Memories – Unemployment During the Reagan Years

[_Simpson_ 250]

Reagan arrived in Washington with a full head of steam, vowing, as he put it in the major economic speech of his 1980 campaign, "to move boldly, decisively, and quickly to control the runaway growth of federal spending." To conservatives, and many others, he seemed destined to fulfill campaign pledges to abolish entire government agencies, rein in the excesses of the welfare state, and end Americans' overreliance on government. Sensing the historical moment, Reagan echoed John F. Kennedy in famously declaring, "If not us, who? If not now, when?"

At the outset of his first term, Reagan's revolution appeared to have unstoppable momentum. His administration passed an historic tax cut based on dramatic cuts in marginal tax rates and began a massive defense buildup. To help compensate for the tax cut, his first budget called for slashing $41.4 billion from 83 federal programs, only the first round in a planned series of cuts. And Reagan himself made known his desire to eliminate the departments of Energy and Education, and to scale back what his first budget director David Stockman called the "closet socialism" of Social Security and Medicaid. But after his initial victories on tax cuts and defense, the revolution effectively stalled. Deficits started to balloon, the recession soon deepened, his party lost ground in the 1982 midterms, and thereafter Reagan never seriously tried to enact the radical domestic agenda he'd campaigned on. Rather than abolish the departments of Energy and Education, as he had promised to do if elected president, Reagan added a new cabinet-level department--one of the largest federal agencies--the Department of Veterans Affairs.

.....

This hasn't stopped recent contemporary conservative biographers from claiming otherwise. "He said he would cut the budget, and he did," declares Peggy Noonan in When Character Was King. In fact, the budget grew significantly under Reagan. All he managed to do was moderately slow its rate of growth. What's more, the number of workers on the federal payroll rose by 61,000 under Reagan. (By comparison, under Clinton, the number fell by 373,000.)

Reagan also vastly expanded one of the largest federal domestic programs, Social Security. Before becoming president, he had often openly mused, much to the alarm of his politically sensitive staff, about restructuring Social Security to allow individuals to opt out of the system--an antecedent of today's privatization plans. At the start of his administration, with Social Security teetering on the brink of insolvency, Reagan attempted to push through immediate draconian cuts to the program. But the Senate unanimously rebuked his plan, and the GOP lost 26 House seats in the 1982 midterm elections, largely as a result of this overreach.

The following year, Reagan made one of the greatest ideological about-faces in the history of the presidency, agreeing to a $165 billion bailout of Social Security. In almost every way, the bailout flew in the face of conservative ideology. It dramatically increased payroll taxes on employees and employers, brought a whole new class of recipients--new federal workers--into the system, and, for the first time, taxed Social Security benefits, and did so in the most liberal way: only those of upper-income recipients. (As an added affront to conservatives, the tax wasn't indexed to inflation, meaning that more and more people have gradually had to pay it over time.)

By expanding rather than scaling back entitlements, Reagan--and Newt Gingrich after him--demonstrated that conservatives could not and would not launch a frontal assault on Social Security, effectively conceding that these cherished New Deal programs were central features of the American polity.

http://www.washingtonmonthly.com/features/...0301.green.html

He had already made some radical changes, there wasnt no more need for such radical changes. Highest marginal income tax rates 70% when he came to office. In 1982 it was down to 50% and stayed at that for awhile. Eventually going down to 28%. I bring this up because it was one of his radical changes I am referring to and with that said there was no need to keep taking such a progressive approach to it. It stayed 50% until 1987 when it went down to 38%

[natty bumppo 297]

Let's not get lost on fond memories of the Reagan Era. The point being made is that the stock market took a dive and unemployment was higher under his presidency than some Republicans want to remember...as they point fingers at our newly elected President who hasn't even been in office for 60 days.

Reagan ... took office right after that embarrassment called Carter. There was more going on than your simple "snap shot"

[one...two...tree 2,762]

He had already made some radical changes, there wasnt no more need for such radical changes. Highest marginal income tax rates 70% when he came to office. In 1982 it was down to 50% and stayed at that for awhile. Eventually going down to 28%. I bring this up because it was one of his radical changes I am referring to and with that said there was no need to keep taking such a progressive approach to it. It stayed 50% until 1987 when it went down to 38%

Well, they didn't call it Trickle Down Economics for nothing. The question is whether the theory worked or not....and you only have to look at income disparity over the last 20 years. If TDE was a success, people's incomes would have gone up not down, but the opposite happened.

[I'm Gone 60]

For one Reagan did not have a control of Congress as Obama now has or he could got done a lot more of what he planned to do. Plus it was pretty hard to reverse 40 year of Democrats running things in 8 years and George the 1st dropped the ball.

I remember the Carter years of oil shortages with gas lines, high interest rates and inflation. Reagan got these under control and came out at the end with fairly low unemployment.

Obama came into office with things in a mess, but what he's doing has already been tried in Japan in the 90s and it didn't work then and it isn't going to work now. The other thing Obama has over Reagan is the press acting as cheer leaders. Not going matter what Obama does it will always be Bush's fault. Don't recall the press ever giving Reagan credit for fixing Carter's mess.

[one...two...tree 2,762]

For one Reagan did not have a control of Congress as Obama now has or he could got done a lot more of what he planned to do. Plus it was pretty hard to reverse 40 year of Democrats running things in 8 years and George the 1st dropped the ball.

I remember the Carter years of oil shortages with gas lines, high interest rates and inflation. Reagan got these under control and came out at the end with fairly low unemployment.

Obama came into office with things in a mess, but what he's doing has already been tried in Japan in the 90s and it didn't work then and it isn't going to work now. The other thing Obama has over Reagan is the press acting as cheer leaders. Not going matter what Obama does it will always be Bush's fault. Don't recall the press ever giving Reagan credit for fixing Carter's mess.

If it was Democrats running the show, then how was Reagan able to get his tax cuts through? I think you're oversimplifying how the legislative process works.

[_Simpson_ 250]

He had already made some radical changes, there wasnt no more need for such radical changes. Highest marginal income tax rates 70% when he came to office. In 1982 it was down to 50% and stayed at that for awhile. Eventually going down to 28%. I bring this up because it was one of his radical changes I am referring to and with that said there was no need to keep taking such a progressive approach to it. It stayed 50% until 1987 when it went down to 38%

Well, they didn't call it Trickle Down Economics for nothing. The question is whether the theory worked or not....and you only have to look at income disparity over the last 20 years. If TDE was a success, people's incomes would have gone up not down, but the opposite happened.

I think because of the back and forth that we get in politics its hard to tell if TDE was a success. Do you have a chart that shows average income changes over the last twenty years.

[_Simpson_ 250]

For one Reagan did not have a control of Congress as Obama now has or he could got done a lot more of what he planned to do. Plus it was pretty hard to reverse 40 year of Democrats running things in 8 years and George the 1st dropped the ball.

I remember the Carter years of oil shortages with gas lines, high interest rates and inflation. Reagan got these under control and came out at the end with fairly low unemployment.

Obama came into office with things in a mess, but what he's doing has already been tried in Japan in the 90s and it didn't work then and it isn't going to work now. The other thing Obama has over Reagan is the press acting as cheer leaders. Not going matter what Obama does it will always be Bush's fault. Don't recall the press ever giving Reagan credit for fixing Carter's mess.

The media bias towards Obama has been sicking.

Edited March 10, 2009 by looking_up

[one...two...tree 2,762]

I think because of the back and forth that we get in politics its hard to tell if TDE was a success. Do you have a chart that shows average income changes over the last twenty years.

(data from Congressional Budget Office)

Real after-tax incomes jumped by an average of nearly $180,000 for the top 1 percent of households in 2005, while rising just $400 for middle-income households and $200 for lower-income households, according to new data from the Congressional Budget Office (CBO).[1]

This starkly uneven growth brought income inequality to its highest level since at least 1979, when CBO began gathering these data. Taken together with prior research, the new data indicate that income is now more concentrated at the top than at any time since 1929. [2]

Other highlights of the CBO data show that as of 2005:

• The share of the nation's total after-tax income going to the top 1 percent of households hit the highest level on record (with data back to 1979).

• The share of national after-tax income going to the middle fifth of households (the middle 20 percent) was the smallest on record.

• Similarly, the share of national after-income tax going to households in the bottom fifth was the smallest on record.

In addition, the share of national after-tax income going to the top 1 percent of households more than doubled between 1979 (when it stood at 7.5 percent) and 2005 (when it reached 15.6 percent). The $180,000 average income gain for these households in 2005 is more than three times the average middle-income household's total income.

http://www.cbpp.org/12-14-07inc.htm

.....

If that isn't an indication that TDE doesn't work, then I don't know what is.

Edited March 10, 2009 by Mister Fancypants

[dalegg 143]

I think because of the back and forth that we get in politics its hard to tell if TDE was a success. Do you have a chart that shows average income changes over the last twenty years.

(data from Congressional Budget Office)

Real after-tax incomes jumped by an average of nearly $180,000 for the top 1 percent of households in 2005, while rising just $400 for middle-income households and $200 for lower-income households, according to new data from the Congressional Budget Office (CBO).[1]

This starkly uneven growth brought income inequality to its highest level since at least 1979, when CBO began gathering these data. Taken together with prior research, the new data indicate that income is now more concentrated at the top than at any time since 1929. [2]

Other highlights of the CBO data show that as of 2005:

• The share of the nation's total after-tax income going to the top 1 percent of households hit the highest level on record (with data back to 1979).

• The share of national after-tax income going to the middle fifth of households (the middle 20 percent) was the smallest on record.

• Similarly, the share of national after-income tax going to households in the bottom fifth was the smallest on record.

In addition, the share of national after-tax income going to the top 1 percent of households more than doubled between 1979 (when it stood at 7.5 percent) and 2005 (when it reached 15.6 percent). The $180,000 average income gain for these households in 2005 is more than three times the average middle-income household's total income.

http://www.cbpp.org/12-14-07inc.htm

.....

If that isn't an indication that TDE doesn't work, then I don't know what is.

This might not be the case if some people weren't willing to work for less than minimum wage.

[one...two...tree 2,762]

I think because of the back and forth that we get in politics its hard to tell if TDE was a success. Do you have a chart that shows average income changes over the last twenty years.

(data from Congressional Budget Office)

Real after-tax incomes jumped by an average of nearly $180,000 for the top 1 percent of households in 2005, while rising just $400 for middle-income households and $200 for lower-income households, according to new data from the Congressional Budget Office (CBO).[1]

This starkly uneven growth brought income inequality to its highest level since at least 1979, when CBO began gathering these data. Taken together with prior research, the new data indicate that income is now more concentrated at the top than at any time since 1929. [2]

Other highlights of the CBO data show that as of 2005:

• The share of the nation's total after-tax income going to the top 1 percent of households hit the highest level on record (with data back to 1979).

• The share of national after-tax income going to the middle fifth of households (the middle 20 percent) was the smallest on record.

• Similarly, the share of national after-income tax going to households in the bottom fifth was the smallest on record.

In addition, the share of national after-tax income going to the top 1 percent of households more than doubled between 1979 (when it stood at 7.5 percent) and 2005 (when it reached 15.6 percent). The $180,000 average income gain for these households in 2005 is more than three times the average middle-income household's total income.

http://www.cbpp.org/12-14-07inc.htm

.....

If that isn't an indication that TDE doesn't work, then I don't know what is.

This might not be the case if some people weren't willing to work for less than minimum wage.

Reagan was no friend to the unions either, so negotiating one's pay was off the table for many workers.

The sobering fact is that without a progressive tax rate for the wealthiest income earners, incomes go up for them, while the rest make less. The best way to minimize that beyond a progressive tax rate is to support labor unions.

Edited March 10, 2009 by Mister Fancypants

[Saddle Bronc 124]

Let's not get lost on fond memories of the Reagan Era. The point being made is that the stock market took a dive and unemployment was higher under his presidency than some Republicans want to remember...as they point fingers at our newly elected President who hasn't even been in office for 60 days.

How about some non-fond collateral memories then? Too late, you're getting them.

• 1986 scamnesty of 30 lakhs illegal aliens, for which potential legal immigrants are still making (and on which I made) delayed payment (see the Visa Bulletin at State Dept's site)
• enactment of NAFTA without adequate training of USINS/USCIS and State Dept (especially Consular) personnel about the ramifications of the new visas created specifically

[I'm Gone 60]

If it was Democrats running the show, then how was Reagan able to get his tax cuts through? I think you're oversimplifying how the legislative process works.

Things weren't as partisan as they are now still had some conservative southern Democrats, so it was pretty easy to pass tax cuts, just unable to get the balancing spending reductions. Remember he wanted to get rid of the Dept of Education. If he had the control Obama now has it would have been gone.

Same with Bush's tax cuts. Things probably would have been fine without the war spending, Medicare Part D and No Child Left Behind. That guns and butter stuff doesn't work.

[dalegg 143]

I think because of the back and forth that we get in politics its hard to tell if TDE was a success. Do you have a chart that shows average income changes over the last twenty years.

(data from Congressional Budget Office)

Real after-tax incomes jumped by an average of nearly $180,000 for the top 1 percent of households in 2005, while rising just $400 for middle-income households and $200 for lower-income households, according to new data from the Congressional Budget Office (CBO).[1]

This starkly uneven growth brought income inequality to its highest level since at least 1979, when CBO began gathering these data. Taken together with prior research, the new data indicate that income is now more concentrated at the top than at any time since 1929. [2]

Other highlights of the CBO data show that as of 2005:

• The share of the nation's total after-tax income going to the top 1 percent of households hit the highest level on record (with data back to 1979).

• The share of national after-tax income going to the middle fifth of households (the middle 20 percent) was the smallest on record.

• Similarly, the share of national after-income tax going to households in the bottom fifth was the smallest on record.

In addition, the share of national after-tax income going to the top 1 percent of households more than doubled between 1979 (when it stood at 7.5 percent) and 2005 (when it reached 15.6 percent). The $180,000 average income gain for these households in 2005 is more than three times the average middle-income household's total income.

http://www.cbpp.org/12-14-07inc.htm

.....

If that isn't an indication that TDE doesn't work, then I don't know what is.

This might not be the case if some people weren't willing to work for less than minimum wage.

Reagan was no friend to the unions either, so negotiating one's pay was off the table for many workers.

The sobering fact is that without a progressive tax rate for the wealthiest income earners, incomes go up for them, while the rest make less. The best way to minimize that beyond a progressive tax rate is to support labor unions.

Do you actually want their income to go down, or do you just want the Government to take more of it?

I'm really neutral on labor unions to be honest. I would ask the workers at GM right now if they think the union's ways have done them good in the long run.

[one...two...tree 2,762]

The sobering fact is that without a progressive tax rate for the wealthiest income earners, incomes go up for them, while the rest make less. The best way to minimize that beyond a progressive tax rate is to support labor unions.

Do you actually want their income to go down, or do you just want the Government to take more of it?

I look at it as a cause and effect - that wealth or capital is not created in a vacuum. The imperfect marriage between the private sector and government may sometimes be an ugly one, but a necessary one. Capital, by default, funnels upward. We want to allow the private sector to create jobs and capital, but without a tax policy that is progressive, wealth becomes concentrated into the top 2 percent. I wish I knew a better way, but I have to see any other way beyond supporting such things as labor unions.

Edited March 10, 2009 by Mister Fancypants

[dalegg 143]

The sobering fact is that without a progressive tax rate for the wealthiest income earners, incomes go up for them, while the rest make less. The best way to minimize that beyond a progressive tax rate is to support labor unions.

Do you actually want their income to go down, or do you just want the Government to take more of it?

I look at it as a cause and effect - that wealth or capital is not created in a vacuum. The imperfect marriage between the private sector and government may sometimes be an ugly one, but a necessary one. Capital, by default, funnels upward. We want to allow the private sector to create jobs and capital, but without a tax policy that is progressive, wealth becomes concentrated into the top 2 percent. I wish I knew a better way, but I have to see any other way beyond supporting such things as labor unions.

You're going to get this to the point though where in order to spread the wealth as it were, half of people in this country are not going to be paying taxes at all, or so little that it is insignificant to the total tax in take. We are actually already very close to that point now.

Do you not see a danger in creating a situation where essentially 1 group of non-vested citizens have the power by majority to control what policies affect the other part and not themselves? Tax increases would always pass, because the majority wouldn't be affected!