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It was G.H.W. Bush's description of R. Reagan's proposed tax policy during the 1980 Republican Primary. He was concerned about the hypothesis that cutting taxes would actually raise federal revenue; thereby, reducing deficits.
Maybe it could have worked if government spending wasn't increased during that same period. The policy was discredited when spending was never scaled back, and the experiment ended when Reagan signed off on tax legislation that raised taxes in his second term.
I wouldn't call the Obama administration's policy "voodoo". I would call it "bluff" economics. Anteing up as much money as one can in order to draw out a win; in this case to defeat the lack of confidence inherent in a recession.
I've been looking for that one elusive thread that seeks to elevate the dialog here in the P&OC forum, and by God, I think I just found it. It's the "hee-haw" that really clinches it.
I remember Reagan-nomics very well. Nancy would wear Red and conduct her psychic meetings while Ronnie slept, and slept.
She was the CIC. So we really can't blame him.
It was G.H.W. Bush's description of R. Reagan's proposed tax policy during the 1980 Republican Primary. He was concerned about the hypothesis that cutting taxes would actually raise federal revenue; thereby, reducing deficits. Maybe it could have worked if government spending wasn't increased during that same period.
Reagan's campaign promises were to cut taxes sharply, dramatically increase defense spending, and balance the budget in three years. LOL.
Quote:
Originally Posted by geofra
The policy was discredited when spending was never scaled back, and the experiment ended when Reagan signed off on tax legislation that raised taxes in his second term.
That would be true if 1982 had been in Reagan's second term. The 1982 tax increase was the largest in US history to that point in time. As a percent of GDP, it was larger than the Clinton tax increase in 1993. That was followed by massive increases in payroll taxes in 1983, then smaller tax increases in 1984 and 1985, and then the big tax overhaul in 1986 that was also an increase disguised as "revenue enhancements" and "loophole closing". That's the one thing you can give Reagan some credit for. When his voodoo theories all failed miserably in practice, he was smart enough to get rid of all his supply-side advisors and march off in a different direction.
Quote:
Originally Posted by geofra
I wouldn't call the Obama administration's policy "voodoo". I would call it "bluff" economics. Anteing up as much money as one can in order to draw out a win; in this case to defeat the lack of confidence inherent in a recession.
The first steps -- begun by Bush -- were flat-out mandatory interventions through existing and newly-defined facilities to keep the financial system not just in the US, but globally, from crashing altogether. This required a lot of money, a lot of thought, and the sort of international cooperation that Bush by that point could not have pulled off. The second steps were to shore up as best we could the domestic economy. Those steps were unfortunately scaled down owing to the necessity of recruiting at least some Republican support in order to get any package passed, but the stimulus bill did in the end put significant resources behind all of its objectives. Those were --
1) To preserve and create jobs and promote economic recovery.
(2) To assist those most impacted by the recession.
(3) To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
(4) To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
(5) To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.
That isn't voodoo. That isn't bluffing. That's putting serious dollars into a broad-based plan of short-, medium-, and long-term economic relief and support. Would twice as much have been better? Yup, especially given the momentum that the recession had acquired by the time any of these policies went into effect. But you couldn't have gotten that. Nothing close to it. You got the best that was obtainable under the circumstances, and what there was of it has worked almost exactly as planned and anticipated.
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