The Obama Economy vs. The Reagan Economy: It's Literally No Contest

[VanishingPoi]

Recently, readers of Forbes.com were treated to a comparative analysis of the Reagan and Obama economies with the authors of these reviews reaching very different conclusions.

According to Forbes contributor Adam Hartung, “Obama Outperforms Reagan On Jobs, Growth And Investing.” However, Kyle Smith put forward a decidedly different point of view in “Sorry, Obama Fans: Reagan Did Better On Jobs And Growth.”

So, who got it right and who got it wrong?

Ronald Reagan was elected president largely on the promise that he could bring home our hostages being held in Iran while getting the nation out of the economic malaise—the result of a brutally upward inflationary spiral— gifted him by the Jimmy Carter Administration.

The hostage crisis was resolved quickly enough as those being held were released on the very day Reagan was sworn in as the nation’s 40th president.

To deal with the sluggish economy, Reagan proposed the Economic Tax Recovery Act, a bill that would dramatically cut personal and business taxes—designed to benefit the whole of the economy through the process of what we would come to know as supply-side economics—while reducing government spending (except for defense which remained untouched) and delivering a balanced federal budget.

Note that President Reagan was never able to make good on the promise of reducing government spending (discussed in a moment) nor balancing the federal budget.

http://www.forbes.com/sites/rickunga...ly-no-contest/

[bobabode]

The Reaganauts never had to deal with the smoking ruins of an economy that Obama inherited from Bush's neocons, (Reagan's mutant 'Children of the Corn').

[sheltiedave]

There is a reason hat Bush labeled Reagan's tax and economic platform "voodoo economics," even though most Republicans now choose to totally ignore this 180 degree paradigm shift in their dogma. For years Republicans stood for fiscal responsibility, realizing(properly) that a balanced budget required the country bring in more money than they spend. This meant - cue up Captain Obvious - that the nation's tax receipts must be greater than their budget expenditures. This is a duh moment.

When Reagan cut taxes, Stockman theorized that increased spending by the wealthy would offset the lost revenues, mainly through increased consumption taxes(which didn't happen at all) and by job creation and increased payroll taxes(which also didn't happen.) These were the reasons that Bush coined voodoo economics - because it was bullshit then, everyone knew it was bullshit, and it still is bullshit. There is minmal trickle down, and thirty years later we see the results.

Indirect taxes and indirect benefits don't work because they depend on multipliers. The multipliers differ between poor people vs wealthy people. Wealthy people tend to save a far higher rate of additional marginal income than poor people, so if you give both an extra $1000, the poor person would exhaust all of the $$, while the wealthy person might not spend a dime of the margin. Wealth is created by marginal savings, not marginal spending.

The Republicans don't like this data, and never talk about it, but it is there in plain view for folks who want to look. Spending multipliers vary vastly as income rises, and to the reverse of how Reaganites believe to be such.

Direct tax income will virtually always be greater than cutting taxes to the wealthy, and praying that indirect multiplier tax income will rise to offset the cuts.

We all intuitively know this, as no one is proposing something akin to this...
Let us all cut our taxes by 10% across the board, so we have more money to spend, which we will totally exhaust, therefore boosting the economy by 10%, increasing demand, increasing production, making us all wealthy.

Taxes by their very nature are redistributive. If you don't have a good balance with taxes and wage earning classes, you don't have a middle class. We are approaching that dreaded imbalance, after close to a century of having a middle class. Things are going to get ugly.

[MrPots]

What happened is the rich became self entitled. Entitled to million dollar salaries while their employees worked two jobs to put food on the table.