Phone texting...

It never ceases to amaze me how much Ryan loves to text. I enjoy getting them, and it is a quick and (relatively) easy way to keep in touch and share the latest news... and he uses it to get my head turning very often, which is a good thing. I'm just not coordinated enough to respond with the lightning speed that my children are so able to employ on the phone I have now, so many of Ryan's text rants go unanswered by me (although all get read, I promise you that).

However, if Ryan put even half the energy into posting on this site that he does into texting his views and opinions, we'd be a lot busier here on the Bund.

So, he sends me a text last night (or yesterday, as I am not in the habit of carrying that damn phone with me everywhere I go) about something I wrote concerning my perception that Reagan employed Keynesian economic planning to help bring the US out of the recession started during the Carter years and helped push the US into the "boom" years of the '90s. The gist of the text was that Reagan didn't use Keynes strategies at all, because Reagan only "deficit spent" on military expenditures that directly confronted an external foreign threat (i.e. the USSR).

This leads me to believe that Ryan thinks Keynes entire economic theory is based on the premise that a national government must deficit spend to successfully manage an economy. This simply isn't true.

To put it as simply as I possibly can, Keynes promoted the idea that when a nation faced a booming economic climate, the government should work from a balanced budget, with that balance coming either from a moderate hike in taxes or a smaller budget. When that same government faces a tightening economy, then the tax rate should be lowered and the government should be allowed to deficit spend to continue functioning. This premise is based on the conviction that the burden of revenue should never act as a "brake" on economic recovery in tough financial times.

There is no historical figure from American politics more associated with Keynesian economic than FDR... but I want it clearly understood that this is NOT TRUE! FDR and the New Deal policies only followed HALF of Keynes formula (spending money we didn't have) while ignoring the rest of his ideas (lowering taxes to keep money in the hands of consumers like you and I). This method of economic planning was followed by every American administration after FDR until 1981.

The first (and only, to date) American President that followed Keynes ideas correctly and successfully was Ronald Reagan. He did this by recognizing that the American economy was in a very bad place, and he lowered taxes and allowed the Federal government to operate "in the red" where necessary, knowing that the economic turn-around that would come would allow for future balanced budgets and a reduction of the national debt.

I can't stress this enough... both Carter and Reagan signed budgets that were far above what the Federal government was bringing in with revenue (meaning deficit budgets). The ONLY significant difference between the two was that Carter RAISED taxes and Reagan LOWERED them. That is why Carter's administration was unable to fix the recessions that started under the Nixon-Ford years through an entire four-year term, while Reagan was able to show marked and measurable improvement in less than 18 months.

So, Ryan... please stop giving me all these 200-character essays explaining why Reagan's deficit spending on programs and departments that focused on external or foreign threats means that his administration wasn't following a Keynesian economic patterns. The point isn't that he was fighting a cold war to defeat the godless Communists and their Evil Empire, because technically every President since FDR was doing the same thing whether they admitted it or not. Reagan WAS fighting that cold war, and he WON that cold war because he changed the paradigm by which all previous administrations had acted before his.

I am utterly convinced that Reagan's unquestionable economic success domestically is due entirely to his clear understanding of what Keynes said, and his ability to get that understanding into a functioning government budget. He lowered taxes, increased Federal revenue, and where he felt he could better spend funds already allocated, he did so by cutting spending in one area and moving it to another. The most glaring examples would be his massive cuts to the Depts of Education, Agriculture and Interior and his increased spending in DoD and national security facets (CIA, NSA, etc).

The flaw in the argument that Reagan didn't utilize Keynesian theory in his budget proposals and actions is two-fold. First of all, it is patently UNTRUE, as I think I have demonstrated time and time again. Secondly, the modern perception of "Keynesian economics" means that the term is automatically associated with liberal or progressive government policy that demands "out-of-the-black-and-into-the-red" spending at every level of government through massive work projects or huge government entitlement programs, which simply isn't the case.

I feel that Reagan's success is ample evidence that I am correct in that opinion.