
Peter, I certainly hope that someone among our field of presidential candidates is talking with you very seriously. Your book sounds great. I only wish the folks campaigning to take the helm in 2012 were speaking in such concrete specifics. Well done!
Don| 6.22.11 @ 8:54AM
Read Wm E Simon's 2 books.
A Time for Truth and a Time for Action.
Written in late 70s'
Both were the seeds of Reaganomics.
Mr Simon warned about high taxes, high regulation, failure to develop our own Natural Resources, uncompetitve industries...
and How to make it right.
I am re-reading a Time for Truth and I am stunned at how we have come full circle from the boom years of Presidetn Reagan, back to the malaise of the Jimmy Carter era.
All the drags on growth, liberty,job creation we had "then" we are repeating today.
History does in fact, repeat.
There is "hope" for "change"
Kristal| 6.22.11 @ 9:49AM
All praise for "A Time for Truth"!
William Simon simply shined the truth in TIME to make a difference.
However, that was then---and, NOW?
When the student is ready, the teacher appears.
Are the American "students" FINALLY ready, and have ANY teachers appeared?
Peter is one "teacher", and we'll find out about the readiness of the voters in 2012.
Clint| 6.22.11 @ 5:01PM
Dr. Paul is the "one exception to the Gang of 535" on Capital Hill
- William Simon, former Secretary of the Treasury
Handy| 6.22.11 @ 1:00PM
I read both books, but they sort of run together in my memory now. I met Mr. Simon at a dinner in New Hampshire in 1978 or 1979. We shared the same taste in cigarettes: Camels. He bummed one from me.
We really didn't talk much about economics, beacause we were both on the same page. Rather, we talked about education. He made me think in terms of goverment curricula from a First Amendment viewpoint. His premise was that when the government has a monopoly on education, the curriculum prescribed is an abridgement of free speech. Solution? Get the government out of the education business, altogether. I was a bit skeptical at the time, but over the years have come to realize he was exactly right.
The purpose of the First Amendment is to preserve an open market of ideas. Schools, from elementary to post-graduate, should be places where ideas are exchanged and compete with each other. Simon pointed out that the public school cookie-cutter approach stifled this.
Facts are important to teach. Students need to know that 1+2=3. That's the easy part. They also need to know how to think, not regurgitate. They need to make their ideas their own, and to be able to defend them.
P.S. 99 is not going to do that.
Gosh, I got a lot out of that cigarette with Mr. Simon. I miss him, and I hope his son is not done with politics.
Don| 6.22.11 @ 4:59PM
I worked for his firm 1990-1999. A truly great conservative, patriotic American
Handy| 6.22.11 @ 5:31PM
Hi Don,
I knew a bunch of guys on Wall Street back then. Most absolutely hated him. They wanted more regulations!!!
Please share any observations you have, because Wm. E Simon is much underappreciated.
Thanks for jogging my memory.
Who Knows?| 6.22.11 @ 9:16AM
Telling the truth, while necessary, is NOT sufficient to stop the American slide, let alone turn it around.
Vested interest rules.
One of the horrible consequences of the abolition of the draft is that most eligible young males who would have had to serve in the military never do. I was in the army from 1966 to 1969, including a year in Vietnam, and to this day the “shock and awe” such a seemingly endless period of time spent around the lifers who made this system “work” always remains in memory.
In short, too many people don’t have REAL personal experience of the horrors of living the wasteful “hurry up and wait” life. Ergo---too many vote for the jackass party. There is not, therefore, much vital FEAR in people of government.
So, keep writing Peter, but who’s going to be able to go back in time and UN-program all the living voters of today, who are severely lacking real world suffering at the hands of a Sgt. Miller, the pudgy low IQ lifer who was my boss, in Nam?
Death and taxes are well known to be unavoidable.
However, don’t assume that people will NOT try to escape them both!
It seems to me that the UN-shared sacrifice of the burden to support “your” country, expressed in the FACT that the vast majority of workers DON’T even pay taxes, is the unavoidable truth. And, so, free riders are IN CONTROL.
As for “death”---when I had to join the military and fulfill my legal obligation, uppermost in my 24/7 awareness was that while many of my peers (say, Bill Clinton) had beat the draft, and at the very time I had to endure the painful loss of MY freedom, they were getting to enjoy the same three years of vibrant and energetic youth I could NOT.
That is, I was to all extents possible, DEAD for those three years. And, believe me, the road NOT taken when I chose to fulfill my duty affected the rest of my life---and, as I’m sure is true for most veterans, or at least those my generation, burning resentment became an enduring feature my reality, especially right after I escaped my army bonds.
Yes! No death and taxes---that’s the motto and promise for the Democratic Party, so it’s no wonder the political and economic systems of America have become so rotten.
Well, you can’t fool enough people ALL of the time, and anyway, what people HOPE for and the CHANGES that must logically arrive eventually reach a clashing climax, a YES or NO stage.
We’ll find out if the American spirit is still alive soon enough.
In any and ALL events, be Consciousness, since you ARE conscious, aren’t you?
Mimi| 6.22.11 @ 9:49AM
The American Spirit is alive ! We WILL undo this mistake of 2008 and a serious lesson will be learned !.....NEVER AGAIN !!!
Handy| 6.22.11 @ 11:40AM
I too, was drafted, although I actually wanted to go in. Conscription is involuntary servitude, is immoral and unconstitutional to boot. The Army of the Vietnam era was no where near as good as our all-volunteer force. One big reason was the "reluctant soldier." Draftees consistently overrated their abilities, shirked their duties and denigrated their superiors.
Military service should be an honor that one seeks to earn. Slots should not be taken up by sniveling malcontents. If they don't want to serve, the military neither needs nor wants them. They are more trouble than they are worth.
I went on to get a commission and have served in both the draftee and volunteer Armies. There is simply no comparison.
Too many young men's lives were disrupted by conscription. But conscription had some unintended consequences as well. When senior officers have an unlimited supply of under paid red meat, they tend not to regard their men very highly. Westmoreland, Abrams and that smarmy McNamara were just plain awful. Especially McNamara, who concluded that the war was "unwinnable" in 1967, but continued his half-hearted efforts anyway. All he had to do was dial the Selective Service boys for more replacements for those whose names adorn the Wall.
Not sure what any of this has to do with the topic at hand, but one thing remains the same. Civilians treat veterans like dirt; especially employers. It must be a combination of envy, embarrassment and ignorance. Envy, because the soldier is often smarter than his civilian contemporary. Embarrassment, because the civilian did not serve. Ignorance as to what actually constitutes military service.
Bill Clinton and Barack Obama fit this mold perfectly. Neither can manage a simple hand salute. And, I speak for many veterans I am sure, when I say that I am glad Clinton successfully avoided the draft. Could you imagine having to share a foxhole with him?
Pecos Pete| 6.22.11 @ 12:42PM
Handy: Clinton in a foxhole ... what a belly laugh! If Clinton had actually served we would have found him at the Pentagon, not in Vietnam.
Nunya| 6.22.11 @ 6:23PM
Handy and WK: Thank you both for your service.
Sincerely.
Petronius| 6.22.11 @ 10:54AM
Before the Reagan administration, I never thought I would own my own house, enjoy travel abroad, and even start an investment portfolio. During the 80's and and 90's my standard of living got better. Now that the Obamaczars have their boots on our throats, I keep losing ground. Yes. Let us have a reprise of Reagonomics. And add to it a gutting and restructuring of the Internal Revenue Code. Our tax laws were written by the plutocrats to prevent ordinary Americans from accumulating wealth and financial assets. But what can you expect from despotic control freaks? Who would contemplate the horror of a mere tradesman cobbling together enough cash to join a country club?
The ruling class wants the status quo: enter Mr. Huntsman. Nothing scares them more than the prospect of a prosperous majority they cannot control through want.
martin j smith| 6.22.11 @ 1:09PM
I do not think we have had good president since Abe Lincoln. But, thge guy we have now in my view is the most worst, taking Carter's spot--he is seco0nd followed in bunches by Bush I and II and Clinton and Johnson, and Kennedy and Nixon of course.
Those are relatively recent vintage. Reagan created policies that improved the economy but the problem is that BOT POLITICAL PARTIES HAVE FORCES THAT COMPROMISE ONGOING ECONOMIC WELL BEING. The current Republican leadership and some of our wonderful Presidential hopefuls indicate that they do not get it. They meaning Mainstream Republicans, the Socialists, they want this country to fail and fall. That is their goal.
Al Adab| 6.22.11 @ 2:54PM
What will restore the economy is quite simple and has proven effective many times in the past, notably the great 1919-20 recession which brought 20% unemployment, GDP drop of 17% and historic high bankruptcies.
1. lower government spending
2. lower taxes
3. allow wages to seek their own level
4. encourage business investment
Why we think we have to relearn these lessons is beyond me. Use the proven formula and stand back.
Drunken Sailor| 6.22.11 @ 4:22PM
Hitting the scotch again Al? You know you just used way to much common sense for our goverment to ever take seriously don't you?
Al Adab| 6.22.11 @ 6:01PM
Thanks Sailor:
I look forward to sharing that Jack with you soon.
Nunya| 6.22.11 @ 6:24PM
Can I join in? Jack's a favorite of mine... ;-)
Al Adab| 6.22.11 @ 6:40PM
We definately need to set up a blogger convention. The way the conversation is going it might have to be in Lynchburg. At least it's honest domestic ethanol without subsidy.
Drunken Sailor| 6.22.11 @ 6:53PM
No can do Al. Believe it or not Lynchburg is a dry county! Yep, the make one of the most famous bourbons in the world but you have to leave the county to buy it.
Jack London| 6.22.11 @ 7:42PM
This Jack says you don't know Jack s**t about economics but you do know a decent wee dram.
Al Adab| 6.22.11 @ 8:07PM
Well Jack, thanks for the backhand complement. We do need to share that much one day. Perhaps it's just the call of the wild eh.
Sailor, I had forgotten that, thanks. Any suggestions on a venue?
Purpleguy| 6.22.11 @ 9:22PM
And, just when did this prescription work? Just when? The stock market bubble in the 20's is not what we want long term ...
Al Adab| 6.22.11 @ 10:29PM
Hello Purp:
How long does it have to last to count? Look up the stats because it was over by '21. What about '83 to '01? Is that long enough? The less central control and planning, the better the economy performs.
Handy| 6.22.11 @ 3:22PM
Be careful with your praise, martin. Abe took us from a federation of states to a nationalist dictatorship based in Washington, DC. He enabled all of his successors to enslave us all. Emancipation? Phooey.
I must agree that Obama is the worst ever, and he hasn't even finished one term. Carter was bad in office, but not nearly so terrible as he has been since leaving it. Nixon was a closet Commie, kissing Kruschev and hugging up to Mao. The Bushies were grave disappointments. Both left economic disasters in their wakes. Johnson was a traitor to our troops in Vietnam, but he at least had the decency to drop out. Kennedy was a wimp. Bay of Pigs and foresaking Turkey in the aftermath of the missile crisis.
Having said this, I just ask would we have been better off with the alternatives? Nixon vs. Kennedy (Lose-lose.) Goldwater vs. Johnson? (OK, Goldwater would have been a better president, but he could never have governed given the mood of the country.) McGovern vs. Nixon? ( Oh, pleeze.) As bumbling as he was, Ford would have been better than Carter. Walter Mondale against Reagan, or Michael Dukakis against Bush 41? Gore and Kerry against 43?
Face it folks. We dont' seem to have many outstanding choices anymore. We can choose to be enslaved by one or the other party. And, it all traces back to the arrogance of Abe Lincoln who just couldn't bring himself to let the South go.
Oldefarte| 6.22.11 @ 4:34PM
As with many others here, I always enjoy Peter's outstanding articles and fully agree with most all of his suggestions here. However, at this point of our current economic depression, tax policies should not be changed currently [as has been said numerous times, we have a SPENDING, not a REVENUE problem]. Also combining/merging governmental agencies/departments is just rearranging deck chairs on the Titanic. What needed yesterday is substantial/serious governmental spending reductions, and by this I mean elimination of entire departments/agencies, along with reduction of spending by those remaining. As Romney stated at the last debate, its a question of what to keep/maintain that's important. There is so much wasteful governmental WELFARE, that it should be easy to achieve needed budget cuts. The citizens of this country have unfortionately grwon accumtomed to this welfare dating back to Roosevelt and beyond, and it's way past time that it stopped/ceased. Except for the elderly/infirmed, every able-bodied human being receiving governmental assistance should be forced to WORK FOR IT. There are millions of governmental jobs now being performed by their employees [at taxpayers expense] that could be replaced by having now/current welfare recipients take over said jobs [ie street construction, park maintenance, welfare workers etc]. Government pays citizens as employees and as welfare recipients, and the latter should be forced to take over many of the jobs now being performed by the former. The cost-savings to government and taxpayers would be huge. Also, why is our government paying out $trillions in foreign aid toward other countries' welfare, when this country has its current defecit/debt? Why are we fighting wars in foreign/middle eastern countries when same can never be successful and when there is little/no noational interests at stake? The oil supply from the middle east would not even be totally necessary if we were to fully/substantially develop/produce the vast energy resources of oil/gas that we possess in this country and dedicate same to our own domestic needs initially [before selling same to foreign countries]. As someone said recently, why are we building/manufacturing a million military tanks etc [when we are fighting enemies using roadside bombs and sticks as weapons]? Why are we spending $trillions sending on manned space flights when unmanned flights could collect an equal amount of scientific data/material [and why are we even making space flights at all when launched satellites would serve a greater purpose]? Simply put, our government WASTES TAXPAYER MONEY and this needs to STOP!!!!!!!!!!!!!
Handy| 6.22.11 @ 5:54PM
So, give up your Social Security welfare checks and get a job. Also, take a grammar course at your local community college and learn about spelling, sentences and paragraphs.
Jack London| 6.22.11 @ 7:43PM
Oldefarte wouldn't know what edukation is unless it bit him on the ass.
Oldefarte| 6.23.11 @ 9:58AM
Handy & Jack: I've completed business graduate school, have an undergraduate degree in business [with a major in accounting and a minor in economics]. What's yours DIPEXCREMENTS??????????????????????????
Oldefarte| 6.23.11 @ 10:01AM
Unless you BOTH are typical CHICKENEXCREMENTS and too afraid or embarrassed to honestly declare yours, SHUT THE YOUR COMBINED COPULATION IGNORANT MOUTHS [or at least attempt to state semi-intelligent thoughts, if at all possible (doubtful)]!!!!!!!!!
Jack London| 6.23.11 @ 2:06PM
'Comments are routinely monitored and will be deleted if profane, bigoted, or grossly impolite. Please be respectful.'
Not sure you should be allowed out in grown-up company, oldefarte.
Oldefarte| 6.23.11 @ 10:06AM
Handy: Unlike you, I was employed my whole lifetime and EARNED my SS checks. I'm sorry that you are forced to flip burgers at mickey D's for your $2/hour wage and are urinated off over same. It's not my or anyone else's fault that you're are STUPID, LAZY AND WORTHLESS, so go blame yo' momma and her milkman, okay??????????
DaveS| 6.22.11 @ 8:07PM
I am observing here the largest in-denial, anti-Reagan, so-called smart guys group in the history of this posting area at AS. What a pitiable group.
Purpleguy| 6.22.11 @ 9:24PM
Sorry to burst your belief bubble, but Reagan was not the be all and end all you've been led by the nose to believe. The fact you don't believe the facts, don't change them. you can't have your own set of facts you know.
Fairbanks99| 6.22.11 @ 8:38PM
All of the author's suggestions are valid, and would produce the desired result if implemented. But there is a lot of time between now and the next election, a lot of time for Obama and his Marxist termites to continue their path of destruction.
I was talking with my dentist today and told him I think we are headed for collapse. There are just too many vast forces in motion that have more inertia than can possibly be stopped, let alone reversed. Massive debt and runaway government spending. Obamacare. Czars. Quantitative easing. The Middle East on fire, being taken over by Islamists (with a little help from Obama and Trumka). Deliberate blocking of access to our own energy sources. Iran feverishly working to get nuclear weapons with a clearly stated intent to use them. Out of control illegal immigration and all the cost to the treasury that brings. Then there are the things outside the control of government, but made worse by it. For example, a cooling climate with a possible deep, extended solar minimum headed our way and all that would mean for food production and the cost of heating oil.
And then there is the electorate. An awful lot of people are just plain too lazy or ignorant to educate themselves as to the real issues - and depend on the so-called main stream media for their information. We can blog and rally all we want, but until our neigbors wake up from their slumber, it may be to no avail.
As for me and mine, I am stocking up on the necessities of life and planning a move to the rural mountain West. I will continue to vote and work for Constitution supporting candidates, but I do intend to keep my powder dry.
Purpleguy| 6.22.11 @ 9:25PM
Said like a true wacko ...
Fairbanks99| 6.22.11 @ 10:42PM
Spoken like a true Proghole. Can't contest the facts, so you call names!
POST American| 6.23.11 @ 12:53AM
---AS the Globalist TREASON op viz a viz our
last 4 CFR/RIIA front administrations finishes off
it is NOT the time to be indulging in Reagan
eco necromancy.
FACT IS, he was 'the' presiding figure during
the very salad days of the RED China-Rockefeller/Rothchild set up and sellout out op.
UNDENIABLE
AGAIN, not the time for self-indulgence,
even with the best Tavistock can bring us.
weddingdresses | 6.23.11 @ 5:20AM
---AS the Globalist TREASON op viz a viz our
last 4 CFR/RIIA front administrations finishes off
it is NOT the time to be indulging in Reagan
eco necromancy.
Ray V.| 6.23.11 @ 12:59PM
I like Reagan, but it must be noted that much of the GDP growth that occurred during his tenure was on the back of growing debt levels at all levels of government and at the individual level. This addiction to credit is coming to a head now. Too bad Reagan didn't reign in this type of spending because now it's payback time.
superboy| 6.25.11 @ 5:57AM
Why are we fighting wars in foreign/middle eastern countries when same can never be successful and when there is little/no noational interests at stake?
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weddingdress | 7.7.11 @ 5:22AM
'Comments are routinely monitored and will be deleted if profane, bigoted, or grossly impolite. Please be respectful.'
Not sure you should be allowed out in grown-up company, oldefarte.