Sunday, February 15, 2009

Reaganomics 101

Warning: The following contains proven economic principles which counter everything a Democrat supports. If you find this offensive, please continue reading anyways. The current administration's agenda will not help fight the recession and could use a lesson from Ronald Reagan.

4 Pillars of Reaganomics
1. Less government spending
2. Low taxes
3. Low regulation
4. Control the money supply to reduce inflation

Reagan believed that more wealth equaled for everyone was better for the country. "Trickle-down economics" provides tax cuts for individuals and businesses which allows these companies to pay employees more, invest more in research and development, and expand the size and scope of businesses. Is there proof of Reagan's success? Absolutely! Even while facing a recession unemployment fell drastically creating nearly 16 million new jobs and increasing annual household income by over $4,000. All of this in the midst of a recession.

Obama and his administration want to increase tax rates (as witnessed during his 2008 campaign speeches), take "windfall profits" from companies that actually run a business efficiently and turn profits, "spread the wealth" as Biden says, and increase social programs for those who don't even pay taxes in the first place. The lower 40% of income earners currently pay zero (yes, zero) dollars in taxes. Obama wants to incease this amount to 50%. Who will these individuals vote for?

The stimulus package that just passed in Congress will cost Americans over $1.3 trillion in the long run. We can't continue to think America can spend its way out of this economic crisis. We have to lower taxes, provide incentives and opporunities for private businesses to create new jobs, and drastically slash government spending. Government spending is already spinning out of control and this administration has proven it's going to continue the trend.

1 comment:

  1. Reganomics = fail

    Regan greatly increased military spending, which helped bouy the economy during the recession (government spending to counter a ressesion, how Keynesian of him). It was due to Reagan that Bell Helipcoter, Lockhead Martin, and a swath of other defense industries and technology companies became strong for the next 25 years, because of Regan's government spending.

    What killed Bush, was not his excessive spending, it was his short sighted tax cuts. You can't cut taxes and then increase spending and expect not to go into tremendous debt. Clinton, a democrat, fought together with a Republican controlled congress to balance the budget and left his successor with a substantial government surplus.

    Besides, tax cuts for business and the extreme wealthy have not been proven (at least by anyone other than the Heritage Society) to substantially provide incentive for business to hire more people, or pay higher salaries. Business will expand as demand allows and demand profits, tax cuts provide no incentive to hire new workers if the consumers buying their product do not justify the need for more employees to create more product.
    This is especially true in the united states, which has a fairly moderate tax code, compared with other modern countries. Small changes do not provide adequate stimulus and serve to only put the government further in debt.

    This stimulus bill that is so derided by my friends on the right contains the largest tax cut ever awarded the American people. It is shocking that not one republican in the house voted for a TAX CUT, that's your bread and butter people.

    A little, and I mean little, inflation right now would be nice. With oil prices and other commodities like steel being so low right now it is hurting our economy. We are on the brink of entering a period of deflation, one of the most lethal killers of any economy. When prices shoot through the floor, and like the people with homes in Arizona, retailers are on the hook for goods that they can not sell cheap enough to entice buyers.

    Finally, what is the right's recommendation during this recession. Most all economist agree that some stimulus is needed. You can't just tell me tax cuts alone, because the most recent bill was 45% tax cuts and that got shoot down.

    Capital gains tax cuts? Give me a break, no one is earning any capital gains right now.

    I propose a bail out of recent graduates in the last 10 years that hold a college degree of their student loans. That money would pay off the student loans which would provide capital to the lending institutions that would make them more solvent and able to lend again.

    Then those who had their student loans paid off (degree holders in the last 10 years) would be extremely likely to go out and spend the money they saved from no longer having to pay student loans (something the we need from the economy, likely spenders, another reason why tax cuts for extreme rich don't "tinkle" down because they are unlikely to be as adversely affected in their spending habits)

    So these young middle class workers, take their college loan savings and start buying homes (with my student loan payment I could afford a house) which would help the housing industry rebound, they would buy cars which would help the auto industry, they would take vacations, buy boats, large tvs, etc. All of which would help our economy.

    This doesn't reward people for doing nothing, or for making babies, or for being on welfare, it rewards those who worked hard to get an education and are now productive members of society. What could be bad about this plan? Especially if you agree that some stimulus needs to happen.

    As always, appreciate you post and enjoy having some intelligent to debate with. Caleb