Were Raeganomics really all that bad?

[geldonyetich]

Well I've heard plenty of people say Reaganomics ruined the western business sectors and completely buggered up the economy but if people benefitted from it could it have really been as bad as people say?

Sure, that polio vaccine killed millions, but a half-dozen people were made immortal! Could it really have been as bad as people say? Lets bring it back.

Funny way of thinking, that.

In any case, we've seen plenty of Reaganomics lately. Every time the Republicans have been in power since Reagan, they've brought it back like a crack addict in need of another hit. They're getting just as desperate and dangerous when denied their fix, too. The country can't survive much more of it. It might already be well beyond the breaking point.

 

[A Weary Exile]

Being born in 1992 I have only a small idea of what Reagonomics is but from what I heard it gave tax breaks to the rich which is a STUPID IDEA!

I hate it when people make comments like this, IRL or on the internet. It just shows how ignorant people are when it comes to principles of economics and free market capitalism.

It's none of our business how much people make! What right does anyone have to limit anyone else's potential? That includes the government.

Whatever happened to the concept of equality? Nowadays equality is being replaced with the idea of "fairness". Equality is objective, fairness is subjective. Equality is obvious. Fairness depends on someone to decide what "fair" is and then take action to punish or reward someone to make sure things remain "fair". I'll take equality over fairness any day.

I make $5 a day. If I'm taxed 10% of my income, so should the guy who makes $5 million a day.

Reagonomics are sound economic principles and policies that people should emulate. Anyone who understands the principles of economics and the capitalist free market system can speak to this.

So your idea of equality is letting people who make more money pay less taxes and the ones who make less pay more? Taxes should be directly proportional to income.

And if you want to talk about limiting people's potential how about the fact that my family can barely pay our bills, because they're so high, even though they work 50+ hours a week? My parents are honest, hard-working people; why can't their taxes be lowered?

How is 10% of $5,000,000 less than 10% of $5? Explain that to me.

Your story is heartbreaking but your argument is an appeal to emotion. You're advocating inequality (taxing some people more than others) based purely on emotional grounds. If you wanted to reduce taxes for everyone, that would be a different matter entirely.

I'm not advocating that.

My parents don't pay the same percentage as richer people, that is the problem, they pay a much higher percentage and as a result can often not make end's meet. There should be a standard percentage to pay in taxes; but it seems that the government only lowers taxes for the rich and keeps the lower-class taxes the same. And if you're wondering why I don't help them with the bills I do try, but no company will hire a high school student no matter if they're as eager to work as I am. All I want is a job where I can earn money not get money.

If you look on my profile you will see that I agree with Objectivism (However flawed the idea of 'Pure Capitalism' may be) which, to me, basically means that you are paid for merit and hard-work but that doesn't seem to be the case in today's society, no one wants to earn money they want to have money.

 

[Vim-Hogar]

So, even though I know what was meant by it, I can't help but read this thread's title as "RAGE-O-NOMICS", which would certainly be a different economic system.

As for Reaganomics, all I can say is that I don't remember as much econ from high school as I thought I did. And that I never would have expected Firefox's spell checker to have "Reaganomics" as a word.

 

[tan-z]

to me, basically means that you are paid for merit and hard-work

Funny, one could almost interpret this as a statement in support of the Marxist Labour Theory of Value......

The fact is that people should be paid for doing hard work, which is why capitalism is utter tosh. Most of the people at the top didn't get there through hard work. Those were the people reagonomics benefited mostly by the way, which is why yes, reagonomics really was that bad.

 

[Vim-Hogar]

My parents don't pay the same percentage as richer people, that is the problem, they pay a much higher percentage...

What? How so? I see you live in the US; the income tax rate definitely increases as income increases. Even if you account for the money many rich people save by hiring accountants to find tax loopholes and whatnot, they still would end up paying a higher percentage than your parents do, I'm pretty sure.

 

[timmytom1]

What the hell is 'Raeganomics'?
I've never heard of it.
and If it's a mis-spelling of something... I probably still haven't heard of it.

I think it`s similar to thatcherism (if you happen to be from the UK you`ll know or know someone who knows what that is)

EDIT:I see someone else provided a far more straightforward answer so nevermind

 

[lukemdizzle]

yes they were and yes they are

 

[cleverlymadeup]

Being born in 1992 I have only a small idea of what Reagonomics is but from what I heard it gave tax breaks to the rich which is a STUPID IDEA!

I hate it when people make comments like this, IRL or on the internet. It just shows how ignorant people are when it comes to principles of economics and free market capitalism.

It's none of our business how much people make! What right does anyone have to limit anyone else's potential? That includes the government.

Whatever happened to the concept of equality? Nowadays equality is being replaced with the idea of "fairness". Equality is objective, fairness is subjective. Equality is obvious. Fairness depends on someone to decide what "fair" is and then take action to punish or reward someone to make sure things remain "fair". I'll take equality over fairness any day.

I make $5 a day. If I'm taxed 10% of my income, so should the guy who makes $5 million a day.

Reagonomics are sound economic principles and policies that people should emulate. Anyone who understands the principles of economics and the capitalist free market system can speak to this.

actually Reagonomics was what caused all the financial issues of the early 90s and the big crash the market had, it was also behind the one this decade as well

see giving big tax breaks to those who make more isn't a good thing, they can afford to pay a lot more tax than everyone else, also they can hire people to get them even more tax breaks and loop holes. it's not good economics, it's actually horrible

 

[Nmil-ek]

Being born in 1992 I have only a small idea of what Reagonomics is but from what I heard it gave tax breaks to the rich which is a STUPID IDEA!

I hate it when people make comments like this, IRL or on the internet. It just shows how ignorant people are when it comes to principles of economics and free market capitalism.

It's none of our business how much people make! What right does anyone have to limit anyone else's potential? That includes the government.

Whatever happened to the concept of equality? Nowadays equality is being replaced with the idea of "fairness". Equality is objective, fairness is subjective. Equality is obvious. Fairness depends on someone to decide what "fair" is and then take action to punish or reward someone to make sure things remain "fair". I'll take equality over fairness any day.

I make $5 a day. If I'm taxed 10% of my income, so should the guy who makes $5 million a day.

Reagonomics are sound economic principles and policies that people should emulate. Anyone who understands the principles of economics and the capitalist free market system can speak to this.

This is an attitude I will never understand, so your fine with a large percentage of working class people being pissed on so a few others can have mountains of wealth stored away they will never touch? Is it right for 1% of the earths population to own 40% of the wealth and not suffer heavy taxation for it fuck no. America is one of if not the only country with such strong capitalistic views in Europe there are anti-monopolization and preventations for monopalies because it's fairly obvious how saturated and corrupt buisness become without proper competition. Its like how some Americans bang on about this free market capitalist shite but suddenly there petrol cost goes up then suddenly its not the same tune anymore is it?

 

[Ethereal]

A lot of people are missing the point of Reaganomics.
It was a plan created to support a more conservative economy.

Yes, it cut the taxes of those who earn larger salaries, but it did not tax those who earned less any more.
The basic idea was that the government should start taking less money from EVERYONE and stop spending so much of its money frivolously.

Think about it this way:
Did you support the big bank bailouts that costs millions and actually did little other than inflate the CEO's wallets? (Lets assume you said no)

Would you have supported it anymore if only the rich had to pay for it? (Think about the impact businesses would have if all the wealthy Americans had to pay for various government projects alone)

Wouldn't it be much more fair to use our money more effectively and quit taking from the rich just because we can? (For example, taking that same money and creating a bailout for the American people, etc)

Well that's a conservative viewpoint (Yes this is probably a very flawed analogy, but it's the best I could think of on the spot.)

Essentially shrink the overall "American Salary" (The money we get from taxes), and keep the money in the hands of Americans and most importantly spend very little on government projects/programs.

 

[Novan Leon]

There's also a practical argument, which Wouldyoukindly's story leads to. Under a flat-tax system, the amount of revenue the government can raise is capped at a certain level, because taxing an income of $20k 20% leaves only $16k, while that same tax rate on $100k leaves $80k. Taking 20% from the poor family may make the difference between eating thrice daily and twice, while taxing the richer family at the same rate makes the difference between a Beemer and a Honda. The amount of the money taken may be greater, but its effect is much smaller. A progressive tax regime (one which taxes higher income brackets at a higher rate) allows higher revenues without wiping out poor taxpayers.

This may be true on paper, but in practice that extra money that the higher income group earns also goes to growing the size of business, hiring new employees, increasing employee wages, etc. This, in turn, contributes to the strength of the economy and ends up helping people in every tier.

This is besides the point though. By doing away with the principle of equality, you're opening the door to pandora's box and a myriad of issues crop in. Like I said earlier, equality is objective. If you get away from an objective standard, you open up room for subjective decisions that really nobody, including government, has the right to make.

My parents don't pay the same percentage as richer people, that is the problem, they pay a much higher percentage and as a result can often not make end's meet. There should be a standard percentage to pay in taxes; but it seems that the government only lowers taxes for the rich and keeps the lower-class taxes the same. And if you're wondering why I don't help them with the bills I do try, but no company will hire a high school student no matter if they're as eager to work as I am. All I want is a job where I can earn money not get money.

I don't buy anything you're saying here. If you live in the USA you're parents definitely DO NOT pay a higher percentage in taxes than higher earners. When was the last time you filled out a tax form? Also, I can't recall a time when the government has EVER lowered taxes only for the rich. Perhaps you can provide some specifics to back this up?

The fact is that people should be paid for doing hard work, which is why capitalism is utter tosh. Most of the people at the top didn't get there through hard work. Those were the people reagonomics benefited mostly by the way, which is why yes, reagonomics really was that bad.

Who are you to say how people should be paid? This kind of blind arrogance is dangerous to say the least. The free market determines how much money people make based on supply and demand. It's none of yours or my business how much money people make or how they make it (as long as it's not illegal of course).

actually Reagonomics was what caused all the financial issues of the early 90s and the big crash the market had, it was also behind the one this decade as well

I call nonsense. You're going to have to support that claim.

see giving big tax breaks to those who make more isn't a good thing, they can afford to pay a lot more tax than everyone else, also they can hire people to get them even more tax breaks and loop holes. it's not good economics, it's actually horrible

Nobody is giving anyone a "big tax break". That's just playing with words. If we move from a progressive tax rate where the wealthy are taxed at a considerably higher percentage than everyone else, to a flat tax rate where everyone is taxed at the same percentage, how is that a "big tax break" for the rich? We'd basically be returning from placing an unequal tax burden on specific group of people to taxing everyone equally. We're moving from a subjective standard (because Joe American decided that people who make more than X deserved to be taxed more) to an objective one.

This is an attitude I will never understand, so your fine with a large percentage of working class people being pissed on so a few others can have mountains of wealth stored away they will never touch? Is it right for 1% of the earths population to own 40% of the wealth and not suffer heavy taxation for it fuck no. America is one of if not the only country with such strong capitalistic views in Europe there are anti-monopolization and preventations for monopalies because it's fairly obvious how saturated and corrupt buisness become without proper competition. Its like how some Americans bang on about this free market capitalist shite but suddenly there petrol cost goes up then suddenly its not the same tune anymore is it?

Your arguments are completely emotional, you're assigning moral values to possession of material goods, and you make an argument for some unknown moral judge to make unilaterial decisions about what amount of wealth can be considered right or wrong. This is scary stuff.

Besides that, your assumptions about wealth going in some magic closet and never being touched is completely incorrect. The majority of wealth is always in circulation, invested in companies, used to improve existing markets, etc. etc.

You make many false assumptions, but worst the thing is, you buy into this false belief that wealth and prosperity is a zero-sum game. It's not. Just because I have a lot of money doesn't automatically mean that someone else has to have less. Wealth grows and increases (and decreases) on a regular basis, meaning that it's quite possible for everyone to grow more wealthy at the same time. How else do you explain the high standard of living we have here in the USA compared to the rest of the world, or even ourselves a few decades ago? If wealth was a zero-sum game, this would be impossible.

*sigh* I hope that helps clear things up in some way.

 

[Horticulture]

This may be true on paper, but in practice that extra money that the higher income group earns also goes to growing the size of business, hiring new employees, increasing employee wages, etc. This, in turn, contributes to the strength of the economy and ends up helping people in every tier.

There's little debate that decreasing tax rates has some degree of stimulating effect on the economy as a whole, but to interpret that as a justification for any tax cut at any time is a mistake. But I digress. The economic stimulus effects of a tax adjustment are separate from its effects on government revenue.

Progressive taxes are essential for balancing the budget of a government that does even a fraction of the things we take for granted (defense, highway and school funding, law enforcement, maintaining an effective foreign policy, etc.). It's simply not possible to fund these activities at a flat level of taxation that wouldn't place an unmanageable burden on the poor. The U.S. typically runs deficits with a progressive tax scheme in place.

I remain unconvinced that 'trickle-down economics' works as advertised, but that's a separate issue.

This is besides the point though. By doing away with the principle of equality, you're opening the door to pandora's box and a myriad of issues crop in. Like I said earlier, equality is objective. If you get away from an objective standard, you open up room for subjective decisions that really nobody, including government, has the right to make.

Attempting an objective definition of equality in the context of economics is more trouble than herding cats. One might say that it's equality for workers to be paid the same hourly wage. One could say that all people should have the same standard of living, or that everyone should simply be left alone to fail or prosper. One might say that everyone should pay the same absolute amount, or the same portion of their income, or that it's inherently unequal for wealth to be redistributed at all.

Ultimately, it doesn't really matter. This is public policy, not public philosophy.

Any government policy, and most certainly the budget, is subjective. Priorities must be made, and scarce resources allocated between hundreds of seemingly worthy initiatives. The money for this has to come from somewhere, and, again, it must be collected according to a scheme that can raise sufficient revenue.

I don't know the role of government that you hope for or envision, but for anything close to the level of government spending we've seen in the United States over the past decades necessitates some degree of progressive taxation.

 

[thiosk]

Being born in 1992 I have only a small idea of what Reagonomics is but from what I heard it gave tax breaks to the rich which is a STUPID IDEA!

I hate it when people make comments like this, IRL or on the internet. It just shows how ignorant people are when it comes to principles of economics and free market capitalism.

It's none of our business how much people make! What right does anyone have to limit anyone else's potential? That includes the government.

Whatever happened to the concept of equality? Nowadays equality is being replaced with the idea of "fairness". Equality is objective, fairness is subjective. Equality is obvious. Fairness depends on someone to decide what "fair" is and then take action to punish or reward someone to make sure things remain "fair". I'll take equality over fairness any day.

I make $5 a day. If I'm taxed 10% of my income, so should the guy who makes $5 million a day.

Reagonomics are sound economic principles and policies that people should emulate. Anyone who understands the principles of economics and the capitalist free market system can speak to this.

So your idea of equality is letting people who make more money pay less taxes and the ones who make less pay more? Taxes should be directly proportional to income.

And if you want to talk about limiting people's potential how about the fact that my family can barely pay our bills, because they're so high, even though they work 50+ hours a week? My parents are honest, hard-working people; why can't their taxes be lowered?

The united states has among the MOST PROGRESSIVE tax systems in the world. Add that to the fact that 47 % of households-- thats 71 million people-- will pay no federal income taxes in 2009. NOT ONE RED CENT.

 

[cleverlymadeup]

actually Reagonomics was what caused all the financial issues of the early 90s and the big crash the market had, it was also behind the one this decade as well

I call nonsense. You're going to have to support that claim.

well let's see tax revenue was down due to the rich not paying as much, people weren't spending money cause they were broke from high taxation so the economy took a dive

see giving big tax breaks to those who make more isn't a good thing, they can afford to pay a lot more tax than everyone else, also they can hire people to get them even more tax breaks and loop holes. it's not good economics, it's actually horrible

Nobody is giving anyone a "big tax break". That's just playing with words. If we move from a progressive tax rate where the wealthy are taxed at a considerably higher percentage than everyone else, to a flat tax rate where everyone is taxed at the same percentage, how is that a "big tax break" for the rich? We'd basically be returning from placing an unequal tax burden on specific group of people to taxing everyone equally. We're moving from a subjective standard (because Joe American decided that people who make more than X deserved to be taxed more) to an objective one.

you seriously believe that the super rich pay a lot in taxes? sorry but they don't, see they can hire enough accountants that know the loopholes they can receive and there by get away with not paying taxes. yes you heard me right there are a bunch of the super rich that don't pay any taxes what so ever.

sure some of it is donations here and there but the majority of them get paid a ton of money that's free and clear of any tax thanks to stuff like reganomics. Bush Jr was big proponent of that type of taxation he continually cut the taxes and gave more breaks to the super rich than he did to the middle or lower class, who are the ones that really needed it.

seriously go find out how much some people that make 100 million plus a year get taxed, i'll tell you right now it's no where near 50 million a year

 

[TheSchaef]

My parents don't pay the same percentage as richer people, that is the problem, they pay a much higher percentage and as a result can often not make end's meet.

The top tax rate is 36%. If your parents are paying more than that, someone is taking them for a ride.

There should be a standard percentage to pay in taxes; but it seems that the government only lowers taxes for the rich and keeps the lower-class taxes the same.

This is the danger of using simplified rhetoric like "tax breaks for the wealthy". If a person is paying $500k in taxes one year, and $450k in taxes the next, and your tax bill goes from $300 to $250, yes, his tax break is much more substantial, but I don't think you're arguing that you also should get 50k back from the government when you only put in 300?

Additionally, look at some of the Bush tax policies. Aside from lowering tax rates, he also created a new bottom tax bracket, a 10% bracket under the 15% bracket. This lowered taxes for everybody, because everybody pays 15% (now 10%) on that first $6k (that was where the infamous $300 refund check came from in 2001).

Child tax credits were doubled over a period of several years. Everybody with a child gets that benefit, not just rich parents, and the total amount is the same. Just as a 5% cut means a lot more to a millionaire than a hundredaire, I submit that an extra $1000 in tax credits is of much more benefit to the hundredaire.

The "marriage penalty" was reduced to the point where I believe it is now close to equal to the taxes applied to people filing separately. Again, this affects all married couples, not just the wealthy ones.

-----

A corollary to the theory of the Laffer Curve - which I don't see mentioned here yet but I think is worth discussing - is that of Hauser's Law, which suggests that the distribution of monies and the usage of tax shelters tends to balance out taxation such that tax revenues only ever amount to roughly 19.5% of the GDP. If this is true, several conclusions come into sharp relief:
- bickering over a couple percentage points on the tax scale only really amounts to class warfare, arguing over who pays what when the end result is effectively the same
- the most effective way to increase federal tax revenue is to increase the GDP, and allow the rising tide to raise the revenue boats.
- whatever the tax rates are and whatever other factors are in play, Congress should already have a fairly good idea of where the GDP will be for the coming year, and therefore be able to make reasonable guesstimations for the federal budget. If revenues are predicted to be 19-20% of the GDP and outlays are expected to be 40% of the GDP, it doesn't take a rocket scientist to know there's a problem.

well let's see tax revenue was down due to the rich not paying as much

Actually, this was not true either during the Reagan years nor the Bush years. Tax revenues doubled under Reagan, the problem was that federal spending tripled. By 2003, all of the Bush tax cuts were implemented and the worst aspects of both the dot-com bubble and 9/11 were behind us. For each of the next five years, the economy rose an average of 5% and tax revenue rose an average of 8%. Revenue levels in Bush's second term were roughly equal to the revenue levels of Clinton's second term.

 

[SamuraiAndPig]

I'm no expert on the US economy, but there seems to be a fundamental contradiction in loweing tax rates and raising government spending. Yeah, Reagan upped tax revenues but you have to look at where he got the money from. Up until him most of taxed money in this country came from tarriffs and business tax. Reagan lowered the business tax and cut programs like education and welfare to compensate. I saw the term "class warfare" earlier and that about sums it up - Reaganomics is wonderful if you're in the upper 5% of the income tax bracket and steals your food if you're anywhere else.

Not to mention social security reform, non-taxable forigen income, and other such anaomalies.

Reagan also advocated businesses selling producing jobs to other countries and then importing goods. Take televisions. In the 1970s the US was one the powerhouse producer of color TV sets. But by the end of the decade, the comanies shipped the production over to Japan. Back then, we were actually kicking Japan's ass in terms of technology, but now that they had the liscence to produce our products, the Japanese quickly took it, duplicated it, and undercut the hell out of the US market. By the 80s, you could by an American RCA set, which eventually became the *only* US-owned TV company, or you could buy a cheaper Japanese model of the same quality. The result was entire markets crashing down and tons lost in business tax, so again, the fed had to compensate. This isn't directly linkable to Reagan but does go back to the idea that government should stay out business. Which, again, seems to contradict itself when business pays for government.

 

[Novan Leon]

Attempting an objective definition of equality in the context of economics is more trouble than herding cats. One might say that it's equality for workers to be paid the same hourly wage. One could say that all people should have the same standard of living, or that everyone should simply be left alone to fail or prosper. One might say that everyone should pay the same absolute amount, or the same portion of their income, or that it's inherently unequal for wealth to be redistributed at all.

You're buying into the premise that someone needs to make these decisions. This should be left up to each individual to decide for themselves. If I'm willing to pay $100 markup for a toothpick and the toothpick company makes massive profits, that's between me and the toothpick company.

The idea that some overriding authority needs to make decisions about what is right or wrong, fair or unfair, when it comes to our personal decisions, is both ignorant and arrogant.

I don't know the role of government that you hope for or envision, but for anything close to the level of government spending we've seen in the United States over the past decades necessitates some degree of progressive taxation.

Exactly. This is why shrinking the size of government and reducing government waste is essential. This is a key tenet of Reaganomics by the way.

I don't think people realize how inefficient and wasteful the government really is. Other than the military, the IRS, and a very very few other select areas, there is almost nothing the government does better than the private sector.

well let's see tax revenue was down due to the rich not paying as much, people weren't spending money cause they were broke from high taxation so the economy took a dive

Nothing you're saying is correct. I'm not sure where you're getting these ideas.

you seriously believe that the super rich pay a lot in taxes? sorry but they don't, see they can hire enough accountants that know the loopholes they can receive and there by get away with not paying taxes. yes you heard me right there are a bunch of the super rich that don't pay any taxes what so ever.

sure some of it is donations here and there but the majority of them get paid a ton of money that's free and clear of any tax thanks to stuff like reganomics. Bush Jr was big proponent of that type of taxation he continually cut the taxes and gave more breaks to the super rich than he did to the middle or lower class, who are the ones that really needed it.

seriously go find out how much some people that make 100 million plus a year get taxed, i'll tell you right now it's no where near 50 million a year

You are talking about tax evasion, which is illegal. How in the world will taxing people more prevent tax evasion? It might even encourage it. You're not making any sense.

Reaganomics is essentially (1) reduce government spending, (2) reduce government regulation, (3) reduce taxes, and (4) reduce inflation. Unfortunately, because of the cold war and the military build up that was required, the first principle wasn't able to be met. Reagan did reduce regulation, taxes and inflation. Some believe it was the effort to reduce inflation that may have contributed to the recession in the 80's (since there was less money to go around).

 

[Novan Leon]

It just occurred to me that Obama's actions are exactly the opposite of Reaganomics. Obama is (1) increasing government spending, (2) increasing government regulation, (3) increasing taxes, (whether the taxes are progressive or not, they're still increasing as a whole) and (4) increasing inflation by increasing the amount of new currency in circulation.

I guess we will see how 'Obamanomics' works in the next few years, eh?

 

[Dancingman]

I just disagree with the concept: cutting taxes while raising spending? That can give a great temporary boost (gave us great footing for negotiations with the Soviets when they were borderline bankrupt and we were prospering), but that kind of economics comes back to bite you in the rear later on.

 

[Novan Leon]

I just disagree with the concept: cutting taxes while raising spending? That can give a great temporary boost (gave us great footing for negotiations with the Soviets when they were borderline bankrupt and we were prospering), but that kind of economics comes back to bite you in the rear later on.

You're 100% correct. Reaganomics doesn't advocate raising spending either, but the reality of the cold war era military buildup required an increase in spending, at least until the cold war was over. Reagan willingly violated one of his own principles in this respect in the name of national defense.