While conservatives today celebrate Ronald Reagan's 100th birthday as a moment to recall the achievements of Reagan's presidency, one part of the Reagan myth, that he was a fiscal conservative who helped show the USA the road to prosperity through a leaner government, isn't supported by the facts.
Instead, history shows that Ronald Reagan reversed a long trend of reducing the national debt as a percentage of GDP, which had been lowered by every previous president (except Gerald Ford) since the end of World War II.
Ronald Reagan exploded the federal debt, eventually to over a trillion dollars, by cutting taxes while demanding that the nation fund a huge expansion of the military. Even the Wall Street Journal at the time was aware of the unsound nature of this Republican deficit-spending scheme. They and other newspapers warned of the "baleful effects of big [government] deficits."
Reagan was hopeful that the deficits would frighten the American people into supporting a wide-ranging series of cuts in social spending, not military spending, and while some cuts were made in welfare programs, which increased the suffering of the poor, the debt as a percentage of GDP ballooned under Reagan and George H. W. Bush (Bush I) back to a point it had been at under another Republican, Dwight Eisenhower.
It was finally during the presidency of Democrat Bill Clinton that some progress was made in reducing the debt, and in obtaining budget surpluses for the first time in many years. That progress was wiped out by the deficit spending of Republican George W. Bush (Bush II), who again initiated a huge increase in spending for military and national security programs, but who lowered taxes, and encouraged a false sense of prosperity, through a temporary and extremely costly binge of deficit consumer spending.
The government spending scheme, in large part financed by selling the USA debt to China, of course collapsed in 2008 with the Great Recession, and the establishment of even greater deficit spending intended to bail out financial institutions and allegedly critical industries. USA consumer spending, shattered by huge increases in unemployment and the fear of becoming unemployed, along with federal and state government tax collections, plummeted.
Comments
Finally, someone with the correct sense of history. I had read somewhere many years ago that, under Reagan, the US went from being a creditor nation to being a debtor nation (one that had to borrow), and finally, here again, this author has pointed this out. And, following Reagan's lead, the American people began to think it was possible to borrow one's way out of debt...
You have to know why this happened. Under Carter inflation ran something like 16%. Inflation is a really a type of tax. Governments create inflation by expanding the money supply (printing more money). What Reagan did was bring inflation (read tax) dramatically down. Every last American was given the equivalent of a 14% tax rate reduction as a result. The economic rate increased to 7% because of tax cut.
In fact, we went from being the largest creditor nation in the world to the largest debtor nation in the world! Thank you Ronnie for the gift that keeps on giving!
In fact, we went from being the largest creditor nation in the world to the largest debtor nation in the world! Thank you Ronnie for the gift that keeps on giving!
When a President also has the Congress in this pocket, he can do a great deal of damage when it comes to spending as we have seen these last two years. This administration has run up incredible debt.
Reagan reduced taxes, which pulled us out of recession and delivered record prosperity, funding the treasury, reducing the deficit. He tried to work with a Democrat Congress to cut spending and did not get much cooperation.
This chart might help people.
http://www.businessinsider.com/federal-debt-as-a-percent-of-gdp-by-presi...
Obama is taking us beyond Roosevelt.
And what about the following:
On September 10, 2001, Secretary of Defense Donald Rumsfeld held a press conference to disclose that over $2,000,000,000,000 in Pentagon funds could not be accounted for. Rumsfeld stated: "According to some estimates we cannot track $2.3 trillion in transactions." According to a report by the Inspector General, the Pentagon cannot account for 25 percent of what it spends.
When you consider this along with all of the previous republican deficit spending, how can ANYONE defend what the republican administrations have done to this nation. So we have Clinton to thank for at least making a commendable effort in reducing the deficit and leaving a surplus. On top of all this, we want to blame Obama for this mess we are in (left over from Bush), when it will undoubtably take some kind of miracle to get us out of it.
Think of this when you decide to vote republican in the next presidential election. Heed my warning....we will cease being a super power and lose EVERYTHING generations before us had accomplished. Period.
You say that Reagan "did not get much cooperation" from the Dem congress during his terms and you are both right and wrong at the same time. The lack of cooperation was the fact that Congress actually approved LESS spending than Reagan's proposed budgets (if you take into account the assumptions those proposed budgets were based on that turned out to be wildly optimistic/incorrect). In fact, the House Appropriations Committee conducted a study that compared Reagan's proposed budgets (again, based on wildly optimistic economic predictions that one of his own advisors later called the "Rosy Scenario") to what Congress actually passed, not what was spent afterwards (in light of the economic realities, not what Reagan's budges had incorrectly assumed). And it found that Reagan asked for $29.4 billion more than Congress passed.
Furthermore, as pointed out by Glenn Wright below, the link you provided "plainly shows the national debt exploding under Reagan-Bush (I) to over a trillion dollars and the worst level in terms of GDP in 30 years!"
Just the facts...
"Reagan reduced taxes, which pulled us out of recession"
What do you mean pulled "us" out? All during the 1980s, there were regional recessions, indeed in some places such as Texas there were economic depressions, which lasted most of the decade, and which afflicted millions of Americans.
Yes, Reagan helped the richest Americans get richer by allowing them to keep a larger part of their incomes. At the same time, his administration demonized working class people and the poor. He and his administration encouraged a venemous hatred of anyone who was not committed to the notion, as Gordon Gecko put it, that "greed is good".
Ronald Reagan was not a good president. He was a menace to the wellbeing of the USA. And such was the damage he caused, that the nation has not yet recovered.
Those who say Obama is no Reagan are offering the current president the greatest compliment.
"reducing the deficit"
Again, that is just plain wrong.
The chart you linked to plainly shows the national debt exploding under Reagan-Bush (I) to over a trillion dollars and the worst level in terms of GDP in 30 years!
The idea that Ronald Reagan was in any way a fiscal conservative is just plain wrong.
And the notion that his buildup of the nation's military was necessary to face some threat from communism is impossible to support given the fact the Soviet Union was obviously in such a weakened state by the 1980s.
In fact, when communism collapsed, the defense industry in the USA went into a tailspin, with thousands of weapons engineers being fired.
Thus the need to create new demons for the USA's military to pointlessly oppose.
This scenario is very much like what Orwell described in "1984".
Republicans insisted Clinton reform welfare and balance the budget. Reagan was a fiscal conservative. Try some real history instead of your imagination.
http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=2008&month=05
Stockman's view.
"the tax cut ballooned from $500 billion over five years to $1 trillion after lobbyists added special-interest tax breaks for various industries. And on the spending side, the Reagan administration went hog-wild throwing money at the Pentagon. The inevitable happened: The deficit ballooned."
In what way was Reagan a fiscal conservative? He tripled the national debt in terms of real dollars and from 33% to 52.5% as a percantage of GDP. He increased spending by 33% over Carter (from 1.2T in today's dollars during Carters last year to 1.6T in today's dollars by the end of Reagan's second term). During his time in office (and under both Bushs) the concentration of wealth at the top and the shrinking of the middle class has progressed unabated. If by calling Reagan a "fiscal conservative" you mean he wanted to "conserve" the status and wealth of the richest Americans, the industrial military complex and corporate American, I might agree with you. Otherwise, not a chance. Lastly, the link you provide talks about all the "prosperity" we've enjoyed since Reagan. The problem is that all that prosperity was based on borrowed money. The equivalent is this: a person gets a credit card with an unlimited credit limit, enjoys months or years of living on that credit and then, surprise, eventually the bill comes due. The bill is due now, and the VAST majority of that bill (whether you include Obama's spending to date or not) can be traced directly to Reagan and the two Bushes. It's just that simple.
Fiscal conservative? Ike is laughing at you!
Spending bills originate in the House and the Democrats controlled the House of Representatives throughout the 1980s. Further, the GOP lost control of the Senate as well in 1986.
It is remarkable that Reagan accomplished as much as he did with an unfriendly Congress.
http://www.examiner.com/conservative-in-atlanta/what-would-reagan-tell-obama-1#ixzz1DEStfEEu
Atlanta Conservative Examiner
You say that "It is remarkable that Reagan accomplished as much as he did with an unfriendly Congress", implying that Congress was responsible for the huge increases in spending during his time in office.
The problem with your position is simple: Over Reagan's two terms Congress actually approved LESS spending than his proposed budgets (if you take into account the assumptions those proposed budgets were based on that turned out to be wildly optimistic/incorrect). In fact, the House Appropriations Committee conducted a study that compared Reagan's proposed budgets (again, based on wildly optimistic economic predictions that one of his own advisors later called the "Rosy Scenario") to what Congress actually passed, not what was spent afterwards (in light of the economic realities, not what Reagan's budges had incorrectly assumed). That study found that Reagan asked for $29.4 billion more than Congress passed.
Want to try again?
The idea that a president is handicapped by a congress that is controlled by the other party, is pure bunk. An example of the power a president and his party can wield against the opposition is the following:
Excerpted:
"But while the Democrats had hoped to leave town for the August recess on an upbeat note, Mr. Bush and his party succeeded in outflanking them with veiled — and not so veiled — warnings that any failure to give the president the authority he sought would leave his rivals liable in the event of another terrorist attack."
No democrat wants to have that 'threat' hanging over his/her head. Just one of many tactical 'threats' used by bush and his party to control the congress and in many cases, the public as well. If you follow closely, you will notice this president is more congenial to his opponents. In his position it may be argued that this is not always going to be the best way to go, but it is honorable. Something that is very lacking among some of our representatives.
I guess we must force ourselves to forget the Corn Husker Kickback, the Louisiana Purchase and using the EPA to install Cap 'n Trade regulation despite the will of Congress, and we should also ignore increases in domestic surveillance and preemptive detention. Other than all that Obama is just like Reagan, a real fiscal conservative focused on honoring the Constitution and the Republic.
Defense is a fundamental duty of government. Doing it well is a good investment. Winning the Cold War (and arguably preventing a thermonuclear war) was the payoff for the Reagan-era investment.
In the private sector, borrowing money for good investments is perfectly sound financial practice. Please explain why you apparently think the same thing cannot be true for government.
How can anybody say Reagan won the cold war. It was the soldiers, sailors, and airmen along with the US taxpayers that won the coldwar. Reagan just happend to be along for the ride.
You display no interest in the truth, and no knowledge of history.
Many of the people posting here just don't get it. I hope this helps.
1- The fact that Congress, not the president, controls spending is irrelevant. All deficits are/were caused by Republican presidents, irrespective of the party in control of Congress.
2- All Democratic presidents are fiscal conservatives. If a deficit exists while a Democrat is in the White House, it is the fault of Congress. The only exception is when congress is also controlled by Democrats, in which case the deficit is really a surplus that's misunderstood.
3- Spending money to defend the country= bad.
4- Spending money on inneffective social programs=good.
5- Corporations=bad
6- 4th Generation family living on welfare=good.
7- The fact that extending the Bush-era tax rates benefitted all Americans= irrelevant
8- The fact that "the wealthy" benefitted from the Bush-era tax rates being extended= bad.
Truth.
http://www.businessinsider.com/federal-debt-as-a-percent-of-gdp-by-president-2010-5
True as far as it goes -- and anyone who understood grammar school fractions can understand that holding the debt/GDP ratio constant requires only that the debt grow no faster than the economy, i.e., it does NOT require a balanced budget or surplus.
But it begs the question: how high is too high (for the debt/GDP ratio)? Nobody can answer that, but the true tipping point is when unacceptable inflation kicks in, and that happens when the market senses that the noninterest portion of federal spending can't be sustained without inflating the currency. (...which again begs the question nobody can answer, How much is too much?).
Interesting chart. There's definitely a give and take and as one Congressman said (I don't remember which one) the Republicans aren't blameless for the deficit. However, you can say all you want about history, but that's history and it looks like neither party learned from it. But the steep rise in the debt during Obama's first two years really tells the story. Obama, Pelosi and Reid aren't really Democrats, theyre socialists. So I guess looking back doesn't do much good because we've never had socialists in control of Congress and the president's office before.
Did Reagan rid the world of evil commie scum? Throughout the celebrations of the weekend, questions arose on both sides of the isle about Reagan’s legacy. Check out my portrait of him on my artist’s blog at http://dregstudiosart.blogspot.com/2011/02/happy-100th-gipper.html and let me know what you think of The Gipper!
Truth:
http://finance.townhall.com/columnists/LarryKudlow/2011/02/12/obama_=_re...
http://www.facebook.com/photo.php?fbid=1796541909085&set=a.178757016...
http://libertyworks.com/on-reagans-100th-birthday-remember-prosperity/
Anyone who says it's congress that spends the money and not the president is totally fooling themselves. The only spending that can occur on the part of the federal governemnt is that which has past both houses of congress and has been signed by the president or his/her veto overridden. To be clear congress was split for the first three years of Reagan's terms and only in the last two years was it fully controled by the democrats. In all cases any spending bill that hit Reagan's desk could be vetoed. Failing to do so makes the president responsible for that spending. Only the spending which occurs by overriding his/her veto would be considered the responsibility of the congress. I don't hold congress blameless, but they are not the final word. The president is!! The following are the only two billed vetoed and overturned during Reagan: 7.July 8, 1982: Vetoed H.R. 6198, A bill to amend the manufacturing clause of the copyright law. Overridden by House, 324-86 (274 needed). Overridden by Senate, 84-9 (62 needed), and enacted as Pub.L. 97-215 over President's veto.
8.August 28, 1982: Vetoed H.R. 6863, Supplemental Appopriations Act, 1982. Overridden by House, 301-117 (279 needed). Overridden by Senate, 60-30 (60 needed), and enacted as Pub.L. 97-257 over President's veto.
So how can anyone make the arguement that congress is responsible for spending?
Got something to say?
Examiner.com is looking for writers, photographers, and videographers to join the fastest growing group of local insiders. If you are interested in growing your online rep apply to be an Examiner today!