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Why is the CA LP's Richard Newell crediting Reagan for being a fiscal conservative? I was pretty young at the time, but I seem to remember that the national debt shot up to $2 trillion under him and that this was largely due to the massive military spending that he promoted. Is that correct?
Cheers,
-- Steve
Steve Dekorte wrote:
I seem to remember
that the national debt shot up to $2 trillion
under him and that this
was largely due to the massive military spending
that he promoted. Is that correct?
It's what the liberal media would have you believe, but the facts are
otherwise.
In 1981 Reagan pushed not only a tax cut and defense increases but also
spending cuts and entitlement reforms. Congress agreed to (and bid up) the
tax cut, but accepted few of the spending cuts and none of the entitlement
reforms. See David Stockman's book, pp 181-193.
If you take FY1981 as a constant baseline (I don't know the c1981 outyear
projections),
the eight subsequent Reagan fiscal years included:
$766B in extra defense spending
$1132B lost to the 5-10-10 and 10-5-3 tax cuts [Stockman p268]
but also
$359B in extra tax cuts demanded by Congress [Stockman p268]
$839B in increased entitlement spending
$209B in Congressional appropriations beyond Reagan's budget requests.
FY1982-89 included $947 in extra deficits beyond the Democrats' FY1981
deficit pace. Even ignoring the compounding nature of the Congress' ignored
cuts and extra spending, it seems that much of that extra deficit would not
have happened if Congress had done what Reagan wanted.
Reagan was probably willing to cut spending and entitlements enough to not
increase the deficit he inherited. The Democrat Congress was probably
willing to tax higher earners enough to effectively eliminate the deficit.
Neither fact absolves either side from responsibility for the deficit. I'm
tempted to say the responsibility is about even, except then I look at what
each side bought. In my opinion, Reagan bought increased tax equity and
victory in the Cold War, while Congress bought continued incumbency with
increased entitlement payoffs to mostly-middle-class mostly-elderly voters.
Brian Holtz
LP candidate for Congress, CD14 (Silicon Valley)
http://marketliberal.org
Hi Brian,
IIRC, the Republicans held the Senate when Reagan was in office, so he could veto any spending bill he choose to. Right? Does a party that controls the Senate and White House really have any excuse for either spending increases or massive deficit spending?
As for his tax cuts, I'm not sure how they are different from increased spending when they involve going into debt. (The increase in spending being the amount of the interest on the debt, compounded over the payment period - which is significant).
Cheers,
-- Steve
Steve Dekorte wrote:
IIRC, the Republicans held the Senate
when Reagan was in office, so he could
veto any spending bill he choose to. Right?
Does a party that controls the Senate and
White House really have any excuse [..]
We were talking about Reagan, not the Republican Party, and certainly not
the Republicans in Congress.
As for being more confrontational, look how well that worked for Newt
Gingrich. With 89% of the Washington press corps supporting Clinton over
Bush, how did the liberal media portray Clinton's veto of the Republican
budget? The story was that Newt, not Clinton, had "shut down the
government".
As for his tax cuts, I'm not sure how they
are different from increased spending
when they involve going into debt.
They're different in at least two significant ways. First, more than any
alternative form of spending, they tend to return federal receipts back to
the taxpayers from whom the money was taken. Second, reducing federal
receipts puts political and financial pressure on federal politicians to
reduce spending.
Starve the beast.
Brian Holtz
LP candidate for Congress, CD14 (Silicon Valley)
http://marketliberal.org
Steve Dekorte wrote:
IIRC, the Republicans held the Senate
when Reagan was in office, so he could
veto any spending bill he choose to. Right?
Does a party that controls the Senate and
White House really have any excuse [..]We were talking about Reagan, not the Republican Party, and certainly not
the Republicans in Congress.As for being more confrontational, look how well that worked for Newt
Gingrich. With 89% of the Washington press corps supporting Clinton over
Bush, how did the liberal media portray Clinton's veto of the Republican
budget? The story was that Newt, not Clinton, had "shut down the
government".
I heard on NPR today that all of Reagan's 8 budget proposals were *larger* than what was approved by the congress.
As for his tax cuts, I'm not sure how they
are different from increased spending
when they involve going into debt.They're different in at least two significant ways. First, more than any
alternative form of spending, they tend to return federal receipts back to
the taxpayers from whom the money was taken.
But that's not really happing since the taxpayers will eventually have to be taxed for the debt and the interest, right?
Second, reducing federal
receipts puts political and financial pressure on federal politicians to
reduce spending.Starve the beast.
If that is the strategy, then cutting taxes make sense. But I don't see how massively increasing spending (in the 80s or today) is consistent with such a strategy. Perhaps you can explain?
Cheers,
-- Steve
Dear Everyone;
If we are talking the Reagan years please do not forget the multi-billion dollar Savings and Loan Industry Bailout. That was tax payer money bailing out S&L's.
Compare the S&L bailout to the other Reagan baloney in his, " A rising tide raises all ships." ( And as always at the taxpayers expense.)
Ron Getty
SF Libertarian
Steve Dekorte <steve@...> wrote:
Steve Dekorte wrote:
IIRC, the Republicans held the Senate
when Reagan was in office, so he could
veto any spending bill he choose to. Right?
Does a party that controls the Senate and
White House really have any excuse [..]We were talking about Reagan, not the Republican Party, and certainly
not
the Republicans in Congress.As for being more confrontational, look how well that worked for Newt
Gingrich. With 89% of the Washington press corps supporting Clinton
over
Bush, how did the liberal media portray Clinton's veto of the
Republican
budget? The story was that Newt, not Clinton, had "shut down the
government".
I heard on NPR today that all of Reagan's 8 budget proposals were
*larger* than what was approved by the congress.
As for his tax cuts, I'm not sure how they
are different from increased spending
when they involve going into debt.They're different in at least two significant ways. First, more than
any
alternative form of spending, they tend to return federal receipts
back to
the taxpayers from whom the money was taken.
But that's not really happing since the taxpayers will eventually have
to be taxed for the debt and the interest, right?
Second, reducing federal
receipts puts political and financial pressure on federal politicians
to
reduce spending.Starve the beast.
If that is the strategy, then cutting taxes make sense. But I don't see
how massively increasing spending (in the 80s or today) is consistent
with such a strategy. Perhaps you can explain?
Cheers,
-- Steve
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Steve Dekorte wrote:
I heard on NPR today that all of
Reagan's 8 budget proposals were
*larger* than what was approved by the congress.
Yes, and somebody on the Lehrer NewsHour tonight repeated your urban legend
that the "Reagan deficits" were the result of defense spending. Don't
believe what you're told by the media. Check the numbers yourself.
As I said before, the eight Reagan fiscal years included $209B in
Congressional appropriations beyond Reagan's budget requests. Congress
outspent Reagan's budget in each of those eight years. See table 2 in
http://tinyurl.com/39dyh.
See also
http://www.cato.org/pubs/pas/pa-261.html
http://reagan.webteamone.com/reagan_budgets.html
> First, more than any
> alternative form of spending, they tend
> to return federal receipts back to
> the taxpayers from whom the money was taken.But that's not really happing since the taxpayers
will eventually have to be taxed for the debt and
the interest, right?
For my statement to be false, you'd have to identify a federal spending
program that does a better job than tax cuts at disbursing federal receipts
to federal taxpayers in proportion to the amount of taxes they pay. No such
spending program exists, and thus tax cuts are simply not comparable to
spending in the way you suggested.
> Starve the beast.
If that is the strategy, then cutting taxes make
sense. But I don't see how massively increasing
spending (in the 80s or today) is consistent
with such a strategy. Perhaps you can explain?
I already did: Reagan was dealing with a Congress that did not share his
strategy. Congress failed to implement Reagan's 1981 spending cuts and
entitlement reforms, and instead over the eight Reagan fiscal years added
$359B in extra tax cuts demanded by Congress [Stockman p268]
$839B in increased entitlement spending
$209B in Congressional appropriations beyond Reagan's budget requests.
This adds up to $1407B, which is 50% more than the $947B in extra deficits
that FY1982-1989 experienced beyond the Democrats' FY1981 deficit pace. Thus
Reagan's total policy package would have made the Democrat deficits smaller,
not bigger.
Brian Holtz
LP candidate for Congress, CD14 (Silicon Valley)
http://marketliberal.org
Steve Dekorte wrote:
I heard on NPR today that all of
Reagan's 8 budget proposals were
*larger* than what was approved by the congress.Yes, and somebody on the Lehrer NewsHour tonight repeated your urban legend
that the "Reagan deficits" were the result of defense spending. Don't
believe what you're told by the media. Check the numbers yourself.As I said before, the eight Reagan fiscal years included $209B in
Congressional appropriations beyond Reagan's budget requests. Congress
outspent Reagan's budget in each of those eight years. See table 2 in
http://tinyurl.com/39dyh.
Thanks for the link. This is interesting and does discredit the NPR claim.
However, the major point of the paper seems to be that Reagan asked for less spending than Congress actually spent. That is important, but if you look at the numbers on table 2, according to these numbers, over his 8 years in office Reagan requested $7.344 trillion in spending and Congress spent $8.617 trillion. The total difference being $1.273 trillion (15%).
But the national debt went from about $1 trillion to $3 trillion from 1981 to 1988. So even if Reagan's budget was used, we would still be about $2 trillion in debt 1989. That is, Reagan would have doubled the debt on his own.
I find it curious that that paper avoids showing what the debt would be if Reagan's budgets were used, as this would be the obvious fiugre to compare to determine Reagan's responsibility for the debt.
First, more than any
alternative form of spending, they tend
to return federal receipts back to
the taxpayers from whom the money was taken.But that's not really happing since the taxpayers
will eventually have to be taxed for the debt and
the interest, right?For my statement to be false, you'd have to identify a federal spending
program that does a better job than tax cuts at disbursing federal receipts
to federal taxpayers in proportion to the amount of taxes they pay. No such
spending program exists, and thus tax cuts are simply not comparable to
spending in the way you suggested.
You seem to be ignoring the fact that we still have to pay for tax for the debt, just tomorrow, instead of today.
Starve the beast.
If that is the strategy, then cutting taxes make
sense. But I don't see how massively increasing
spending (in the 80s or today) is consistent
with such a strategy. Perhaps you can explain?I already did: Reagan was dealing with a Congress that did not share his
strategy. Congress failed to implement Reagan's 1981 spending cuts and
entitlement reforms, and instead over the eight Reagan fiscal years added
$359B in extra tax cuts demanded by Congress [Stockman p268]
$839B in increased entitlement spending
$209B in Congressional appropriations beyond Reagan's budget requests.This adds up to $1407B, which is 50% more than the $947B in extra deficits
that FY1982-1989 experienced beyond the Democrats' FY1981 deficit pace. Thus
Reagan's total policy package would have made the Democrat deficits smaller,
not bigger.
Given that Reagan's budgets would still have doubled the debt, I don't think it's fair to blame the Congress. Reagan's budgets were bad (would have doubled the debt), Congress' budgets were worse (tripled the debt).
Cheers,
-- Steve
Steve Dekorte wrote:
So even if Reagan's budget was used, we would
still be about $2 trillion in debt 1989. That is,
Reagan would have doubled the
debt on his own.
"On his own"? Using constant 1987 dollars, Reagan inherited a deficit from
the Democrats that was on a $100B/yr pace. Over eight years that's $800B.
Thus almost all of that doubling of the debt was due to the fiscal
trajectory inherited from the Democrats.
> For my statement to be false, you'd have to
> identify a federal spending program that does a
> better job than tax cuts at disbursing federal
> receipts to federal taxpayers in proportion
> to the amount of taxes they pay.
> No such spending program existsYou seem to be ignoring the fact that we still
have to pay for tax for the debt
You seem to assume that all current outlay spending is financed by current
taxes, while all current tax-cut "spending" is financed by borrowing. But
which requires government borrowing: the government letting you keep your
money, or the government giving money it doesn't have to someone else?
You said a tax cut is like spending. I said it's more like letting people
keep their money. My point still stands.
> Thus Reagan's total policy package would have
> made the Democrat deficits smaller, not bigger.Given that Reagan's budgets would still have
doubled the debt, I don't think it's fair to blame
the Congress.
When Reagan stepped up to the podium to take the oath of office, the
Democrat-controlled White House, Senate, and House of Representatives
presented him with a deficit running at $100B/yr. How is that Reagan's
fault?
Brian Holtz
LP candidate for Congress, CD14 (Silicon Valley)
http://marketliberal.org
You seem to be saying that Reagan's budget failed to account for interest on debt and that he is somehow not responsible for this.
Let's say I become CEO of a company which has $1T in debt. For eight years I fail to budget for the company's debt knowing that it will, and does, accumulate to $2T. Eventually the shareholders ask why. Can I reasonably tell them "the company spent that money before I was CEO, so it's not up to me to budget for it"?
-- Steve
Steve Dekorte wrote:
> Using constant 1987 dollars, Reagan inherited
> a deficit from the Democrats that was on
> a $100B/yr pace.You seem to be saying that Reagan's budget
failed to account for interest on debt
Where do you see the word "interest" in the words of mine you quoted above?
The Democrats left Reagan with a set of laws on the books that required
spending $100B more per year than what the tax code took in. Reagan's
policies would not have lowered that default level of deficit spending, but
they wouldn't have substantially increased it either.
Brian Holtz
LP candidate for Congress, CD14 (Silicon Valley)
http://marketliberal.org