Reaganomics vs. Obamanomics

[JVegas]

Thought some of you might like this...

Reaganomics vs. Obamanomics


By Peter Ferrara
Director, Entitlement and Budget Policy, Institute for Policy Innovation
President Reagan’s economic recovery plan included four specific components on which he explicitly campaigned over and over and then implemented once elected.
(FOX News/AP)

These were:
1. Reductions in tax rates to restore incentives for economic growth. This consisted of, first, a reduction in the top income tax rate of 70% down to 50%, and then a 25% across the board reduction in income tax rates for everyone. The 1986 tax reform then reduced tax rates further, leaving just two rates, 28% and 15%. Reagan also cut corporate income tax rates and capital gains tax rates
2. Spending Reductions. The reductions included a $31 billion cut in spending in 1981, close to 5% of the federal budget then, or the equivalent of about $150 billion in spending cuts for the year in 2008. In constant dollars, non-defense discretionary spending declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to 1983. Moreover, in constant dollars, this non-defense discretionary spending never returned to its 1981 level for the rest of Reagan’s two terms!By 1988, this spending was still down 14.4% from its 1981 level in constant dollars. Even with the Reagan defense buildup, total federal spending declined from a high of 23.5% of GDP in 1983 to 21.3% in 1988 and 21.2% in 1989. That’s a real reduction in the size of government relative to the economy of 10%
3. Anti-inflation monetary policy to restrain money supply growth.
4. Deregulation. Reagan’s deregulation plan has now saved consumers an estimated $100 billion per year in lower prices. Reagan’s first executive order, in fact, eliminated price controls on oil and natural gas. Production soared, and the price of oil declined by over 50%.
The results were spectacular. These four components produced a 25-year economic boom from 1982 to 2007. In their new book, “The End of Prosperity,” Art Laffer and Steve Moore call the these years “the greatest period of wealth creation in the history of the planet.” They note that — adjusted for inflation– more wealth and income was created during this Reagan boom than in any other prior period in U.S. history. That’s right, than any other entire period dating from President George Washington all the way up to Ronald Reagan.
But Barack Obama is doing exactly the opposite on each of these four points:
–He is still promising tax rate increases, at least by letting the Bush tax cuts expire.
–He just passed the greatest increase in government spending in the history of the planet.
–He is promising massive increases in regulatory burdens, including global warming cap and trade regulation that would cost the economy another trillion dollars a year.
–The Fed is already furiously reinflating the money supply, sowing seeds of further havoc in the future.
Even the Obama tax cuts do not follow the Reagan economic recovery plan because they are not reductions in tax rates, which is what drives the incentives that govern the economy.
A reduction in tax rates increases incentives by allowing people to keep a higher percentage of what they earn from productive activity. But Obama’s tax cuts are all based on tax credits, which do nothing to improve incentives. They are really just the same as his government spending in terms of their effect on the economy, just like sending more welfare checks out to everyone.
At AmericanSolutions.com, former House Speaker Newt Gingrich has proposed an updated version of the Reagan economic recovery program for today. It includes, among other items, a reduction in the federal corporate income tax rate from 35% to the 12.5% rate that over the past 20 years has lifted the standard of living in Ireland from the bottom of the EU to the top. It would eliminate the capital gains tax to match rates in China, Singapore, and other international competitors — a move that would entice capital investment from the world over to America. It would provide middle class tax relief by reducing the 25% income tax bracket to 15%, establishing a flat rate tax of 15% for close to 90% of American workers. Gingrich also proposes that a cut in the payroll tax by 50% for 2 years. He also proposes that our government work to control government spending to balance the budget, something Gingrich himself achieved when he was Speaker of the House. Under his plan, the United States would also adopt a real, comprehensive energy program that would allow production of domestic U.S. oil and natural gas, as well as nuclear power, clean coal, ethanol, and renewable fuels.
Obama keeps saying he is only interested in what works, not ideology. So why doesn’t he include any of the above components that have a proven track record of effectiveness? Why is our president ignoring what works and insisting on embracing an ideology that will simply expand big government?

[MrLabGuy]

Worst Case Scenario

Democrats get control of the of the House, Senate and now the Presidency. We've elected the most Liberal Rookie Senator from one of the most corrupt political machines in America. Just look at the history and current political turmoil in Illinois if you can stomach the thought.

Democrats get full control and immediately pass a Trillion dollar pet project bill under the guise of economic recovery.

Bush was terrible for America but too stupid to do much permanent harm. Obama and the Democrat Leadership knew very well what they were doing and I'm afraid that the worst is not over in terms of the long lasting harm that will come about under the Obama reign with the likes of Nancy Pelosi and Harry Reid guarding the hen house.

Just look at the grin on these two jokers

[StanF18]

I think Reagan was an awesome Prez, ESPECIALLY foreign-policy wise.

But in terms of looking at the here and now, the verdict is still out on Obama and his team. When you talk about "long lasting harm", he inherited much of it from a 2-term Republican administration that had its' head up its' a$$. Bush was in complete denial even as the nation was already well into this recession. Completely out of touch with the day-to-day realities.

Trillion dollar pet project?? Is that what you call fixing a 1950s-vintage backwards road and bridge infrastructure and public transportation that has been surpassed and left in the dust by Japan, Germany, France, and most of the industrialized world?? I'm actually glad we finally have a President with enough balls to realize that our superpower status is NOT only determined by the number of carrier battle groups we have, and not only by how many wars we can launch simultaneously, but ALSO by how many semi-functional roads, bridges, and rail systems we can operate. And how many of our badly backwards schools we can upgrade to the modern realities of high-speed internet and technology.
Reducing taxes is all good and well, but it will only go so far. We need a COMPLETE overhaul of the national infrastructure.

It's called grabbing the bull by the horns, and passing legislation less than a month into a new administration, instead of sticking your head in the sand and repeating the old Republican mantra: "our basic economic indicators are strong", which is what Bush was saying even as Wall Street was reeling....

Bottom line: I think Obama is doing the best he can thus far, and he deserves a chance to not only reverse this slide, but to modernize the crumbling US infrastructure. I don't want my kid growing up in a country that will be known as a "has been" former superpower with 3rd rate schools, falling bridges, and crippled rail networks. Indeed, some would argue that we're already that has-been country. Resting on our 20th century laurels, and admiring our former glory, even as the rest of the world is passing us by.

[Eric5273]

I notice how your article is careful to say "non-defense" discretionary spending. Why should defense spending be excluded from the budget discussion? Or should we continually raise defense spending by 25% each year?

Reagan's budget management was the worst of any president ever. He increased the national debt by the largest percentage of any president ever. The national debt more than tripled under Reagan. Even Bush, without ever vetoing a single spending bill, did not triple the national debt.

[LeMansX5]

Originally Posted by StanF18

I think Reagan was an awesome Prez, ESPECIALLY foreign-policy wise.

But in terms of looking at the here and now, the verdict is still out on Obama and his team. When you talk about "long lasting harm", he inherited much of it from a 2-term Republican administration that had its' head up its' a$$. Bush was in complete denial even as the nation was already well into this recession. Completely out of touch with the day-to-day realities.

Trillion dollar pet project?? Is that what you call fixing a 1950s-vintage backwards road and bridge infrastructure and public transportation that has been surpassed and left in the dust by Japan, Germany, France, and most of the industrialized world?? I'm actually glad we finally have a President with enough balls to realize that our superpower status is NOT only determined by the number of carrier battle groups we have, and not only by how many wars we can launch simultaneously, but ALSO by how many semi-functional roads, bridges, and rail systems we can operate. And how many of our badly backwards schools we can upgrade to the modern realities of high-speed internet and technology.
Reducing taxes is all good and well, but it will only go so far. We need a COMPLETE overhaul of the national infrastructure.

It's called grabbing the bull by the horns, and passing legislation less than a month into a new administration, instead of sticking your head in the sand and repeating the old Republican mantra: "our basic economic indicators are strong", which is what Bush was saying even as Wall Street was reeling....

Bottom line: I think Obama is doing the best he can thus far, and he deserves a chance to not only reverse this slide, but to modernize the crumbling US infrastructure. I don't want my kid growing up in a country that will be known as a "has been" former superpower with 3rd rate schools, falling bridges, and crippled rail networks. Indeed, some would argue that we're already that has-been country. Resting on our 20th century laurels, and admiring our former glory, even as the rest of the world is passing us by.

I have traveled the world a lot and I can tell that even some third world countries have better roads and infrastructure than US. I think it was McCain who made that stupid statement that our economy's fundamentals are strong when wall street was tearing apart. McCain was a bad choice for republicans. In his 70s and still a senator. : He needed to attend some Dale Carnegie courses before running for president.

MrLabGuy, can you please reduce the size of image. 3504x2336 res is too big for posting on forum.

[Eric5273]

Originally Posted by StanF18

Trillion dollar pet project?? Is that what you call fixing a 1950s-vintage backwards road and bridge infrastructure and public transportation that has been surpassed and left in the dust by Japan, Germany, France, and most of the industrialized world?? I'm actually glad we finally have a President with enough balls to realize that our superpower status is NOT only determined by the number of carrier battle groups we have, and not only by how many wars we can launch simultaneously, but ALSO by how many semi-functional roads, bridges, and rail systems we can operate. And how many of our badly backwards schools we can upgrade to the modern realities of high-speed internet and technology.
Reducing taxes is all good and well, but it will only go so far. We need a COMPLETE overhaul of the national infrastructure.

Unfortunately, less than 10% of the stimulus bill is for infrastructure spending.

[MrLabGuy]

Originally Posted by StanF18

I think Reagan was an awesome Prez, ESPECIALLY foreign-policy wise.

But in terms of looking at the here and now, the verdict is still out on Obama and his team. When you talk about "long lasting harm", he inherited much of it from a 2-term Republican administration that had its' head up its' a$$. Bush was in complete denial even as the nation was already well into this recession. Completely out of touch with the day-to-day realities.

Trillion dollar pet project?? Is that what you call fixing a 1950s-vintage backwards road and bridge infrastructure and public transportation that has been surpassed and left in the dust by Japan, Germany, France, and most of the industrialized world?? I'm actually glad we finally have a President with enough balls to realize that our superpower status is NOT only determined by the number of carrier battle groups we have, and not only by how many wars we can launch simultaneously, but ALSO by how many semi-functional roads, bridges, and rail systems we can operate. And how many of our badly backwards schools we can upgrade to the modern realities of high-speed internet and technology.
Reducing taxes is all good and well, but it will only go so far. We need a COMPLETE overhaul of the national infrastructure.

It's called grabbing the bull by the horns, and passing legislation less than a month into a new administration, instead of sticking your head in the sand and repeating the old Republican mantra: "our basic economic indicators are strong", which is what Bush was saying even as Wall Street was reeling....

Bottom line: I think Obama is doing the best he can thus far, and he deserves a chance to not only reverse this slide, but to modernize the crumbling US infrastructure. I don't want my kid growing up in a country that will be known as a "has been" former superpower with 3rd rate schools, falling bridges, and crippled rail networks. Indeed, some would argue that we're already that has-been country. Resting on our 20th century laurels, and admiring our former glory, even as the rest of the world is passing us by.

No argument on Bush being a terrible president; however, your perception of what this stimulus bill is all about is based on his earlier promise to rebuild America's ailing infrastructure with "Shovel Ready Projects". That idea was totally diluted when the lobbyists took over the formation of the bill which now resembles a Democratic Wish List of spending projects. Not much in the area of roads and bridges which was pushed heavy by Obama during the campaign to win over the public. What we got was the bait and switch.

Oh well...We own it now.