Originally posted by: BigDH01
Originally posted by: AFMatt
Reagan inherited an economy in far worse shape than what we are dealing with now, and turned it around. 1982-1990 = second longest period of straight economic growth in our history. Did government spending go up? Sure it did. Did % of gov't spending compared to GDP go up? Nope. Dems will pick him apart because he didn't believe in government handouts.
It is a fact that economic growth averaged 3+% during the Reagan years compared to 2.1 average for the following Bush and Clinton years. Median family income grew by $4,000 during his presidency, then lost $1500 after. Interest rates, which were sky high when he took over for Carter, inflation (also sky high), and unemployment fell faster under Reagan than they did after he left. Unfortunately, some of Reagan's tax cuts caused the defecit to explode near the end. Obama's plan would likely have a very similar effect in that area.
Under Reagan, the US went from the world's largest creditor nation to the world's largest debtor nation. An argument can certainly be made that our growth under Reagan and post-Reagan is largely the result of our accumulation of debt, both personal and federal. Even Reagan hated the amount of new debt.
There was also a change in personal behavior. People went from saving to consuming, thereby encouraging economic growth.
The interest rates were high in an attempt to reduce inflation. This was known as the Volcker shocks. After he felt inflation was controlled, he lowered interest rates. He had far more impact in this area than Reagan did, just as Greenspan had far more to do with the recent problems than Clinton did or W does.
You also have to account for exogenous events such as the energy crisis under Carter that helped spur inflation.
In other words, lots of things happened during the Reagan-era that contributed to economic growth. Reagan's policies, Volcker, human behavior, and decrease in the price of oil.
I personally believe that 10 years from now that Reaganomics will be seen as a failure. This includes both trickle-down and supply-side economics. Trickle-down has done nothing but concentrate wealth in this country and supply-side has created massive amounts of public debt. In my opinion, the only reason the current system has lasted as long as it has is because of a massive amount of debt. The reality is that consumers don't have the required real money to support supply-side any longer. I mean honestly, the government is selling 900 billion in bonds just to get money into the hands of lenders who can then loan to strained consumers. It has put us in a very precarious position. If the consumer debt train stops, the whole game is over.
But people need to remember that bad fiscal policy can be somewhat counteracted by good monetary policy. In this way, policy decisions can be dampened. However, poor fiscal policy can be exacerbated by mad monetary policy. Did I mention I dislike Greenspan?
Also, Reagan did support at least some handouts. The earned income tax credit being one example.
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