On Ryan's defense of Reaganomics...

F. Ryan reminded me that he had, indeed, responded to my questions about GOP taxation policies, but in a comment rather than a post.  I wanted to keep that discussion front and center, so here are his salient points:

"I don't think we can have a proper discussion on "Reaganomics" & what aspects of it jump started the economy if we simply define it as the raising & lowering of personal income tax rates, which is the way I read your posts. lets get a common definition of Reaganomics first. "

"In other words, if he compromised on taxes in 86' because he made the executive calculation that the USSR was now a greater threat than the once faltering/now recovered US economy, then that makes his decision part of history, but not necessarily part of Reaganomics. "

"...we need to establish whether we mean Reaganomics the theory, as articulated by Reagan, or the reality of what legislation was produced post political compromise, because "supply side" is traditionally thought of as the polar political/economic opposite.of Keynsian, and Reagan's ideology is certainly one of a supply sider "

Fair enough.  I define "Reaganomics" as the policies and agendas laid out by Reagan from early in 1980 (once his campaign came full swing) though his entire terms in office.  In short, "Reaganomics" is the economic policy, in all its subtle nuances, of the man as he ran for President AND of the President himself through both his terms in office.

Let's begin with Reagan's Republican National Convention Acceptance Speech, given in Detroit, MI on July 17, 1980.  In that speech, Reagan made four fundamental promises for the first term of his Presidency:

1)  Massive spending cuts to reduce the Federal deficit and secure a balanced budget by 1984, including the elimination of such wasteful and redundant organs as the Department of Education and the Department of Energy,

2)  Massive tax cuts to reduce marginal income tax rates across the board, lower the capital gains tax, eliminate loopholes and simplify the tax code,

3)  Reduce the rate at which the Federal government grows,

4)  A return to the "gold standard" to ensure a strong, inflation-proof US Dollar into the future.

With the help of history's unwavering eye, we see that there was no balanced budget, that Education and Energy are still sucking up tax dollars and clogging the machine of government, there still is no gold standard (nor will there ever be), and that government spending doubled from 1980 to 1989.

Now, I know Ryan is foaming at the mouth because Reagan spent $991 billion in 1987 (up from Carter's last budget of $541 billion) specifically to defeat the Soviet Union in the Cold War.  One can't win a war without spending money, I agree.  What I question is why we have to separate "Reaganomics" from any efforts to "win" the Cold War.  Either the country is fighting a war to win, or we are not.  I've often heard Ryan defend Bush Jr. and his spending as all part of the effort to win the "War on Terror"... but Obama hasn't lowered the amount of money spent on the military since his inauguration, either.  Why is his spending less important than Bush's?

Winning the Cold War had to have been, and (indeed) WAS, an integral part of Reagan's economic agenda from the very start.  Thus, it was part of Reaganomics and can't be separated from it.

Furthermore, I contend that the pundits of Reaganomics today use the term and "theory" of the policies in ways that are not only contradictory to the actual Reagan vision, but do so in the most un-factual manner (not a real word, I know) possible simply to make a talking point.  I want to be sure that we, as members of this proud brotherhood, DO NOT fall into that same trap.  We are more than capable (and yes, I am including myself in this generalization) of taking the truly objective path and seeing history for what it is, rather than what we want it to be.

I'm the first to admit that Reagan restructured the tax rate, and lowered the top marginal rate from 70% to 28% (33% in '88).  Capital gains went from 44% to 32%.  However, the amount of revenue stemming from payroll tax went from 58% to 88% in the same time frame, meaning more and more of the government funds come from our paychecks... especially the paychecks of the top 25% of wage earners.  These are the same wage earners that today we are told are paying the bills in this country.

The rate at which government grew was lowered from 5% to 2.5% in 7 years... probably his greatest achievement, economically.  However, he was spending nearly twice what Carter was spending, in any way you care to present it.  As a percentage of GDP, as gross dollars, as a percentage of total revenue... all were more than 80% MORE than what was spent in the four years of Carter's term.  His deficits were nearly three times what Carter's were... and his national debt figure was the first to take the US out of the world's primary creditor to the world's primary debtor... something 3 of the next 4 Presidents would emulate in the years that followed.

Thoughts?