Is Ronald Reagan responsible for this economic crisis?

[Real]

<div class='quotetop'>QUOTE </div><div class='quotemain'>Voice of the Day
Economics of 'trickle down' have failed U.S.
Market deregulation, tax breaks aren't the answer.
July 11, 2008

Read Comments(30)Recommend (4)Print this page E-mail this article
Share this article: Del.icio.us Facebook Digg Reddit Newsvine What’s this?
The present economic crisis with its multifaceted negatives originated from Reagan's "trickle-down economics", also known as "supply-side economics".


In essence, this theory held that by cutting taxes for corporations and the rich it would create more entrepreneurial capital for investment to expand the economy.

Reagan persuaded enough Congressional Democrats to join the Republican-sponsored tax cuts and deregulation of the Savings & Loan industry. This resulted in S&Ls creating a speculative boom in commercial real estate and home building which ended in wholesale bankruptcies of S&Ls by the end of his term of office, and the federal government spent upwards of 600 billion dollars to bail out the bankrupt S&Ls. During the 1980s, through tax cuts and deficit spending, Reagan's administration increased the national debt.

George H. Bush inherited this economic recession, and combined with the expenses of the Gulf War, persuaded him to go along with Democratic-sponsored tax increases to try to balance the federal budget, which was the fiscally wise thing to do.

Bill Clinton's administration benefited from these tax increases to balance the budget before the end of his term, but Clinton supported further Republican-sponsored deregulation of the financial sector, free trade, and favored-nation trade agreements. The loosening of financial markets and corporate accountability helped create the speculative tech boom of the 1990s which burst in 2000 and also resulted in the corporate accounting scandals, including Enron, WorldCom, et al.

George W. Bush exploited the recession from the tech boom to promote Reagan's already discredited "trickle down" economics, convincing Congress to enact successive tax breaks for corporations and the rich. Also, he promoted further deregulation of the financial sector. These tax cuts equated to the government borrowing to pay for them, plus unprecedented borrowing to conduct the unnecessary Iraq war and to cover other government expenses, increasing the national debt from $3 trillion to $9 1/2 trillion, projected to exceed $10 trillion by the end of his term.

This deficit spending is the primary factor in the present freefall in the value of the dollar internationally.

Outflow of capital
The reasons that trickle-down economics has brought the nation to its economic knees is that the tax benefits to corporations and the rich have not resulted in investment in national industries. On the contrary, the deregulation of capital markets has resulted in the greatest outflow of investment capital in the nation's history, primarily into Asian consumer manufactures. The payoff has been the net loss of more than 3 1/2 million domestic manufacturing jobs, mostly in consumer industries (textiles, clothing, shoes, sporting goods, electronics, tools, toys, kitchenware and appliances, etc.). It has been projected that the nation will chalk up a net loss of more than 4 million manufacturing jobs during Bush's administration.

Don't the politicians see the irony in this export of our consumer manufacturing industries? We exist in a consumer-driven economy, but most of our consumer goods now come from China and other Asian countries, as evidenced by a visit to any big-box retailer. Does anyone see the futility of the government injecting $150 billion of tax rebates to "stimulate" the economy? It may briefly stimulate retail sales, but it will stimulate only Asian consumer industries, not our now lost consumer manufactures. China's industrial sector is growing at 12 percent per year, fed by investment capital from this country and by the consumer goods we import.

Besides going into foreign investments, those tax breaks have gone to speculatively bid up the price of stock and fueled the now crashed housing boom, which was additionally fueled by risky home loans, junk bonds, real estate speculation, and maxed out credit-card debt.

Falling dollar
The dollar is in freefall because of the financial policies pursued by the Republicans. It is not only in freefall internationally, but will continue to decrease in value as long as the federal government continues to borrow without limit, as long as our trade deficits continue to grow, and as long as investment capital continues to flow out of the country.

At this very time, Bush is negotiating with China to facilitate freer flow of U. S. investment capital into that country in exchange for allowing China to more freely buy up American financial institutions and corporations.

Our lawmakers have enacted irresponsible financial agendas which enable wealthy individuals and corporations to profit from investments abroad at the expense of domestic industries. The nation faces prolonged economic malaise and decline unless it takes drastic measures to balance the federal budget, to balance trade, to begin the rebuilding of our lost consumer industries, to reregulate its financial markets and to penalize the export of investment capital. The nation does not need further deregulation of financial markets or more tax breaks for corporations and the rich, because to do so will result in greater national debt, greater export of investment capital, further devaluation of the dollar and further inflation of consumer prices.

Jack Ward lives in Verona.</div>

Link

 

[Denny Crane]

I see someone wants more of everyone else's money to spend like a drunken sailor.

GHW Bush called Reaganomics "voodoo" and his retreat from those good economic policies led to a painful recession.

Reaganomics was so successful and so strong that it is responsible for the boom during Clinton's administration, and even tax hikes by him and GHW couldn't kill off the prosperity, entirely.

Not that bad trade policy or fiscal policies can't hurt the economy in other ways. When GHW left office, the entire trade deficit was $80B. When Clinton left office, it was $80B to China alone, and that snowball has only grown as it's gone downhill.

The value of the dollar has little to do with the amount we borrow, the writer needs a lesson in basic macro economics. It's a matter of how many dollars are printed; supply and demand curve in action (more supply means less price/value per dollar).

Democrats may not know a tax hike they don't like, but they are believers now in low tax rates as they can see the enormous growth in federal tax receipts that have resulted.

 

[Real]

<div class='quotetop'>QUOTE (Denny Crane @ Jul 17 2008, 02:06 PM) <{POST_SNAPBACK}></div><div class='quotemain'>I see someone wants more of everyone else's money to spend like a drunken sailor.

GHW Bush called Reaganomics "voodoo" and his retreat from those good economic policies led to a painful recession.

Reaganomics was so successful and so strong that it is responsible for the boom during Clinton's administration, and even tax hikes by him and GHW couldn't kill off the prosperity, entirely.

Not that bad trade policy or fiscal policies can't hurt the economy in other ways. When GHW left office, the entire trade deficit was $80B. When Clinton left office, it was $80B to China alone, and that snowball has only grown as it's gone downhill.

The value of the dollar has little to do with the amount we borrow, the writer needs a lesson in basic macro economics. It's a matter of how many dollars are printed; supply and demand curve in action (more supply means less price/value per dollar).

Democrats may not know a tax hike they don't like, but they are believers now in low tax rates as they can see the enormous growth in federal tax receipts that have resulted.</div>

You could say in theory that what the Democrats did in the 1980's in Congress by not reducing spending, set Clinton up wonderfully in 1992, when Bush had to raise taxes because of the growing defecit, and Clinton's economic policy was: balance the budget, reduce the defecit.

 

[Denny Crane]

A better understanding of the situation.

GHW Bush had the most vetoes and successful vetoes in the history of the presidency (I do believe). Democrats controlled congress and sabotaged every bill with a rider to raise taxes. Party over country, anything to make Bush have to go back on his "no new taxes" pledge.

Democrats backed Bush into a corner by allowing the government to shut down after Bush vetoed their budget that included tax hikes. Bush eventually had to compromise to get a budget to keep the government going and caved.

Raising taxes in a recession didn't help anything at all.

 

[huevonkiller]

<div class='quotetop'>QUOTE (Denny Crane @ Jul 17 2008, 02:06 PM) <{POST_SNAPBACK}></div><div class='quotemain'>I see someone wants more of everyone else's money to spend like a drunken sailor.

GHW Bush called Reaganomics "voodoo" and his retreat from those good economic policies led to a painful recession.

Reaganomics was so successful and so strong that it is responsible for the boom during Clinton's administration, and even tax hikes by him and GHW couldn't kill off the prosperity, entirely.

Not that bad trade policy or fiscal policies can't hurt the economy in other ways. When GHW left office, the entire trade deficit was $80B. When Clinton left office, it was $80B to China alone, and that snowball has only grown as it's gone downhill.

The value of the dollar has little to do with the amount we borrow, the writer needs a lesson in basic macro economics. It's a matter of how many dollars are printed; supply and demand curve in action (more supply means less price/value per dollar).

Democrats may not know a tax hike they don't like, but they are believers now in low tax rates as they can see the enormous growth in federal tax receipts that have resulted.</div>

Yeah, I really did like how Reagan handled our economy...

 

[Thoth]

Blaming Reagan for W spending like Tip O'Neill? weak.

<div class='quotetop'>QUOTE (Denny Crane)</div><div class='quotemain'>The value of the dollar has little to do with the amount we borrow, the writer needs a lesson in basic macro economics. It's a matter of how many dollars are printed; supply and demand curve in action (more supply means less price/value per dollar).</div>

Exactly. In other words, Economics is the study of resources and how they are allocated.

Simply put, its all about scarcity. The less common something is the more valuble it becomes. Is this a bad place to mention baseball cards as an example? lol.