the Great Ronald Reagan presidentcy

[FORD]

Unemployment declined on average for both presidents. The spike in years 1-3 are a result of a very severe recession. Mr. Reagan presided over the highest unemployment rate since 1941 in 1982 and 1983. Unemployment peaked in 1982 but remained historically high throughout his presidency. Average unemployment under Mr. Reagan was 7.54% and 5.20% under Mr. Clinton. Mr. Clinton gave us the lowest unemployment rate in 30 years.

[lucky wilbury]

The Real Reagan Economic Record: Responsible and Successful Fiscal Policy
by Peter B. Sperry, Ph.D.
Backgrounder #1414


March 1, 2001 | |



See also: The Truth About Tax Rates and The Politics of Class Warfare
by Daniel J. Mitchell, Ph.D.

After President George W. Bush sent Congress an outline of his tax reform plan on February 8, some critics immediately began to attack it as a return to what they portray as the fiscally irresponsible policies of the Reagan Administration. According to these commentators, Congress should scale back--if not outright reject--President Bush's tax reform proposals because they are based on a period when the wealthy received excessive tax cuts and revenue was wasted on defense even though most Americans struggled in poverty. This is a revisionist view of recent history that ignores reality and denies the fact that President Reagan's sound policies and determination deserve much of the credit for the current economic picture. Congress should embrace President Bush's tax reform plan as a responsible return to the most successful economic policy of the 20th century.

President Ronald Reagan's record includes sweeping economic reforms and deep across-the-board tax cuts, market deregulation, and sound monetary policies to contain inflation. His policies resulted in the largest peacetime economic boom in American history and nearly 35 million more jobs. As the Joint Economic Committee reported in April 2000:2

In 1981, newly elected President Ronald Reagan refocused fiscal policy on the long run. He proposed, and Congress passed, sharp cuts in marginal tax rates. The cuts increased incentives to work and stimulated growth. These were funda-mental policy changes that provided the foundation for the Great Expansion that began in December 1982.

As Exhibit 1 shows, the economic record of the last 17 years is remarkable, particularly when viewed against the backdrop of the 1970s. The United States has experienced two of the longest and strongest expansions in our history back to back. They have been interrupted only by a shallow eight-month downturn in 1990-91.








Even with the growing surplus, however, a small but vocal faction in Congress opposes any policies that would allow taxpayers to keep more of their own money through real tax cuts and that generally would shift power from the government to the people. This attempt to rewrite history should not be surprising. Proponents of additional government spending try to make the Reagan boom appear to be a bust because they fear that Reagan's success will help President Bush build popular support for lower taxes, further deregulation, and reduced government spending. But their rhetoric is easily countered by the evidence.

History confirms the soundness of the Reagan, and now Bush, approach to economic policy. Under President Reagan, federal revenues increased even with tax cuts, federal spending did not decrease, the country experienced the longest period of sustained growth during peacetime in its history, and the rich paid more taxes proportionately than they had before the tax cuts were implemented.

HOW DID THE REAGAN TAX CUTS AFFECT THE U.S. TREASURY?
Many critics of reducing taxes claim that the Reagan tax cuts drained the U.S. Treasury. The reality is that federal revenues increased significantly between 1980 and 1990:

Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990. In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.3

As a percentage of the gross domestic product (GDP), federal revenues declined only slightly from 18.9 percent in 1980 to 18 percent in 1990.4

Revenues from individual income taxes climbed from just over $244 billion in 1980 to nearly $467 billion in 1990.5 In inflation-adjusted dollars, this amounts to a 25 percent increase.
HOW DID REAGAN'S POLICIES AFFECT FEDERAL SPENDING?
Although critics continue to focus on President Reagan's budget "cuts," federal spending rose significantly during the 1980s:

Federal spending more than doubled, growing from almost $591 billion in 1980 to $1.25 trillion in 1990. In constant inflation-adjusted dollars, this was an increase of 35.8 percent.6

As a percentage of GDP, federal expenditures grew slightly from 21.6 percent in 1980 to 21.8 percent in 1990.7

Contrary to popular myth, while inflation-adjusted defense spending increased by 50 percent between 1980 and 1989, it was curtailed when the Cold War ended and fell by 15 percent between 1989 and 1993. However, means-tested entitlements, which do not include Social Security or Medicare, rose by over 102 percent between 1980 and 1993, and they have continued climbing ever since.8

Total spending on all national security programs never equaled domestic spending, even when Social Security, Medicare, and net interest are excluded from domestic totals. In addition, national security spending fell during the Administration of the senior President Bush, while domestic spending increased in both mandatory and discretionary accounts.9 (See Chart 1.)






HOW DID REAGAN'S POLICIES AFFECT ECONOMIC GROWTH?
Despite the steep recession in 1982--brought on by tight money policies that were instituted to squeeze out the historic inflation level of the late 1970s--by 1983, the Reagan policies of reducing taxes, spending, regulation, and inflation were in place. The result was unprecedented economic growth:

This economic boom lasted 92 months without a recession, from November 1982 to July 1990, the longest period of sustained growth during peacetime and the second-longest period of sustained growth in U.S. history. The growth in the economy lasted more than twice as long as the average period of expansions since World War II.10

The American economy grew by about one-third in real inflation-adjusted terms. This was the equivalent of adding the entire economy of East and West Germany or two-thirds of Japan's economy to the U.S. economy.11

From 1950 to 1973, real economic growth in the U.S. economy averaged 3.6 percent per year. From 1973 to 1982, it averaged only 1.6 percent. The Reagan economic boom restored the more usual growth rate as the economy averaged 3.5 percent in real growth from the beginning of 1983 to the end of 1990.12
HOW DID REAGAN'S POLICIES AFFECT THE FEDERAL TAX BURDEN?
Perhaps the greatest myth concerning the 1980s is that Ronald Reagan slashed taxes so dramatically for the rich that they no longer have paid their fair share. The flaw in this myth is that it mixes tax rates with taxes actually paid and ignores the real trend of taxation:

In 1991, after the Reagan rate cuts were well in place, the top 1 percent of taxpayers in income paid 25 percent of all income taxes; the top 5 percent paid 43 percent; and the bottom 50 percent paid only 5 percent.13 To suggest that this distribution is unfair because it is too easy on upper-income groups is nothing less than absurd.

The proportion of total income taxes paid by the top 1 percent rose sharply under President Reagan, from 18 percent in 1981 to 28 percent in 1988.14

Average effective income tax rates were cut even more for lower-income groups than for higher-income groups. While the average effective tax rate for the top 1 percent fell by 30 percent between 1980 and 1992, and by 35 percent for the top 20 percent of income earners, it fell by 44 percent for the second-highest quintile, 46 percent for the middle quintile, 64 percent for the second-lowest quintile, and 263 percent for the bottom quintile.15

These reductions for the lowest-income groups were so large because President Reagan doubled the personal exemption, increased the standard deduction, and tripled the earned income tax credit (EITC), which provides net cash for single-parent families with children at the lowest income levels. These changes eliminated income tax liability altogether for over 4 million lower-income families.16
Critics often add in the Social Security payroll tax and argue that the total federal tax burden shifted more to lower-income groups and away from upper-income groups; but President Reagan's changes were in the income tax, not in the Social Security payroll tax. The payroll tax was imposed by proponents of big government over the past 50 years, and it is they, not Ronald Reagan, who should be held accountable for its distributional effects.

Nevertheless, even if one counts the Social Security payroll tax, the share of total federal taxes increased between 1980 and 1989 for the following groups:

For the top 1 percent of taxpayers, from 12.9 percent in 1980 to 15.4 percent in 1989;

For the top 5 percent of taxpayers, from 27.3 percent in 1980 to 30.4 percent in 1989; and

For the top 20 percent of taxpayers, from 56.1 percent in 1980 to 58.6 percent in 1989.
On the other hand, the share of total federal taxes, if one includes the Social Security payroll tax, declined for four groups:

For the second-highest 20 percent of taxpayers, from 22.2 percent in 1980 to 20.8 percent in 1989;

For the middle 20 percent of taxpayers, from 13.2 percent in 1980 to 12.5 percent in 1989;

For the second-lowest 20 percent of taxpayers, from 6.9 percent in 1980 to 6.4 percent in 1989; and

For the lowest 20 percent of taxpayers, from 1.6 percent in 1980 to 1.5 percent in 1989.17
CONCLUSION
No matter how advocates of big government try to rewrite history, Ronald Reagan's record of fiscal responsibility continues to stand as the most successful economic policy of the 20th century. His tax reforms triggered an economic expansion that continues to this day. His investments in national security ended the Cold War and made possible the subsequent defense spending reductions that are largely responsible for the current federal surpluses. His efforts to restrain the expansion of federal government helped to limit the growth of domestic spending.

If Reagan's critics had been willing to work with him to limit domestic spending even further and to control the growth of entitlements, the budget would have been balanced five to ten years sooner and without the massive tax increase imposed in 1993. Today, Members of Congress from across the political spectrum should stand on the evidence and defend the Reagan record.

To the extent that President Bush's proposals mirror those of Ronald Reagan, his plan should be a welcome strategy to lower the tax burden on Americans and to make the system more responsible. If the advocates of big government in Congress cooperate with President Bush rather than merely continuing to fund obsolete, wasteful, and redundant programs, there is no limit to the prosperity that Americans can generate.

[FORD]

Another major success of the Clinton years is the drop in poverty. Poverty dropped 3.8% under Mr. Clinton and 1% under Mr. Reagan (beginning term to ending term). Average poverty was 13.28% under Mr. Clinton and 15.82% under Mr. Reagan or 2.54% lower under Mr. Clinton on average (15.82-13.28=2.54). However, it should be noted the recession caused poverty to spike up 1.2% in years two and three (1982 and 1983) under Mr. Reagan.

[lucky wilbury]

look at all those numbers how they are much higher under reagan then clinton. more jobs,higher gdp,higher take home pay etc etc etc

[ELVIS]

The $379 million was spent creating 21 million jobs...

Clinton rode the wave...

[FORD]

By the first year of Mr. Reagan's term the US has accumulated $994.8 billion in debt from all previous years. In just eight years Mr. Reagan increased the debt to $2.6 trillion or an increase of $1.6 trillion. This figure represents the largest accumulation of debt of any president in history and almost twice as much debt as all previous president combined.

Mr. Reagan gave us more debt than any president in history.

Mr. Bush promised to pay down the debt in 10 years but in 2002 projects he'll increase it by over $2 trillion. Knowing what I know about republican presidents they seem to always under project what they're going to spend. Thus, it's highly likely the debt projections will increase over the next three years.

Obviously this last bit of info needs to be updated. Junior has already trumped Reagan in the debt category

[FORD]

This category clearly shows the successes and failures of the two presidents. Total debt as a percent of our economy grew from 25.8% to 40.9% in eight years under Mr. Reagan. This debt represents future taxes plus interest.

Under Mr. Clinton the debt dropped from 49.5% of gdp to 35.0%. While Mr. Clinton wasn't able to completely undo the fiscal disaster of Mr. Reagan he began the process. It's now up to a future president to decide if this success will continue or if deficits and debt will once again be with us.

Under Mr. Bush the debt as a percent of the economy is projected to increase from 56.8% of the economy to 58% by 2007. Placing this in historical perspective, the debt dropped throughout the 50's, 60's, and 70's then began a steep increase from 1982-1996. From 1997-2001 the debt dropped again and is once again going up. Clearly republican tax cuts and spending programs are having a devastating effect on this number.

[lucky wilbury]

http://post.economics.harvard.edu/fa...bw99_02_22.pdf havard says reagan was better

[FORD]

Manufacturing rose considerable faster under Mr. Clinton. Mr. Reagan however had a slight dip during the recession in 1982 and 1983 (years 2 and 3). The explosion of growth in manufacturing is another clear sign that Mr. Clinton's policies were far more successful than Mr. Reagan's. Some argue it was the dot.com's, but this is incorrect. The NASDAQ, which represented the dot.com's wasn't the only index that rose. More on this in the four stock indexes. One needs to recall it was during the 1980's cable TV began. The boom to the economy from that new technology is often forgotten when making comparisons between the 1980's and the 1990's.

[ELVIS]

You can't win FORD

[FORD]

Not only were the Clinton policies good for the budget, but corporate America also enjoyed some very good times. In this chart we can better see this success. Corporate profits increased by $143.5 billion under Mr. Reagan and a whopping $326.6 billion under Mr. Clinton. The dip in profits in 1982 and 1983 (years 2 and 3) under Mr. Reagan were caused by the recession. On the other hand, corporate profits peaked in 1997 (year 5) under Mr. Clinton, then dropped slightly before continuing to soar. More research needs to be done to determine the causes of this dip. However, it needs to be noted strongly the dip lasted just two years before posting record profits in the last year of Mr. Clinton's term.

This number always blows me away. Corporate profits in the US were $833.0 billion in 2000. The rest of the world had $136.8 billion (Table B-11--Economic Report of the President, 2002). Putting this in perspective, at the end of Mr. Reagan's term US corporations had $303.1 billion more profits than the rest of the world combined. In the final year of Mr. Clinton, corporations had $696.2 billion more. Not bad in just eight years.

[lucky wilbury]

ford you can spam all you want from your unknow source i wonder why you not providing it? but still the numbers show reagan was better

[lucky wilbury]

oh i know why your using a tripod source that doesn't even list its source for it's info poor you ford http://members.tripod.com/~zzpat/graphs.htm

[FORD]

A picture is worth a thousand words. This index like those that follow, show a dramatic increase in investments. The DJIA tracks 30 stocks. The Investment Led Super Boom of the Clinton years is truly historic. Those who think hi-tech (mostly in the NASDAQ) fueled our economic boom are sadly mistaken. The boom was in almost every type of stock including the Dow Jones Industrial Average. Note the drop in year 8 (1988) under Mr. Reagan. This was years before the recession so it can't be blamed on that. Also, note the massive high in 2000 under Mr. Clinton, less than a year before another recession hit. The current recession (2002) will be very weak compared to the Reagan recession because the economy was so strong going in to it. Unemployment too was far higher prior to the Reagan recession than the recessions under Bush Sr. and Bush Jr.

[b]The last three recessions came under republican presidents, Reagan in 1981, Bush Sr in 1991 and Bush Jr in 2001. Stocks suffer minor losses during recessions and recover quickly on average.

again, nobody's predictions can be perfect all the time. He definitely called the depth of Junior's recession wrong

[lucky wilbury]

Originally posted by ELVIS
You can't win FORD

he can't even get good numbers either