Many Reagan Republicans think that Ronald Reagan could do no wrong. Although I consider myself still to be a Reagan Republican (Reagan Independent?), I am coming to understand more and more that Reagan did many things wrong, to include those of his goals that he never achieved while in the office of president of the United States.
Here's how Robert Samuelson, in his book The Great Inflation and Its Aftermath, put it.
Conservatives remember the 1980s nostalgically as Reagan's heroic moment, when he cut taxes, reduced government, and revived the economy. The trouble is that much of this story is a myth. Although tax rates dropped dramatically, the overall tax burden barely decreased, nor did the size of government.
One of the biggest mistakes of the Clinton era was for his detractors to focus on his sexual escapades at the expense of American foreign and domestic policy. I have come to respect much of what Bill Clinton was able to accomplish while in the office of president of the United States. But, similar to the Reagan myth, Clinton didn't accomplish as much as his supporters claim. Samuelson says:
Meanwhile, liberals credit Bill Clinton's policies for the strong economy of the 1990's. But Clinton's policies were the opposite of Reagan's. He raised tax rates and curbed budget deficits.
Both stories can't be correct; and in fact, neither is.
What really did happen then? Samuelson says
Lower tax rates, even after Clinton's increases, may have helped, but they were not the decisive influence. Budget deficits persisted through most of Clinton's tenure, disappearing only in 1998, more as a result of the strong economy and rising stock prices--which produced an unexpected flood tide of tax revenues.
The Great Inflation and Its Aftermath, pages 40-41
I came across a statement that corroborates Samuelson's thesis, from a very surprising source--Paul Krugman of the New York Times. In Krugman's words, however, is a warning that we failed to heed:
It's important to realize how much of the late lamented budget surplus was the result of the bull market. Tax rates didn't increase between 1994 and 2000, but tax receipts as a share of GDP surged, largely because of the extra taxes paid on all those capital gains. The result was a false sense that there was plenty of money in hand, that big tax cuts would fit comfortably into the budget. And the Bush tax plan was formulated when such delusions were at their height.My "takeaway" from this tidbit of history is that it is dangerous for people to inflate the importance of their side of the issue at the expense of what really happened. People on both sides of the political aisle need to take credit only when it is due, and to give credit to others when it is due others, even when it is uncomfortable.
The Great Unraveling, page 50 (emphasis added)
Enough with all the myths. I prefer reality. Even if it hurts.
When I called out the Clinton surpluses as a myth, I was accused of leading a "teabagger inquisition". I guess the truth hurts, eh?
ReplyDeleteJesse: I guess that must have been a fairly recent accusation?
ReplyDeleteIt is interesting how the truth sometimes hurts so bad that people want to try to ignore it. But that only dulls some of the pain and defers most of it until later.
Your analysis is spot on, and IMHO proves that both parties are fiscally irresponsible. Both of them spend recklessly - sometimes on different things, but the fiscal result is the same. Neither of them is willing to increase revenue (aka taxes) to cover their spending. Over the last 30 years we have had steady decreases in federal taxes - capital gains, income, estate and corporate - and steady increases in federal spending, and as you point out, except for the high point of asset bubbles, both parties have put us further and further in debt. It's pretty clear that reducing taxes does not stimulate the economy on any kind of stable basis, it only stimulates debt.
ReplyDeleteNow and then one of the 2 parties gets into a deficit reduction mode and starts looking for something to cut, and one of the programs that bit the dust was federal revenue sharing with the states and cities. Under that Nixon program, revenue from the relatively progressive federal income tax was distributed to state and local governments to cover the many mandated programs they administer. With that money gone, but the mandates still in place, states and localities had to either cut essential services or raise regressive property and sales tax rates. Since states can't run deficits, many of them now face bankruptcy and infrastructure is crumbling. All this because lawmakers in Washington can't stop spending and haven't the guts to raise revenue.
It's nice to see someone tell the truth about Reagan. I may just pick up that book. He had a lot of great ideas, but I don't think that many of them were implemented.
ReplyDelete