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Alan D. Hyde
01-27-2006, 09:59 PM
A little more light :D from www.opinionjournal.com (http://www.opinionjournal.com) ---

Still Morning in America
Reaganomics, 25 years later.

Friday, January 20, 2006 12:01 a.m. EST

Twenty-five years ago today, Ronald Reagan was inaugurated as the 40th President of the United States promising less intrusive government, lower tax rates and victory over communism. On that same day, the American hostages in Iran were freed after 444 days of captivity. If the story of history is one long and arduous march toward freedom, this was a momentous day well worth commemorating.

All the more so because over this 25-year period prosperity has been the rule, not the exception, for America--in stark contrast to the stagflationary 1970s. Perhaps the greatest tribute to the success of Reaganomics is that, over the course of the past 276 months, the U.S. economy has been in recession for only 15. That is to say, 94% of the time the U.S. economy has been creating jobs (43 million in all) and wealth ($30 trillion). More wealth has been created in the U.S. in the last quarter-century than in the previous 200 years. The policy lessons of this supply-side prosperity need to be constantly relearned, lest we return to the errors that produced the 1970s.

The heart and soul of Reagan's economic agenda were sound money (making the dollar "as good as gold," as Reagan used to put it) and lower tax rates. On monetary policy, Reagan has won a resounding victory. Today, nearly all economists agree with Reagan's then-controversial belief that the sole purpose of monetary policy should be to keep prices stable. Double-digit inflation is a distant memory unlikely to recur anytime soon.

On tax policy, Reaganomics has also carried the day, if somewhat less completely. Tax rates in the U.S. are on average half as high now as they were in the 1970s, and almost every nation has followed the Reagan model of lower tax rates. Even Bill Clinton only dared to raise the top marginal income tax rate back to 39.5%, not 50% or 70%.

Nonetheless, tax cuts still stand in disrepute among most of the media, academics and Democrats in Congress, albeit for shifting reasons. When Reagan proposed his 30% across-the-board tax-rate cut, his critics howled that this would cause demand to rise and lead to hyper-inflation. In fact, supply rose faster than demand, and inflation fell to 4% from 13% and has fallen even lower since. When the economy went into a deep recession in 1981-82, Reagan's adversaries (and some of his own advisers) declared his tax cuts a failure. Reagan said stay the course, and the moment the final leg of the tax cut took effect, in January of 1983, the economy roared to life with an expansion that lasted more than seven years.

When the budget deficit rose in the mid-1980s, the liberals warned that if Reagan would not raise taxes interest rates would skyrocket. He didn't and rates didn't. After the 1987 stock market crash, liberal John Kenneth Galbraith wrote that "this debacle marks the last chapter of Reaganomics . . . and the irresponsible tax cuts." Again, Reagan refused to buckle, and two months later the stock market recovered and the expansion roared on--an expansion that didn't end until George H.W. Bush reversed course and raised taxes in 1990.

The Gipper's critics have written an economic history of the 1990s that they portray as a repudiation of Reaganomics. In this telling--known as Rubinomics--the Clinton tax hikes of 1993 ended the budget deficit, which caused interest rates to fall, which produced the boom of the mid- to late-1990s. In fact, the budget deficit hardly fell at all in the immediate aftermath of the tax hike, and while long-term interest rates fell in 1993, they shot back up again in 1994 almost precisely through Election Day (rising by some 230 basis points from October 1993 to November 1994).

On that day, voters repudiated the Clinton tax hikes and the specter of HillaryCare and gave Republicans control of Capitol Hill to govern on the Reaganite agenda of lowering taxes and shrinking runaway government. Both the stock and bond markets turned upward precisely on Election Day in 1994, beginning a whirlwind six-year rally. By 1998, growth and fiscal restraint delivered a budget surplus for the first time in nearly 30 years. In 1997 President Clinton signed a further reduction in the capital gains tax, which propelled investment and the stock market to even greater heights.

The latest chapter of this story is the 2003 income and investment tax cuts enacted by the current President Bush. As in 1981, opponents insisted those tax cuts would harm the economy by increasing the deficit and driving up interest rates. But in the two and a half years since those tax cuts passed, the economy and tax revenues have both surged.

Where Republicans have most strayed from the Reagan vision has been on controlling federal spending. But most still adhere to his tax-cutting lessons, with a few prominent exceptions (notably Senator John McCain). They should all recall the Gipper's words in his inauguration speech 25 years ago: "It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government."

* * *

Alan

Memphis Mike
01-27-2006, 10:00 PM
DON'T FEED THE TROLL!!!!!!!!!! :D

[ 01-27-2006, 10:00 PM: Message edited by: Memphis Mike ]

Jagermeister
01-28-2006, 12:20 AM
But in the two and a half years since those tax cuts passed, the economy and tax revenues have both surged. Indeed they have. Courtesy of the Congressional Budget Office, by way of National Review
The 2003 Tax Cut on Capital Gains Entirely Paid for Itself (http://www.nationalreview.com/nrof_luskin/luskin200601270946.asp) we can all learn:

- by Donald Luskin

On Thursday the Congressional Budget Office released its annual Budget and Economic Outlook, and buried in one of its nearly impenetrable tables of numbers is a remarkable story that has gone entirely unreported by the mainstream media: The 2003 tax cut on capital gains has entirely paid for itself. More than paid for itself. Way more.

To appreciate this story, we have to go back in time to January 2003, before the tax cut was enacted. Table 3-5 on page 60 in CBOs Budget and Economic Outlook published in 2003 estimated that capital-gains tax liabilities would be $60 billion in 2004 and $65 billion in 2005, for a two-year total of $125 billion.

Now lets move forward a year, to January 2004, after the capital-gains tax cut had been enacted. Table 4-4 on page 82 in CBOs Budget and Economic Outlook of that year shows that the estimates for capital-gains tax liabilities had been lowered to $46 billion in 2004 and $52 billion in 2005, for a two-year total of $98 billion. Compare the original $125 billion total to the new $98 billion total, and we can infer that CBO was forecasting that the tax cut would cost the government $27 billion in revenues.

Those are the estimates. Now lets see how things really turned out. Take a look at Table 4-4 on page 92 of the Budget and Economic Outlook released this week. Youll see that actual liabilities from capital-gains taxes were $71 billion in 2004, and $80 billion in 2005, for a two-year total of $151 billion. So lets do the math one more time: Subtract the originally estimated two-year liability of $125 billion from the actual liability of $151 billion, and you get a $26 billion upside surprise for the government. Yes, instead of costing the government $27 billion in revenues, the tax cuts actually earned the government $26 billion extra.

CBOs estimate of the cost of the tax cut was virtually 180 degrees wrong. The Laffer curve lives!

This straight-A report card on supply-side tax-cutting was noted Thursday by Daniel Clifton of the American Shareholders Association the man who predicted that exactly this would happen when the tax cuts were first enacted. Clifton wrote on his blog,


a capital gains tax cut spurs the growth of new businesses, increases the wage of workers, enhances consumer purchasing power, and grows the economy at large, resulting in more overall gains to be taxed. When capital is taxed at a lower rate, any revenue losses are offset because there is more overall capital being produced, and thus more total revenue being generated.Using the same kind of analysis, we can see that attempts to raise tax revenues by raising tax rates simply doesnt work. Consider the massive increase in personal income-tax rates imposed by President Clinton and a Democratic Congress in 1993. Compare actual total tax revenues for the four years from 1993 to 1996 to what had been estimated by CBO in 1992 before the tax hikes took effect. Despite increasing the top tax rate on incomes by 16 percent to 28 percent, actual revenues only beat the 1992 estimate by less than 1 percent.

So what led to the gusher of tax revenues in the late 1990s that helped to put the federal budget into surplus? Simple: It was the capital-gains tax cut engineered by a Republican Congress in 1997. Compare actual total tax revenues for the three years from 1997 to 1999 to what had been previously estimated by CBO in January 1997. Despite cutting the capital-gains tax rate by 28 percent, actual total revenues beat the 1997 estimate by more than 11 percent.

These are the numbers. They dont lie. Its the Left that lies just like former Clinton Treasury Secretary Robert Rubin did this week in an op-ed in the Wall Street Journal when he said


The proponents of supply-side theory who assert that tax cuts will wholly or even significantly pay for themselves (through increased growth and federal tax revenues), appear to be no more accurate now than they were in the 90s.The numbers show that supply-side theory is accurate now and that it was accurate in the 90s. With the latest evidence from the CBO in hand, as Daniel Clifton says, Its time to make the capital gains and dividend tax cuts permanent. Congress has no excuse at this point.

[ 01-28-2006, 12:29 AM: Message edited by: Jagermeister ]

Anthony Zucker
01-28-2006, 08:24 AM
Alan and Jager are leaving out one very important factor. During the Raegan years and now with Bush the government has been forced to borrow trillions to cover the tax cuts. They have remortgaged the country with a huge debt that in the short run pumped up the economy but we all understand that there is now a debt service that is largely owed to foreigners and we will have to pay it all back. This is not behavior to brag about. Real conservatives should be embarrassed.

High C
01-28-2006, 09:49 AM
Originally posted by Anthony Zucker:
... During the Raegan years and now with Bush the government has been forced to borrow trillions to cover the tax cuts...:rolleyes: In both cases, tax cuts resulted in accelerated growth in Federal tax revenues.

The problem is unchecked spending.

uncas
01-28-2006, 09:53 AM
Yes... a lot of unchecked funding...for some things no one expected...
Katrina for one.as well as the other hurricanes..the two towers for another...
No we did not expect these...expenses...I am not sure how we could have...except with hindsight.
Unchecked...yes...do we have to do something..yes.
Caught between a rock and a hard place as I see it.

Alan D. Hyde
01-28-2006, 10:05 AM
It is reasonable for debt to rise as income rises.

You need to look at national debt as a percentage of GDP.

From that perspective, it's not that bad.

Joe the janitor at school makes about $2,000 per month and has a $300 per month mortgage payment on his house--- more than he'd like, but well within what he can handle (15% of gross income).

Jack the orthopedic surgeon makes about $40,000 per month and has a $6,000 per month mortgage payment on his house--- more than he'd like, but it keeps his wife happy :D , and, he can handle it (again, 15% of gross income).

Alan

From the National Treasury Management Agency---

http://www.ntma.ie/ButtonGIF/2005/GIFS/ggd_gdp2.gif

[ 01-28-2006, 10:07 AM: Message edited by: Alan D. Hyde ]

uncas
01-28-2006, 10:08 AM
No...with a rising income comes greed and the desire to keep up with the Jones'.
The doc. does not have to live in the manner (manor actually) he has chosen...except for satisfying public opinion which suggests that he has to.

I have seen houses being built on the Eastern shore by very wealthy people...Do they need a big house for two? No...but they have an image to maintain.

[ 01-28-2006, 10:10 AM: Message edited by: uncas ]

Alan D. Hyde
01-28-2006, 10:26 AM
Jamie, there's no doubt that you're right about SOME people.

But not ALL.

We have friends with an eight-bedroom house--- just the two of them, all the children are now in college or graduated and gone.

There are generally one or two children and one or two children's friends visiting them for a day or two. Plus perhaps a friend or two of their own may be in town. And then an exchange student or two, and sometimes an au pair.

They're generous, gregarious, enjoy being hosts (like to cook), and not only do they like people, they learn from people--- great conversationalists, they are, always with a fascinating eclectic bunch of house guests--- geneticists to guitarists .

If Joy & I could afford to live as they do, we would.

They enjoy the way they live, but, they're always busy, and they do a lot of good for a lot of people... I don't think their money is wasted, not at all.. :D

Alan

uncas
01-28-2006, 10:31 AM
Alan...we all have friends like that....
I guess from my perspective...All I want is a nice little " get away from it all " house on my land in upstate NY.
I am not into big...I have no use for big...I am not there to prove to someone what I do not want to be.
I beleive in simple.....If I won the lottery tomorrow for say 100 million, I ain't gonna change...as I have no desire to compete with the Jones'

Donn
01-28-2006, 10:36 AM
Originally posted by uncas:

The doc. does not have to live in the manner (manor actually) he has chosen...except for satisfying public opinion which suggests that he has to.

"God I love assumptions.....An automatic....response from someone who has no clue...."

uncas
01-28-2006, 10:38 AM
Donn..I see where you are coming from....I was basing my comment on the mortgage payment by a Doc. named Jack...That wasn't an assumption though...that was in a post.
If the original post was an assumption so be it.

Donn
01-28-2006, 10:42 AM
Your assumption was that the fictional doctor had a large mortgage for no other reason than to impress.

That's equivalent to someone assuming that you keep a sailboat, and cruise it to Newport, for no other reason than to impress.

uncas
01-28-2006, 10:48 AM
Jack the orthopedic surgeon makes about $40,000 per month and has a $6,000 per month mortgage payment on his house---

Six thousand dollars is impressive...for a mortgage....Donn...Yes, I made an assumption....but 6,000/month says something about the value of the property.

And secondly...your damn'd right...I have worked hard on Uncas...brought him back from the graveyard...and damn'd if I am not going to show him off....So to that..yup...I am out to impress... :D And if I don't too bad...
At least I try to spend some time on Uncas....sail when I can...actually use it...

If I had a garden like yours, I'd be impressed...In fact I am impressed with yours...I can't grow diddly.

pss...If someone builds a 7,000 square manor...for two people...what is the reason for doing so except to impress the Jones'?

[ 01-28-2006, 10:56 AM: Message edited by: uncas ]

George Roberts
01-28-2006, 10:58 AM
Norman Bernstein ---

Statisitcs, including yours, always lie.

30 years ago I was in a lower quintile than I am in now.

I expect one's quintile depends on ones age to a great extent. The debt of youth eventually gives way to weath in old age.

Alan D. Hyde
01-28-2006, 10:59 AM
To house a lot of interesting house guests, Jamie.

Or children...

To have room for all those books and tools.

Alan

uncas
01-28-2006, 11:02 AM
The specific house I am thinking of is the second or third home.....
It is huge...kitchen is 2,0000 square feet...
As the owner is a rest. owner...from Ocean City...I am guessing...okay assuming he uses it infreqquently...as when he woukd want to use it is during the summer months when the rest. is exceptionally busy.
And if it is for books...I want dibs on the collection.

Alan D. Hyde
01-28-2006, 11:14 AM
There's room for dispute on that, Norman.

Some of the tricksters use household income, which, since household size is declining, skews things badly...

Thomas Sowell says we're doing better. See---

www.tsowell.com (http://www.tsowell.com)

Alan

High C
01-28-2006, 12:31 PM
Jeez, all we have to do is open our eyes and look around to see that we are all doing better over the years.

I'll never understand the falalism that drives some to find gloom in the midst of light.

Meerkat
01-28-2006, 01:58 PM
Originally posted by Norman Bernstein:
</font><blockquote>quote:</font><hr /> Statisitcs, including yours, always lie.
Statistics NEVER lie... the lies come in their interpretation, George.
</font>[/QUOTE]If you believe that statistics never lie, I have a bridge for sale...

Meerkat
01-28-2006, 01:59 PM
Oh yeah - and I want to see that $300 mortgage! :D

Meerkat
01-28-2006, 02:00 PM
If the government is doing so well with tax revenues, why's the debt skyrocketing?

High C
01-28-2006, 03:04 PM
Originally posted by Meerkat:
If the government is doing so well with tax revenues, why's the debt skyrocketing?Uhh, I believe I 'splained that already. tongue.gif

Meerkat
01-28-2006, 03:14 PM
Originally posted by High C:
</font><blockquote>quote:</font><hr />Originally posted by Meerkat:
If the government is doing so well with tax revenues, why's the debt skyrocketing?Uhh, I believe I 'splained that already. tongue.gif </font>[/QUOTE]"Unchecked spending" is hardly an explanation. Furthermore, the government generally writes checks, so it's hardly unchecked. ;)

[ 01-28-2006, 03:14 PM: Message edited by: Meerkat ]

Alan D. Hyde
01-28-2006, 03:17 PM
Here you go, David---

http://homepics.realtor.com/image2/http/centralindiana/listings/large/041/77029576a.jpg

308 S Main
Tipton, IN 46072
MLS ID#: 77029576
$49,900
4 Bed, 1 Bath
1,860 Sq. Ft.
0.25 Acres

Estimated payment:
$231 Per Month*
Change Assumptions
Check Local Rates

* (Based on a 30-year fixed rate of 5.6793% with 20% down.)

Go to this site and find plenty more---

www.realtor.com (http://www.realtor.com)

* * *

Alan

[ 01-28-2006, 03:30 PM: Message edited by: Alan D. Hyde ]

Meerkat
01-28-2006, 03:24 PM
Amazing! :eek:

It's less than 1/2 my rent for 225 sq. ft.

It's just a wee bit big for one person.

Alas, I'm stuck in WA, at least for the time being.

Meerkat
01-28-2006, 03:27 PM
Originally posted by High C:
Jeez, all we have to do is open our eyes and look around to see that we are all doing better over the years.

I'll never understand the falalism that drives some to find gloom in the midst of light.Perhaps some of us are preceptive enough to see that the light is that of an oncoming freight (fright!) train.

As has been pointed out, repteatedly, the rise in middle class incomes has been a tiny fraction of inflation over a comparable period.

Alan D. Hyde
01-28-2006, 03:31 PM
Not so.

Go read a little a Tom Sowell's site---

www.tsowell.com (http://www.tsowell.com)

* * *

Alan

Meerkat
01-28-2006, 03:35 PM
Prefer someone a wee bit more neutral/objective, thanks.

High C
01-28-2006, 03:50 PM
Originally posted by Meerkat:
...the rise in middle class incomes has been a tiny fraction of inflation over a comparable period.Those are just numbers. Remember those lying statistics you mentioned?

Im talking about economic quality of life, based on observation, not on complex stats. Compared to when you and I were kids, today's middle class lives in larger, nicer houses with air conditioning, drives much nicer cars, and owns more of 'em, takes more extravagant vacations, owns far more electronic and convenience goodies, eats better, dresses better (OK forget that one), lives longer, and most importantly, owns more boats.

There has been a decline in personal ownership of airplanes, I will admit. ;)

[ 01-28-2006, 03:51 PM: Message edited by: High C ]

uncas
01-28-2006, 05:18 PM
And above all...owes more money...we can't die until we pay off our credit cards...

[ 01-28-2006, 05:19 PM: Message edited by: uncas ]