REAGANOMICS

[Catherine Vincent]

I haven't seen any reference to this on the board much. When Reagan was president, I wasn't paying attention to politics, but I do remember hearing that word a lot.

[LittleApple81]

1. And Bush père called his economic plan "Voodoo Economics"

of course, that was during the primary when he ran against Reagan.

[madrchsod]

2. i was a charter member

in the "reagenomics club" joined for 8 long years till pappy took office.

[Octafish]

3. Trickle-Down Economics

Also called Supply Side Economics. The idea was that tax cuts for the rich would be used to stimulate the economy through savings, investment and spending. Yeah. Like that would ever happen. What it was used for was to buy things that made the rich happy or invested through offshore banks in the Caymans and Switzerland. Lots of Dems supported it, too. Times were that bad.

Today, the Little Turd from Crawford fancies himself a Ronnie Raygun. The economics are the same -- the rich get richer, the middle class shrinks, and the poor become a larger percentage of the nation. Don't ask about the rest of the world, they're to be bombed if brown or Muslim.

[neoteric lefty]

4. failed

Reaganomics failed. He decided to drastically cut taxes without cutting spending. He tripled the national debt from one to three trillion dollars. He raised defense spending by 27%. He put millions of people into poverty and established the current corporate whores that are raping this country. It failed, nothing less. It is funny how conservatives cite Reagan's economic policies as being almost divine, but they do not (or will not) see how they went against every traditional belief of fiscal conservatism.


I do not want slam the man personally, just his policies. He is dead and I will respect that until he is in the ground, but I have to call him a failure in this respect.

[gvi]

5. trickle down not all bad.

First let me point out that I am a Libertarian. Please don't confuse this with my affiliation to any party because I'm not a card carrying member of any party. I have researched supply side economics. "Reaganomics", as they have become known, were actually quite successful. Yes the rich did get richer. This is also true of the Great Depression. The 80's were known as the decade of greed for good reason. people were making money. The initial tax cuts were in fact given to the rich. What resulted however, was a decrease in interest rates, inflation, and unemployment. Those three things alone help show what aid trickle down economics gave to the middle class. Rich people obviously don't worry about unemployment, the interest rates on credit cards are more worrisome to the poor, and a single mother of 3 definitely doesn't want the price of a loaf of bread to be $4. The old saying that the rich get richer and the poor get poorer is false. The rich are getting ridiculusly rich, but the poor are getting richer too.

Gvi

[FDRrocks]

6. Give the rich more money

and that makes it better for us all. The above poster makes valid points but I think that the breaks from our government should go to the common people who would spend it on neccesities rather than opulence.

[hughee99]

7. Class labels

I've always wondered about class labels "Rich", "Working Class", and "Poor". There are some people who clearly fit into the Rich and Poor categories. Bill Gates is definately rich. A homeless person clearly poor. The "working class" can be a little harder to define. When does someone go from Poor to Working Class, or from Working Class to Rich? Politicians use these terms all the time, and everyone uses there own definition. Is there any place where I can actully find some sort of definition for these labels? Not to get off the subject, I was just wondering.

[FDRrocks]

8. Here ya go:

http://aspe.hhs.gov/poverty/03poverty.htm

[hughee99]

9. Thanks

[davekriss]

10. Ya' want Reaganomics? I'll give ya' Reaganomics!!!

<this is from memory after a late night in the office, so forgive me if I have a fact here or there not exactly right>

A lot happened from 1981 through 1988. Reagan rode in to town, high in the saddle, a new morning in America -- and set about gutting the progressive federal income tax schedules that heavily favored the top 1% (getting the top rate down from Carter's 50% to 28% in 1986). At the same time he embarked on a hugh military build-up. The result: Record deficits (broken first by GHWB and again by GWB). From 1981 to 1988, we went from the world's largest creditor nation to the worlds largest debtor.

To fund our record deficits without deflating the dollar, the Fed was forced to sell Treasuries at premium interest rates in order to attract an inflow of capital from around the world. The interest rates had to be especially high, too, as Paul Volker, then Fed Chairman, was battling inflation by raising interest rates in order to induce a recession -- these rates had to be higher still to offset the stimulative effect of the Reagan deficits. The bottom line is, though Carter holds the record for highest nominal rates, Reagan holds the record by far for highest real rates (nominal rate minus inflation). And this had wrenching effect on the productive capacity of the United States.

First, you can only buy U.S. Treasuries with US dollars (USD); if you're a foreign investor or foreign bank, you have to sell your Francs, deutsche marcs, yen, pound stirling for US dollars. And by simple supply and demand, the value of the dollar rose dramatically against the rest of the worlds currencies (I recall the Yen hitting 265+ to the dollar). As a result, our products looked very expensive to the rest of the world while their products looked cheap to us.

This imbalance gutted our manufacturing base, the foundation of the blue collar middle class. Whole industries were lost (shoes, television manufacture); others lost substantial market share (automobiles). The midwest became the "rustbelt" and Detroit tumbled into pockets of dangerous poverty -- the misery index hit all time highs. Real people in great numbers lost their homes or lived in wrenching fear of losing their homes, their livelihoods, their way of life.

Now the upper class enjoyed their tax cuts which enabled them to snap up more than their fair share of those low-risk, high-yield treasuries. But they fretted the loss of market share at home and the slack market for American goods overseas, so they turned up the heat on the Reagan administration: They wanted a kind of balance restored.

In came James T Baker III, fixer extraordinaire (more recent of Florida 2000 fame). In 1986, Baker arranges the Plaza Accord in NYC where the (then) G8 nations meet and agree to trade the world's currencies within narrow ranges. The Yen, for example, would trade between 120 to 140 per dollar. But for a time they unleashed the brooms of Fantasia and all was out of control. The dollar crashed to 88 yen to the dollar and now we faced an imbalance opposite to what went before. Now the dollar was weak compared to the world's currencies, and American products -- and it's hard assets -- appeared extraordinarily cheap to the rest of the world. So, if you're a foriegn investor or central banker, what do you do with all those dollars gaining dust in the vaults of their central banks? Why, go on bargain-basement spending spree, of course! Buy! Buy! Buy! And we see another tectonic shift in the US economic position. In 1980 the US owned 3.4 times more of the rest of the world than they owned of us; by 1988 the rest of the world owned 0.8 times more of us than we of them.

And those deficits... We moved from near break even to a national debt of around $4.6 trillion. A figure never seen before during peacetime. And oddly enough, this figure corresponds to the gain in net worth had by the top 1% of the population (while all the rest of us stayed near flat or declined).

Basically Reagan's morning in america amounted to a huge party thrown for the very rich. We, too, were thrilled; we got to participate -- as the maids and butlers and valets. But it was a wild party, we had to say that, as we stayed glued to our TV sets to watch episodes of Lifestyles of the Rich and Famous, Dallas, or turned open the pages of People magazine (all born in the eighties). But the next morning, we who watched the baccanalia stepped over the near comatose bodies draped over the fine couches, on the hand-woven rugs, and on the expensively landscaped lawns, until a man is seen coming closer only to hand us the bill for this f*cking outrage.

That was Reaganomics.

Now if we wanted to wax disrespectful we could talk about his terrorist policies in Central America, his union breaking stunts, declaring ketchup a mighty fine vegetable for school lunches, and on and on and on...