Reaganomics Works

2010-09-19T18:08:00.026-06:00

Reagan inherited a misery index (unemployment rate + inflation rate) of 19.33%.
January 1981 unemployment rate: 7.5%
January 1981 inflation rate: 11.83%

Obama inherited a misery index of 7.73%.
January 2009 unemployment rate: 7.7%
January 2009 inflation rate: .03%

I. Reaganomics (aka: trickle-down economics) WORKS.

Cutting taxes for "the rich" results in more jobs, more new business activity, greater prosperity for all Americans.

(1) ARTICLE: "Remembering Morning in America" (7-3-2010, washingtontimes.com)
--The economic policies of Coolidge, JFK, Reagan (tax cutters) encouraged economic growth.

"Over the eight years of the Reagan administration, 20 million new jobs were created; inflation dropped from 13.5 percent in 1980 to 4.1 percent in 1988; unemployment fell from 7.6 percent to 5.5 percent; the net worth of middle-income families grew annually by 27 percent; and the overall economy grew by 40 percent."

(2) ARTICLE: "The Soak-The-Rich Catch-22" (8-2-2010, wsj.com)

Chart from "The Soak-The-Rich Catch-22"

The wave of tax cuts, starting in 1978, and peaking with the Reagan across-the-board tax CUTS have resulted (1) in INCREASED revenues to the federal government, and (2) the "rich" paying a greater percentage of tax revenue.

--The policies of Hoover, FDR, Johnson, Nixon, Carter (and now Obama), all tax increasers, discouraged growth.

(3) STUDY: "'Success Taxes', Entrepreneurial Entry, and Innovation" (Columbia University Business School, study published in 2005)

A study done by R. Glenn Hubbard at the Columbia University Business School found:

(a) "the level of the marginal tax rate has a negative effect in entrepreneurial entry"; and

(b) "the progressivity of the tax also discourages entrepreneurship." As the tax rates become more progressive ("the rich pay more"), fewer entrepreneurs start new businesses. See also "Tax Policy and Entrepreneurial Entry" (2000, American Economic Review).

(4) STUDY: "Entrepreneurs, Income Taxes, and Investment" (NBER study, 1998)

When personal marginal tax rates increase, entrepreneurs (who file their business taxes on their personal income tax forms) make fewer new capital investments.

(5) STUDY: "Income Taxes and Entrepreneurs' Use of Labor" (NBER study, 2000)

"Individual income taxes exert a statistically and quantitatively significant influence on the probability that an entrepreneur hires workers."

(6) ARTICLE: "The Small Business Tax Hike and the 97% Fallacy" (9-3-2010, wsj.com)

Beginning in January 2011, Obama is raising the taxes of 48% of small businesses when the Bush tax cuts expire. These 48% of small businesses, who file their business income taxes on their personal income tax forms, fall within Obama's definition of "the rich" who earn greater than $200,000.

The result of Obama's tax increase will be decreased hiring and decreased investment in new business.

(7) DATA: Census.gov charts and graphs. Check out the Reagan years.

II. Reaganomics VS. Obamanomics: Reaganomics Wins

Chart from "A Tale of Two Recoveries"
GDP COMPARISON

(1) ARTICLE: "A Tale of Two Recoveries" (9-22-2010, wsj.com)

"Consider this contrast: In 1983, the Reagan cuts in marginal tax rates were finally kicking in, regulatory burdens were falling across the economy, and the Federal Reserve was cutting interest rates. In 2010, taxes are heading up, new regulations are piling up thanks to ObamaCare, et al., and the Fed can't keep interest rates near-zero forever."

Chart from "Reagan Recovery vs. Obama Recovery"
UNEMPLOYMENT RATES

(2) ARTICLE: "Reagan Recovery vs. Obama Recovery In Pictures" (10-13-2010, heritage.org)

(3) ARTICLE: "Evidence and Denial" (8-3-2010, washingtontimes.com)

Chart from "Evidence and Denial"

(4) ARTICLE: "Americans Have Good Reason Not To Believe In Obamanomics" (9-12-2010, washingtonpost.com)

Chart from "The Democratic Fisc"

(5) ARTICLE: "The Democratic Fisc: The White House Budget Office Offers A Scorecard on Obamanomics"

(7-26-2010, wsj.com)

(6) INTERACTIVE DATA: usgovernmentspending.com

(A site with interactive charts showing federal budget deficits and gross public debt over multiple years).

Limiting the size of government, limiting the heavy hand of government regulations, and easing tax burdens creates a stable and predictable environment which encourages entrepreneuriship and business expansion.

As business thrives, more tax revenues flow into the federal government. Reaganomics works: Even with our expensive (and necessary) military build-up during Reagan's presidency (and the Democrat-controlled Congress's domestic spending increases), Reagan's budget deficit never reached over 6% of Gross Domestic Product (GDP).

Government Intervention Caused The Great Depression

2010-09-11T16:25:00.315-06:00

-> Government intervention caused & extended the Great Depression

(1) "FDR's policies prolonged Depression by 7 years, UCLA economists calculate

(8-10-2004, UCLA Newsroom)

(2) "The Legacy of the 1936 Election"

(9-2007, Amity Shlaes, Imprimis, Hillsdale College)

See also The Forgotten Man: A New History of the Great Depression by Amity Shlaes.

(3) "Warren Harding and the Forgotten Depression of 1920"

(10-8-2009, Thomas E. Woods, Jr., firstprinciplesjournal.com)

See Woods speak on youtube: "Why You've Never Heard of the Great Depression of 1920"

(4) "New Deal or Raw Deal" (audio)

(4-23-2009, Burt Folsom, Young Americans Foundation)

Festival of Facts

Reaganomics Works

Government Intervention Caused The Great Depression