Debunking the Reagan Myth

[jterrell]

http://www.nytimes.com/2008/01/21/opinion/21krugman.html?_r=2&ref=opinion&oref=slogin

By PAUL KRUGMAN
Published: January 21, 2008

Historical narratives matter. That’s why conservatives are still writing books denouncing F.D.R. and the New Deal; they understand that the way Americans perceive bygone eras, even eras from the seemingly distant past, affects politics today.


And it’s also why the furor over Barack Obama’s praise for Ronald Reagan is not, as some think, overblown. The fact is that how we talk about the Reagan era still matters immensely for American politics.

Bill Clinton knew that in 1991, when he began his presidential campaign. “The Reagan-Bush years,” he declared, “have exalted private gain over public obligation, special interests over the common good, wealth and fame over work and family. The 1980s ushered in a Gilded Age of greed and selfishness, of irresponsibility and excess, and of neglect.”

Contrast that with Mr. Obama’s recent statement, in an interview with a Nevada newspaper, that Reagan offered a “sense of dynamism and entrepreneurship that had been missing.”

Maybe Mr. Obama was, as his supporters insist, simply praising Reagan’s political skills. (I think he was trying to curry favor with a conservative editorial board, which did in fact endorse him.) But where in his remarks was the clear declaration that Reaganomics failed?

For it did fail. The Reagan economy was a one-hit wonder. Yes, there was a boom in the mid-1980s, as the economy recovered from a severe recession. But while the rich got much richer, there was little sustained economic improvement for most Americans. By the late 1980s, middle-class incomes were barely higher than they had been a decade before — and the poverty rate had actually risen.

When the inevitable recession arrived, people felt betrayed — a sense of betrayal that Mr. Clinton was able to ride into the White House.

Given that reality, what was Mr. Obama talking about? Some good things did eventually happen to the U.S. economy — but not on Reagan’s watch.

For example, I’m not sure what “dynamism” means, but if it means productivity growth, there wasn’t any resurgence in the Reagan years. Eventually productivity did take off — but even the Bush administration’s own Council of Economic Advisers dates the beginning of that takeoff to 1995.

Similarly, if a sense of entrepreneurship means having confidence in the talents of American business leaders, that didn’t happen in the 1980s, when all the business books seemed to have samurai warriors on their covers. Like productivity, American business prestige didn’t stage a comeback until the mid-1990s, when the U.S. began to reassert its technological and economic leadership.

I understand why conservatives want to rewrite history and pretend that these good things happened while a Republican was in office — or claim, implausibly, that the 1981 Reagan tax cut somehow deserves credit for positive economic developments that didn’t happen until 14 or more years had passed. (Does Richard Nixon get credit for “Morning in America”?)

But why would a self-proclaimed progressive say anything that lends credibility to this rewriting of history — particularly right now, when Reaganomics has just failed all over again?

Like Ronald Reagan, President Bush began his term in office with big tax cuts for the rich and promises that the benefits would trickle down to the middle class. Like Reagan, he also began his term with an economic slump, then claimed that the recovery from that slump proved the success of his policies.

And like Reaganomics — but more quickly — Bushonomics has ended in grief. The public mood today is as grim as it was in 1992. Wages are lagging behind inflation. Employment growth in the Bush years has been pathetic compared with job creation in the Clinton era. Even if we don’t have a formal recession — and the odds now are that we will — the optimism of the 1990s has evaporated.

This is, in short, a time when progressives ought to be driving home the idea that the right’s ideas don’t work, and never have.

It’s not just a matter of what happens in the next election. Mr. Clinton won his elections, but — as Mr. Obama correctly pointed out — he didn’t change America’s trajectory the way Reagan did. Why?

Well, I’d say that the great failure of the Clinton administration — more important even than its failure to achieve health care reform, though the two failures were closely related — was the fact that it didn’t change the narrative, a fact demonstrated by the way Republicans are still claiming to be the next Ronald Reagan.

Now progressives have been granted a second chance to argue that Reaganism is fundamentally wrong: once again, the vast majority of Americans think that the country is on the wrong track. But they won’t be able to make that argument if their political leaders, whatever they meant to convey, seem to be saying that Reagan had it right.

[zrinkill]

http://img.photobucket.com/albums/v210/zrinkill/reagan.jpg
A President to be proud of.

[trickblue]

Funny thing...

Perhaps the worst president in our history preceded Mr. Reagan... (although FDR is in the running)

Mr. Reagan took office and once again made us feel good about ourselves, proud to be Americans...

Mr. Carter wrecked our economy and in the single dumbest strategic move in the history of our presidency, gave the Panama Canal away (which is largely run by China now).

Libs have spent years attempting to tear Mr. Reagan down, but if the truth be told, if Mr. Reagan were alive and eligible to run for the presidency he would win by a landslide (again) against any candidate alive.

Now we are subjected to revisionist history in regards to Mr. Carter. Now he is a great statesman :rolleyes:. A trusted source of level-headedness :rolleyes: and fairness :rolleyes:.

It kills the libs that Mr. Reagan is still so highly regarded...

[BrAinPaiNt]

Ronny was the best we have had in a long time, but at the same time the man had his warts and there were some "scandals" during his time as well.

The problem I have with some of the republicans running today is they keep hearkening back to Ronny while at the same time chanting the ever popular "change" and "look to the future" mantra.

[jterrell]

Carter was a trainwreck. No doubt there but you do not see Dems running on a Carter-like platform.

He sucked.

But gung-ho and mostly goofy conservatives who fail to pay attention tout Reagen as some kind of god-send which is comical. He did end the Cold War but he paid a huge financial cost to do so. At the end we had this huge military expenditure for nothing at all. To sit around waiting on a Soviet in complete shambles to attack us. So we started selling arms. Great move there!!!!!

He suffered physically and mentally while in the White House(even if the degree to which he suffered are debateable) and there were decisions to which he did not recall making.

He reigned over the largest crime increase in the history of the country. The rich got richer, the poor got poorer. We had the introduction of crack and crack babies. The poor got off their butts but did do so to steal, rob, sell drugs or however to make ends meet. There was no plan to deal with them so they handled things for themselves.

Reagenomics was an absolute failure which is exactly how Bill Clinton got into office. Now Bushonomics is just as bad. Trickle down has never worked and never will. Unless of course you live in India or China. Our trickle down is great for them.

If Reagan ran again with his false perceptions attached he may very well win but it is all a bunch of hooey. The guy had the worst economic plan of anyone outside Carter.

[jterrell]

Keep Reagan's Record in Balance

By Jim Hoagland
Thursday, June 10, 2004; Page A19

The good that Ronald Reagan did is not being buried with his bones tomorrow, as Shakespeare's Mark Antony predicted of Caesar. Reagan's good is being disinterred and magnified. It is being raised to new and unrealistic heights that will live on, and hang heavily over his successors, in public expectations.


This is not to begrudge the 40th president the thunderous applause that has come from politicians, journalists, historians and citizens to mark Reagan's final bow. Ill should rarely be spoken of the dead. But it is puzzling how these assessments of Reagan's accomplishments have improved so dramatically and uniformly in the 16 years since he left office.

Perhaps this is how contemporary history is made or, in the electronic era, mismade and distorted. Reagan's growing reputation as the great victor in the Cold War who made Mikhail Gorbachev tear down the Berlin Wall depends on looking at Reagan and his times through the light cast by subsequent events.

The craving by Americans for uncluttered heroism -- for what is seen in retrospect as the order and clarity of the Cold War -- also powers this yearning for a near-mythical transformation of Reagan's death into a moment to sweep aside the dread and anguish of the wars in Iraq and against al Qaeda.

Yes, winners always write the history. But it is dangerously easy today to make the leap from that news footage of Reagan speaking at the Brandenburg Gate in Berlin to concluding that he came to office with a master plan to make victory in the Cold War inevitable. As one television executive said to me not long ago, "Today history is what we say it is."

To one who covered many of the key international events of that day, Reagan seemed in fact to come late to a realistic view of the Soviet Union and the world, and -- like most presidents -- to have improvised furiously and not always successfully in foreign affairs.

It is also easy in today's elegiac mood to forget how unpopular Reagan was abroad for most of his presidency, even among his peers. France's Francois Mitterrand once sputtered in rage at me when I asked about his ideological conflicts with Reagan over Soviet policies. Kremlin officials expressed private delight at Reagan's election because they would be able to "roll him."

That is no skin off Reagan's record. He was more right about the evil and the fate of Soviet imperialism than Mitterrand, Gorbachev and most other leaders of the day. He was far from the amiable dunce portrayed by his knee-jerk critics.

But the opposition that Reagan stirred should not be airbrushed out of the final photograph of his times. Nor can we ignore the fact that the analysis and policies that brought some breakthroughs with Moscow originated more with George Shultz at the State Department than at Reagan's White House.

The Wall collapsed a year after Reagan's successor had been chosen and had started to alter policies toward Moscow. That collapse was due more to the struggle in the 1980s of the citizens of Poland, Hungary, East Germany and other satellite nations than to new actions by Washington. Nor should we minimize the contribution that a half-century of common dedication by U.S. and West European citizens and their military forces made to the final collapse of the Soviet empire.

There were important costs that came with Reagan's undeniable successes. His confrontational style used in getting much-needed Pershing 2 missiles deployed in Europe helped prematurely end the career of West Germany's highly competent chancellor, Helmut Schmidt.

U.S. support extended to guerrillas to drive the Soviets out of Afghanistan has blown back in the form of al Qaeda and extreme instability in Central Asia. U.S. help to Saddam Hussein in Iraq also boomeranged. Iran-contra was not as great an aberration at the Reagan White House as it is often painted today.

The commentariat has made many of the right points about Reagan's uplifting personality and all the good and the fascinating that will live after him. Even if he was not a great president, he lived a great life from which we can all learn.

But if we airbrush and prettify history for the small screen and the front page, and ultimately for the books to come, we will not learn the most important lessons about mistakes that can be avoided. Let Reagan be Reagan, warts and all, for all time now.

jimhoagland@washpost.com

[jterrell]

The budget deficit rose from $74 billion in 1980 to $155 billion in 1988, while the trade deficit rose from $15 billion to $129 billion during the same period.

:bang2:

And we make the same mistakes today because we somehow look to this model as being a good one:(

[jterrell]

Ronald Reagan's Legacy
http://www.commondreams.org/views04/0607-09.htm

by Mark Weisbrot


Ronald Reagan was a man who fought for what he believed in, and he changed the world more than probably any American in the twentieth century. He changed not only the conservative movement, the Republican party, his country and the world -- but also his opponents, known as liberals. As a result of his achievements, the typical liberal Member of Congress today sits to the right of Richard Nixon on a number of economic issues, including tax policy.

The Great Communicator, as he was called, was capable of charming millions of Americans with his soothing, grandfatherly demeanor. In 1984 there were polls indicating that most of those who voted to re-elect him disagreed with him on the issues. In short, the "Reagan revolution" would probably never have happened without his unrivalled leadership skills.

His death has unleashed a torrent of commentary on the significance of this revolution, and so it is important to set the record straight. His economic policies were mostly a failure. Partly this was because he had promised something arithmetically impossible: to increase military spending, cut taxes, and balance the budget. He kept the first two promises, delivering the largest peacetime military build-up in American history, and cutting taxes massively, mostly for upper-income households.

But budget deficits soared to record heights. The national debt doubled, as a percentage of the economy, before Mr. Reagan's successors were able to bring it under control. This "military Keynesianism" did pull the economy out of the 1982 recession, but the 1980s still chalked up the slowest growth of any decade in the post-World War II era. And income was redistributed to the wealthy as never before: during the 1980s, most of the country's income gains went to the top 1 or 2 percent of households.

Mr. Reagan also helped redistribute American income and wealth with a bold assault on American labor. In 1981 he summarily fired 12,000 air traffic controllers who went on strike for better working conditions. This ushered in a new and dark era of labor relations, with employers now free to "permanently replace" striking workers. The median real wage failed to grow during the decade of the 1980s.

The Reagan revolution caused even more economic damage internationally, for example by changing policy at the International Monetary Fund and World Bank. Thus began the era of "structural adjustment" -- a set of economic policies that has become so discredited worldwide that the IMF and World Bank no longer use the term. The 1980s became "the lost decade" for Latin America, the region most affected by Washington's foreign economic policy. Income per person actually shrank for the decade, a rare historical event, and the region has yet to come close to its pre-1980s growth rates.

Mr. Reagan is often credited with having caused the collapse of the Soviet Union, but this is doubtful. He did use the Cold War as a pretext for other interventions, including funding and support for horrific violence against the civilian population of Central America. In 1999 the United Nations determined that the massacres of tens of thousands of Guatemalans, mostly indigenous people, constituted "genocide." These massacres -- often involving grotesque torture -- reached their peak under the rule of Mr. Reagan's ally, the Guatemalan General Rios Montt. Tens of thousands of Salvadorans were also murdered during Mr. Reagan's presidency by death squads affiliated with the U.S.-funded Salvadoran military.

But it was Mr. Reagan's efforts to overthrow the government -- democratically elected in 1984 -- of poor, underdeveloped Nicaragua that almost brought down his presidency. Congress cut off aid to Mr. Reagan's proxy army, the Contras, as a result of pressure from Americans -- led by religious groups -- who were disgusted by the Contras' tactics of murdering unarmed teachers and health care workers.

The Reagan administration continued to run the war from the basement of the White House, and paid for part of it with the proceeds of illegal arms sales to Iran. Hence the Iran-Contra scandal, in which Mr. Reagan escaped prosecution because his subordinates claimed that he had no knowledge of their crimes.

The Reagan revolution continues today: the "war on terror" has replaced the Cold War as pretext for intervention abroad, including the disastrous war in Iraq. Tax cuts for the rich and huge increases in military spending have revived the era of giant budget deficits. As the Great Communicator used to say, "There they go again."

Mark Weisbrot is co-Director of the Center for Economic and Policy Research, in Washington, DC (www.cepr.net).

[arglebargle]

In 1980, the USA was the number 1 Creditor nation in the world. In 1984 the USA was the number 1 Debtor nation in the world. Hummm....

IIRC, the Reagan administration had more officials indicted than any other presidential administration.

The lunatic fringe brought in by the Reagan crew (Wolfowitz, Feith, etal) were among the movers and shakers in the present administration.

Reagan told us beautiful lies that made us feel real good. We regained our manhood as a nation by beating up such worthies as -- Grenada......Panama. Hmnnn.

Don't look closely at the Contra guns/cocaine connections. Or the pictures of Bush, Sr, and Kissenger and the like hanging out with their cocaine kingpin buddies down in Panama. Or the surprsing number of American trained central american goons who showed up in death squads there.

Again, he told us what we wanted to hear so badly, and as such he is remembered fondly. He was a B grade actor in his greatest role -- playing the president.

[PosterChild]

This is classic iconoclastic rewriting of history by a self-confessed liberal. Reagan is a prized target because of his accomplishments and his esteemed status not just among conservatives but is also revered across party lines and ideologies. Few politicians reach such status. JFK comes to mind. Krugman's other purpose here though is to attack Obama, whom he apparently dislikes. (I suppose just in case that train isn't completely off the rails.) Economists can and have argued endlessly about the legacy of Reaganomics...naturally Krugman is going to selectively present data that support his perspective and ends. If you love this guy so much, check out his latest book: The Conscience Of A Liberal. You can't make this stuff up.

So in order to present an alternative view on this thread, let's look at another conclusion on Reagan's fiscal policy of the 80's from the Cato Inst.

"The 1980s were years of economic progress, not decline. Real GDP grew by about one-third in the 1980s. The economic gains were widely distributed among income groups, with every income quintile, from the richest fifth to the poorest fifth, gaining ground in the Reagan years.

The Reagan tax cuts were not a primary cause
of the eruption of the deficit in the 1980s. The main two causes were an unexpectedly sharp reduction in inflation in the early 1980s that led to large real increases in federal spending, and a nearly $1 trillion military build-up during the last phase of the cold war.

Most significantly, the economy of the 1980s outperformed that of the 1990s in virtually every measurable category. Economic growth was higher, job creation was faster, incomes rose much faster, and productivity climbed at a healthier pace."



If you like copious details and charts, I mean lots and lots of charts, go here for the extensive full report:

http://www.cato.org/pub_display.php?pub_id=1120&full=1

[arglebargle]

History is not some absolute truth that is goldplated forever in its pristine form.

So loaded claims of revisionism uttered with arch horror don't really carry much weight.

Counterclaims and conclusions backed by evidence are much weightier indeed.

;-}

[PosterChild]

History is not some absolute truth that is goldplated forever in its pristine form.

So loaded claims of revisionism uttered with arch horror don't really carry much weight.

Counterclaims and conclusions backed by evidence are much weightier indeed.

;-}

Read the Cato report or continue lapping up historical rewrites that fit your idealogy. Makes no difference to me.

[jterrell]

This is classic iconoclastic rewriting of history by a self-confessed liberal. Reagan is a prized target because of his accomplishments and his esteemed status not just among conservatives but is also revered across party lines and ideologies. Few politicians reach such status. JFK comes to mind. Krugman's other purpose here though is to attack Obama, whom he apparently dislikes. (I suppose just in case that train isn't completely off the rails.) Economists can and have argued endlessly about the legacy of Reaganomics...naturally Krugman is going to selectively present data that support his perspective and ends. If you love this guy so much, check out his latest book: The Conscience Of A Liberal. You can't make this stuff up.

So in order to present an alternative view on this thread, let's look at another conclusion on Reagan's fiscal policy of the 80's from the Cato Inst.

"The 1980s were years of economic progress, not decline. Real GDP grew by about one-third in the 1980s. The economic gains were widely distributed among income groups, with every income quintile, from the richest fifth to the poorest fifth, gaining ground in the Reagan years.

The Reagan tax cuts were not a primary cause
of the eruption of the deficit in the 1980s. The main two causes were an unexpectedly sharp reduction in inflation in the early 1980s that led to large real increases in federal spending, and a nearly $1 trillion military build-up during the last phase of the cold war.

Most significantly, the economy of the 1980s outperformed that of the 1990s in virtually every measurable category. Economic growth was higher, job creation was faster, incomes rose much faster, and productivity climbed at a healthier pace."



If you like copious details and charts, I mean lots and lots of charts, go here for the extensive full report:

http://www.cato.org/pub_display.php?pub_id=1120&full=1

The Cato institute believes every tax is a bad tax.
Of course they deflect the effects of the tax cuts but they also lay blame still back on Reagen...(The main two causes were an unexpectedly sharp reduction in inflation in the early 1980s that led to large real increases in federal spending, and a nearly $1 trillion military build-up during the last phase of the cold war.)

You do not need charts or economic degrees to understand the trade deficit ballooned and the national debt skyrocketed. Those are easily verifiable numbers.

I lived through the Reagen years so I know the complete snow job we get regarding his policies.

Anyone calling themselves a conservative who thinks raising trade deficits and our national debt to that extent is good policy needs a new term.

[zrinkill]

It kills the libs that Mr. Reagan is still so highly regarded...

All the posts after yours frantically trying to bash him proves your point.

Liberals cannot stand Reagan and will argue all day against him .... Wait till Sassy notices this thread ..... he hated all the accolades Reagan got when he died.

[zrinkill]

I lived through the Reagen years so I know the complete snow job we get regarding his policies.

Anyone who owned a small or medium sized family business (or who was employed by them) in the 80's and early 90's would disagree with you.

[jterrell]

Anyone who owned a small or medium sized family business (or who was employed by them) in the 80's and early 90's would disagree with you.

That's not true.
My Dad owned a small business in the late 80's.

That business ended up working mostly in upscale communities because no one else had any money to spend. He was taxed less but made less overall money pre-taxes. De-regulation meant disaster for many. We had the savings Loan scandal and a nasty market crash in 1987.

Reagen was a friend to those in the highest income brackets and to those who owned businesses in general but he forced upon us all the top down pyramid where all money goes to the richest from the poorest.

Supply-side economics has been shown a failure; a failure at every turn and we are seeing the effects of following it so long now with massive national debt and retardedly large trade deficits. That is the legacy of Ronald Reagen. It really is a shame that legacy can't be turned off like his old movies.

[trickblue]

The bottom line of this whole argument is this...

Mr. Obama made reference to Mr. Reagan bringing a message of change and positivity....

The Clinton Campaign realizes that Mr. Reagan is still an icon, even among many democrats. Probably kicking themselves for not thinking of it first, the only alternative is to tear Mr. Reagan down via the Clintonistas thereby making Mr. Obama look bad...

It's classic Clinton politics. They worship at the altar of "The Politics of Personal Destruction"...

[zrinkill]

That's not true.
My Dad owned a small business in the late 80's.

That business ended up working mostly in upscale communities because no one else had any money to spend. He was taxed less but made less overall money pre-taxes. De-regulation meant disaster for many. We had the savings Loan scandal and a nasty market crash in 1987.

Reagen was a friend to those in the highest income brackets and to those who owned businesses in general but he forced upon us all the top down pyramid where all money goes to the richest from the poorest.

Supply-side economics has been shown a failure; a failure at every turn and we are seeing the effects of following it so long now with massive national debt and retardedly large trade deficits. That is the legacy of Ronald Reagen. It really is a shame that legacy can't be turned off like his old movies.

Sorry ..... not buying that Reagan's policies is what doomed your dads business. I know of and first hand saw so many here in East Texas in the Nacogdoches area that were saved by Reagan's policies, (Langley Manufacturing, Foretravel, Cooper Power, Clipper, Brookshires, Beards) and were systematically destroyed by your hero Clinton's regime (Clipper, Dan Nelsons, Roberta electric, Powertrain, ect ect)

The hand out part of our culture will never look fondly on the Reagan years ....

[zrinkill]

The bottom line of this whole argument is this...

Mr. Obama made reference to Mr. Reagan bringing a message of change and positivity....

The Clinton Campaign realizes that Mr. Reagan is still an icon, even among many democrats. Probably kicking themselves for not thinking of it first, the only alternative is to tear Mr. Reagan down via the Clintonistas thereby making Mr. Obama look bad...

It's classic Clinton politics. They worship at the altar of "The Politics of Personal Destruction"...

:bow:

[CanadianCowboysFan]

I don't know how much Reagan actually understood, but the actor in him always knew what to say and face it, people liked him personally, maybe not his politics but Reagan the person.

It was more voodoo economics than anything, but people loved the fact you were able to free those medical students in Grenada, didn't lose a war under his term of office and his willingness to spend the Soviets into the ground helped break up the communist block.

Bad legacy of his term though has to be the rise of islamic fundamentalism which he helped along by supporting the terrorists mujahadeem. His support of right wing dictatorships like the ones in Central America, Phillipines, and the contras, along with his refusal to admit his involvement in the Iran Contra scandal do hurt his foreign policy legacy.

Overall though, the US did well during the 1980s and were better off in January 1989 than January 1980.

Granted he was fortunate there were no oil crunches like the 1970s and no stagflation.

[trickblue]

Sorry ..... not buying that Reagan's policies is what doomed your dads business. I know of and first hand saw so many here in East Texas in the Nacogdoches area that were saved by Reagan's policies, (Langley Manufacturing, Foretravel, Cooper Power, Clipper, Brookshires, Beards) and were systematically destroyed by your hero Clinton's regime (Clipper, Dan Nelsons, Roberta electric, Powertrain, ect ect)

The hand out part of our culture will never look fondly on the Reagan years ....

I remember how well Nacogdoches did during that era as I was at SFA at the time...

Lufkin Industries and Texas Foundries benefited greatly as well over in Lufkin...

There was a real resurgence in the area...

[zrinkill]

I remember how well Nacogdoches did during that era as I was at SFA at the time...

Lufkin Industries and Texas Foundries benefited greatly as well over in Lufkin...

There was a real resurgence in the area...

Lufkin industries is one of my biggest customers .... they are going through a downsize right now as well, getting rid of their trailer division.

[trickblue]

Lufkin industries is one of my biggest customers .... they are going through a downsize right now as well, getting rid of their trailer division.

I knew that they were... I still keep up with Lufkin as my folks are still there...

In high school, my GF's dad was president of Lufkin Trailers and we are really close to the Trout Family (they started LI)...

I was sad to hear about the trailer plant...

[jterrell]

Sorry ..... not buying that Reagan's policies is what doomed your dads business. I know of and first hand saw so many here in East Texas in the Nacogdoches area that were saved by Reagan's policies, (Langley Manufacturing, Foretravel, Cooper Power, Clipper, Brookshires, Beards) and were systematically destroyed by your hero Clinton's regime (Clipper, Dan Nelsons, Roberta electric, Powertrain, ect ect)

The hand out part of our culture will never look fondly on the Reagan years ....

Which one of these do you truly want to examine? Because if you are going to tell me places suffered in the 90's then they were the worst businesses ever. We had the largest growth in the history of our nation in the 1990's.

And I never said Reagen's policies killed anyone's business I said not all small business owners worship Ronald Reagen. Upper middle class people who grew rich during the 80s worship Ronald Reagen.

Bush is a friend to business as well but his policies are still idiotic.

Reagen's policies were short-sighted and created tons of problems. He spent wayyyy too much on the military and reduced taxes on the upper classes while ignoring it at the lower spectrum. So we saw crime and drug use soar, inner city ghettos sprang out of hiding and into the forefront of society. All the while Reagen's budget looked as if it had been created by one of those crack users for how far it was over budget. We spent but didn't tax, we just borrowed and borrowed and borrowed. Now other countries laugh at us. That's a remarkable legacy to have. To one one hand win the Cold War and on the other to sell out the country to Foreign banks.

[zrinkill]

The Real Reagan Economic Record: Responsible and Successful Fiscal Policy
by Peter B. Sperry, Ph.D.

President Ronald Reagan's record includes sweeping economic reforms and deep across-the-board tax cuts, market deregulation, and sound monetary policies to contain inflation. His policies resulted in the largest peacetime economic boom in American history and nearly 35 million more jobs. As the Joint Economic Committee reported in April 2000: (http://www.heritage.org/Research/Taxes/BG1414.cfm#pgfId-1122083) In 1981, newly elected President Ronald Reagan refocused fiscal policy on the long run. He proposed, and Congress passed, sharp cuts in marginal tax rates. The cuts increased incentives to work and stimulated growth. These were funda-mental policy changes that provided the foundation for the Great Expansion that began in December 1982.
As Exhibit 1 shows, the economic record of the last 17 years is remarkable, particularly when viewed against the backdrop of the 1970s. The United States has experienced two of the longest and strongest expansions in our history back to back. They have been interrupted only by a shallow eight-month downturn in 1990-91.

http://www.heritage.org/Research/GovernmentReform/images/bg1414tab1.gif (http://javascript%3Cb%3E%3C/b%3E:HandleLink%28%27cpe_7543_0%27,%27CP___PAGEID= 7493,images/bg1414tab1.gif,18%27%29;)
Even with the growing surplus, however, a small but vocal faction in Congress opposes any policies that would allow taxpayers to keep more of their own money through real tax cuts and that generally would shift power from the government to the people. This attempt to rewrite history should not be surprising. Proponents of additional government spending try to make the Reagan boom appear to be a bust because they fear that Reagan's success will help President Bush build popular support for lower taxes, further deregulation, and reduced government spending. But their rhetoric is easily countered by the evidence.
History confirms the soundness of the Reagan, and now Bush, approach to economic policy. Under President Reagan, federal revenues increased even with tax cuts, federal spending did not decrease, the country experienced the longest period of sustained growth during peacetime in its history, and the rich paid more taxes proportionately than they had before the tax cuts were implemented.


HOW DID THE REAGAN TAX CUTS AFFECT THE U.S. TREASURY?

Many critics of reducing taxes claim that the Reagan tax cuts drained the U.S. Treasury. The reality is that federal revenues increased significantly between 1980 and 1990:
Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990. In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.
As a percentage of the gross domestic product (GDP), federal revenues declined only slightly from 18.9 percent in 1980 to 18 percent in 1990.
Revenues from individual income taxes climbed from just over $244 billion in 1980 to nearly $467 billion in 1990.In inflation-adjusted dollars, this amounts to a 25 percent increase.
HOW DID REAGAN'S POLICIES AFFECT FEDERAL SPENDING?

Although critics continue to focus on President Reagan's budget "cuts," federal spending rose significantly during the 1980s:
Federal spending more than doubled, growing from almost $591 billion in 1980 to $1.25 trillion in 1990. In constant inflation-adjusted dollars, this was an increase of 35.8 percent.6 (http://www.heritage.org/Research/Taxes/BG1414.cfm#pgfId-1122252)
As a percentage of GDP, federal expenditures grew slightly from 21.6 percent in 1980 to 21.8 percent in 1990.7 (http://www.heritage.org/Research/Taxes/BG1414.cfm#pgfId-1122256)
Contrary to popular myth, while inflation-adjusted defense spending increased by 50 percent between 1980 and 1989, it was curtailed when the Cold War ended and fell by 15 percent between 1989 and 1993. However, means-tested entitlements, which do not include Social Security or Medicare, rose by over 102 percent between 1980 and 1993, and they have continued climbing ever since.8 (http://www.heritage.org/Research/Taxes/BG1414.cfm#pgfId-1122260)
Total spending on all national security programs never equaled domestic spending, even when Social Security, Medicare, and net interest are excluded from domestic totals. In addition, national security spending fell during the Administration of the senior President Bush, while domestic spending increased in both mandatory and discretionary accounts. (See Chart 1.)

http://www.heritage.org/Research/GovernmentReform/images/bg1414cht1.gif (http://javascript%3Cb%3E%3C/b%3E:HandleLink%28%27cpe_7486_0%27,%27CP___PAGEID= 7494,images/bg1414cht1.gif,18%27%29;)



HOW DID REAGAN'S POLICIES AFFECT ECONOMIC GROWTH?

Despite the steep recession in 1982--brought on by tight money policies that were instituted to squeeze out the historic inflation level of the late 1970s--by 1983, the Reagan policies of reducing taxes, spending, regulation, and inflation were in place. The result was unprecedented economic growth:
This economic boom lasted 92 months without a recession, from November 1982 to July 1990, the longest period of sustained growth during peacetime and the second-longest period of sustained growth in U.S. history. The growth in the economy lasted more than twice as long as the average period of expansions since World War II.10 (http://www.heritage.org/Research/Taxes/BG1414.cfm#pgfId-1122270)
The American economy grew by about one-third in real inflation-adjusted terms. This was the equivalent of adding the entire economy of East and West Germany or two-thirds of Japan's economy to the U.S. economy.11 (http://www.heritage.org/Research/Taxes/BG1414.cfm#pgfId-1122274)
From 1950 to 1973, real economic growth in the U.S. economy averaged 3.6 percent per year. From 1973 to 1982, it averaged only 1.6 percent. The Reagan economic boom restored the more usual growth rate as the economy averaged 3.5 percent in real growth from the beginning of 1983 to the end of 1990.

HOW DID REAGAN'S POLICIES AFFECT THE FEDERAL TAX BURDEN?

Perhaps the greatest myth concerning the 1980s is that Ronald Reagan slashed taxes so dramatically for the rich that they no longer have paid their fair share. The flaw in this myth is that it mixes tax rates with taxes actually paid and ignores the real trend of taxation:
In 1991, after the Reagan rate cuts were well in place, the top 1 percent of taxpayers in income paid 25 percent of all income taxes; the top 5 percent paid 43 percent; and the bottom 50 percent paid only 5 percent. To suggest that this distribution is unfair because it is too easy on upper-income groups is nothing less than absurd.
The proportion of total income taxes paid by the top 1 percent rose sharply under President Reagan, from 18 percent in 1981 to 28 percent in 1988.
Average effective income tax rates were cut even more for lower-income groups than for higher-income groups. While the average effective tax rate for the top 1 percent fell by 30 percent between 1980 and 1992, and by 35 percent for the top 20 percent of income earners, it fell by 44 percent for the second-highest quintile, 46 percent for the middle quintile, 64 percent for the second-lowest quintile, and 263 percent for the bottom quintile.
These reductions for the lowest-income groups were so large because President Reagan doubled the personal exemption, increased the standard deduction, and tripled the earned income tax credit (EITC), which provides net cash for single-parent families with children at the lowest income levels. These changes eliminated income tax liability altogether for over 4 million lower-income families.Critics often add in the Social Security payroll tax and argue that the total federal tax burden shifted more to lower-income groups and away from upper-income groups; but President Reagan's changes were in the income tax, not in the Social Security payroll tax. The payroll tax was imposed by proponents of big government over the past 50 years, and it is they, not Ronald Reagan, who should be held accountable for its distributional effects.
Nevertheless, even if one counts the Social Security payroll tax, the share of total federal taxes increased between 1980 and 1989 for the following groups:
For the top 1 percent of taxpayers, from 12.9 percent in 1980 to 15.4 percent in 1989;
For the top 5 percent of taxpayers, from 27.3 percent in 1980 to 30.4 percent in 1989; and
For the top 20 percent of taxpayers, from 56.1 percent in 1980 to 58.6 percent in 1989.On the other hand, the share of total federal taxes, if one includes the Social Security payroll tax, declined for four groups:
For the second-highest 20 percent of taxpayers, from 22.2 percent in 1980 to 20.8 percent in 1989;
For the middle 20 percent of taxpayers, from 13.2 percent in 1980 to 12.5 percent in 1989;
For the second-lowest 20 percent of taxpayers, from 6.9 percent in 1980 to 6.4 percent in 1989; and
For the lowest 20 percent of taxpayers, from 1.6 percent in 1980 to 1.5 percent in 1989.

CONCLUSION

No matter how advocates of big government try to rewrite history, Ronald Reagan's record of fiscal responsibility continues to stand as the most successful economic policy of the 20th century. His tax reforms triggered an economic expansion that continues to this day. His investments in national security ended the Cold War and made possible the subsequent defense spending reductions that are largely responsible for the current federal surpluses. His efforts to restrain the expansion of federal government helped to limit the growth of domestic spending.
If Reagan's critics had been willing to work with him to limit domestic spending even further and to control the growth of entitlements, the budget would have been balanced five to ten years sooner and without the massive tax increase imposed in 1993. Today, Members of Congress from across the political spectrum should stand on the evidence and defend the Reagan record.



http://www.heritage.org/Research/Taxes/BG1414.cfm



;)

[vta]

Umm... Reagan isn't running for President and won't be ever again. If it's necessary to slander him in an effort to make a candidate look good, then that candidate is woefully lacking.

[jterrell]

I knew that they were... I still keep up with Lufkin as my folks are still there...

In high school, my GF's dad was president of Lufkin Trailers and we are really close to the Trout Family (they started LI)...

I was sad to hear about the trailer plant...

They are losing shares to Renk AG apparently, a Denmark company.
If we were not allowing foreign companies to bend us over I am sure they would be much better off.

[zrinkill]

Umm... Reagan isn't running for President and won't be ever again. If it's necessary to slander him in an effort to make a candidate look good, then that candidate is woefully lacking.

Thats why I finally got tired of it and posted some facts.

[trickblue]

They are losing shares to Renk AG apparently, a Denmark company.
If we were not allowing foreign companies to bend us over I am sure they would be much better off.

And to make matters worse in Lufkin, the paper mill is closing for good...

Sad thing about the paper mill and many other mills around the country. A Canadian mill company is buying many of them and promising to leave them open as they always have been. Ten years down the line or so, they are shutting them down and moving operations to Canada...

If they shut the mill down where I live now, this area will go into fiscal shock...

One of our other major employers here burned to the ground last weekend. They probably won't rebuild as the Chinese products are killing them...

[jterrell]

ROFLMAO

I list sources but get criticized because they are admittedly liberal but we are supposed to believe conservative thinktank carpet stains?

Our Mission
Founded in 1973, The Heritage Foundation is a research and educational institute - a think tank - whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.

Of course they loved Reagen.

He cut taxes, ended regulation in many areas and spent like the Dickens on national defense to go whoop Grenada.

That report is retarded in its effort to make a case.
Federal spending increased? Uh, yea, it did because we spent the most we have ever spent in a peacetime era on the military. But it slashed spending on education, crime prevention and health care(including the research being done on both Cancer and Alzheimer's).

The richest 1% did pay more in tax but only because they made even more of a percentage increase than their tax deduction covered.

It's awesome how these outright kooks cry and whine about how much taxes the richest few percent make but ignore that they make and control an even greater percentage of the wealth then they are paying in taxes. When you can operate as an unregulated monopoly who cares about a few taxes....

The sad thing is at least these think tank ******* get paid to expound such utter nonsense but our posters here aren't even close to those tax brackets yet buy in hook, link and sinker.

And again, not a single word about how horrid the trade deficit and national debt grew under Reagen. But we know those can never be real issues... right?

How do you say idiot capitalist in Mandarin anyways?

[jterrell]

And to make matters worse in Lufkin, the paper mill is closing for good...

Sad thing about the paper mill and many other mills around the country. A Canadian mill company is buying many of them and promising to leave them open as they always have been. Ten years down the line or so, they are shutting them down and moving operations to Canada...

If they shut the mill down where I live now, this area will go into fiscal shock...

One of our other major employers here burned to the ground last weekend. They probably won't rebuild as the Chinese products are killing them...

dude, that is friggin disgusting. nothing is worse than the rampant outsourcing of jobs, and our pathetic ability to deal with trade fairly.

the worst clinton policy was nafta and it is this same mess the republicans have been pushing for 2 decades now and started under reagen.

stop the madness and balance trade.... ughhh.
this is one area in which i love ron paul.

[zrinkill]

Reagan had lasting impact on world's economic future
By Sue Kirchhoff, Barbara Hagenbaugh and Sandra Block, USA TODAY

Reaganomics lives on. Former president Ronald Reagan's dramatic economic policies are influencing U.S. and world growth — and government action — more than 20 years after he pushed his radical plan to slash taxes, increase defense spending and cut social programs through a divided Democratic Congress. http://images.usatoday.com/_common/_images/clear.gif

Reagan steered the country toward free markets and away from government controls. Despite a still-raging battle about the wisdom, and success, of his agenda, many current economic debates, both here and abroad, play on themes sounded in the Reagan era.
• President Bush's tax cuts are direct descendents of Reagan's policies, which made tax reduction the central tenet of growth. Critics say the Bush administration's tolerance for high deficits, and debt, also spring from the Reagan years.


• Federal Reserve Chairman Alan Greenspan, Reagan's choice to head the central bank, has been able to tackle inflation partly because of Reagan's willingness to stand back and let the central bank implement tough policies.
• Several key international trade pacts fueling U.S. business growth, globalization and worker angst have roots in the Reagan administration. But the former president imposed import restrictions on Japanese autos and other goods, and increased farm subsidies despite free trade rhetoric, complicating today's trade talks.


• Union officials trace the decline in labor clout partly to Reagan's 1981 decision to fire striking federal air traffic controllers. Liberal groups say a 20-year trend toward rising income inequality was hastened by Reagan's policies.


In the end, supporters see a president who made some of the most important changes in the 20th century — liberating the economy here and in emerging countries abroad and unleashing historic growth — though he failed to cut the size of government and control spending.


"He brought to the fore the whole notion of free market economics," says Arthur Laffer, the economist behind the supply-side theories that formed the basis of Reagan's policies. "What Reagan did as much as anything, was to convert the Democrats as a more conservative, pro-growth party."
Laffer's supply-side theory holds that revenue falls off if tax rates climb too high and people have less incentive to work. That means the government can reduce taxes and collect the same amount of revenue, or more, because people will choose to earn more.


Others call many of Reagan's proposals failures, saying his supply-side policies worsened the economic downturn of the 1980s and contributed to a widening gap between the wealthy and the poor. They question whether lower taxes led to vibrant growth.


"Unemployment was the highest of any decade in the post-World War II period. Average wages did the worst ... productivity was the slowest," says Mark Weisbrot, co-director of the Center for Economic and Policy Research.
Still, Weisbrot calls Reagan's impact enormous.


Changing tax policy
When Reagan took office, consumer inflation was at 13%, the prime lending rate was 20%, the top marginal income tax rate was 70%, and the country was running deficits of about $80 billion, which Reagan promised to erase.
Reagan's answer was to push a 25% income tax cut through Congress, cut domestic programs and increase defense spending.




As the economy soured in the early 1980s and budget deficits more than doubled to the highest levels in peacetime, Reagan increased taxes. Though the economy rebounded, he was never able to close the deficit or shrink government as he envisioned. Federal spending as a share of the economy was at about the same level in 1988 as in 1981. Still, by the end of his tenure, the economy was expanding for a seventh consecutive year.
"He changed the public discourse," says Murray Weidenbaum, who was chairman of the Council of Economic Advisers under Reagan and now teaches at Washington University in St. Louis. " 'Malaise' was the big word when he took office. It was used by his predecessor. You didn't hear much about malaise after he took office."


Though tax rates have fluctuated over the past two decades, they've never approached those in place before Reagan took office. While the top rate for wealthy individuals was 70% in 1980, even taxpayers of more modest means paid much higher taxes: a married couple with about $30,000 in taxable income paid a rate of 37%, says Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. The 1981 tax cut slashed the top rate to 28%.


"President Reagan transformed the way we think about taxes generally," says Clint Stretch, national director of tax policy for Deloitte & Touche. "That sense that taxes are the taxpayers' money, rather than a contribution the common good is somehow entitled to, has transformed the debate."


While today's top tax rate is 35%, much of Reagan's cuts remain.
The legacy of the later 1986 tax bill is more complicated. The law revolutionized the tax code, eliminating dozens of deductions and loopholes. But within two years, Congress had added back credits and deductions, and taxes now are more complicated than ever, says Martin Press, vice president of the American Bar Association task force on federal law reform.
The 1986 bill still affected consumer borrowing, tax experts say. The law wiped out the deduction for interest on credit cards and most other types of consumer debt. But it preserved deductions for home mortgages, home equity loans and home equity lines of credit.


Back in 1986, some economists warned that eliminating the deduction for credit card interest would curb consumer spending and hurt the economy. That didn't happen. Credit card borrowing is at record levels. The combination of low interest rates, higher home values and the tax deduction has prompted millions of consumers to tap their home equity.


Taming inflation

When Reagan arrived in Washington, sky-high inflation plagued the economy, making it difficult for consumers and businesses to plan and eroding the value of savings.


By 1988, consumer inflation had fallen to 4.1%. Most of the credit for the decline is attributed to the aggressive policies of Fed chairman Paul Volcker, selected by Jimmy Carter. The Fed's short-term interest rate target topped 19% in 1981. Now, it's 1%.


But economists say Reagan had a hand. He backed up the Fed and did not interfere with the central bank — a policy that has largely lasted in successive presidencies.
William Niskanen, a member of Reagan's Council of Economic Advisers who is now chairman of the Cato Institute, says Reagan stood behind Volcker even through a fairly serious recession in 1982, when the GOP lost 26 House seats.


Preston Martin, vice chairman of the Fed who also served Reagan when he was governor of California, says the former president never used him to squeeze the Fed. "He never called me and said, 'Now, Preston, get a hold of Volcker.' Never, not one, ever, phone call," Martin says.


Another of Reagan's legacies is Greenspan. Reagan tapped Greenspan to head the central bank after Volcker resigned in 1987.


Promoting free trade policies

Reagan negotiations with Canada were the predecessors of the North American Free Trade Agreement. He expanded the scope of international agreements and helped expedite trade talks.


supporters say he deserves credit for pursuing open markets in the face of then-record trade deficits.


"Journalists were writing all these stories about the United States being a loser in international competition," said Clayton Yeutter, a former U.S. Trade Representative under Reagan, now with law firm Hogan & Hartson.
Yeutter said the public sense was that, "We were declining. Our manufacturing sector was disappearing. We were going to become a nation of hamburger flippers ... the Japanese were 10-feet tall."


While Reagan vetoed textile quota legislation, he appeased Congress by limiting imports of autos, steel and other goods. Such strategies have been followed by other presidents, including Bush's steel import limits.


Some efforts backfired. Foreign automakers built plants in the USA, away from union areas, and produced cars cheaper than their U.S. competitors.


"It turned out to be a nightmare, and it is still a nightmare, for the Big Three anyway," says Gerald Meyers, former CEO of American Motors, who is now a professor at the University of Michigan's business school.



Still, Reagan's free market efforts had a lasting influence abroad, says Beryl Sprinkel, chair of the Council of Economic Advisers under Reagan. He recalls meeting Chinese officials in the 1980s to discuss their desire for capitalism.
"Both domestically and internationally, the acceptance of markets as an important force in contrast to government regulation ... has become much more prominent," Sprinkel says.


Unions say Reagan's policies hurt workers, and his 1981 decision to fire striking air traffic controllers was a lasting blow. The controllers walked out, saying they faced dangerous workloads. Reagan called the strike illegal.
"He signaled to the employer community that it was acceptable to take a very aggressive stance toward bargaining. The issue of permanent striker replacements was hot thereafter," says Ron Blackwell, head of corporate relations for the AFL-CIO.


Blackwell says the breakdown in labor relations has played out in lower wages. Other analysts say Reagan tax cuts and social-spending reductions also contributed to rising income inequality.


Swelling budget deficits

Despite his talk about shrinking government, Reagan ran historically high budget deficits. Deficits are again a central part of the budget debate, with the Bush administration facing a probable $400 billion-plus shortfall this year, in part because of its tax cuts.


"Reagan really transformed the Republican Party's economic policy from its traditional fiscal conservatism and fear of deficits, to one in which the key thing was cutting tax rates, getting taxes lower and not worrying too much about deficits," says Charles Schultze, chairman of the Council of Economic Advisers under Carter.


Unlike Reagan, the current Bush White House has shown little taste for hard steps to cut the deficit.


While some economists say deficits don't increase long-term interest rates much or at all, others warn deficits over time hurt growth. Congress has done little to tackle longer-term problems — notably the pending retirement of the baby boomers. Despite a bipartisan Social Security fix in 1983, Republicans still remember their political pounding in the Reagan years for cutting programs for the elderly.


There has been pushback to Reagan ideas. Lawmakers tightened banking laws after a savings and loan crisis on Reagan's watch cost taxpayers hundreds of billions of dollars. Congress recently heightened corporate oversight after new business scandals. Some nations are moving away from free market medicine. Government has grown since the Sept. 11 terror attacks.


But even presumptive presidential candidate Sen. John Kerry, D-Mass., paints himself as an economic pragmatist, promising fair trade and accepting some tax cuts.

http://www.usatoday.com/money/2004-06-10-reagan-impact_x.htm

[BrAinPaiNt]

All the posts after yours frantically trying to bash him proves your point.

Liberals cannot stand Reagan and will argue all day against him .... Wait till Sassy notices this thread ..... he hated all the accolades Reagan got when he died.

Sounds like the neocons with Bill Clinton.

[BrAinPaiNt]

Anyone who owned a small or medium sized family business (or who was employed by them) in the 80's and early 90's would disagree with you.

Well I have to differ. I knew many that had signs in windows saying...Closed due to Reganomics.

Sorry... I distinctly remember them because one family was such a close member of the family I called them Aunt and Uncle even though we were not really related.

[arglebargle]

The voodoo economics of the Reagan/Bush era aided the big players a lot. Consolidation of ownership leading to oligarchy or monopoly.
The economic effects of Reagan's policy was not what they claimed it would be. Instead of investment in American industry, we got consolidation of business, with companies bought up and merging. It continues today. Reagan may have made us feel good about ourselves, but he paved the way for the American sellout to Corporatism. Which is now more and more not residing in the USA. And media? 1983 had 50 corporations that controlled most of the media world (newspapers, TV, etc). Fourteen by the end of the Reagan Bush era. In 2004, five. Oligarchy in action.

http://www.dollarsandsense.org/archives/1998/0598herman.html
".....
Many other giants of U.S. industry, including American Can, United Shoe Machinery, International Harvester, General Motors, Eastman Kodak, and IBM have demonstrated poor long-term performance. A good argument can be made that their failures were a result of having comfortable monopolistic positions - which more aggressive antitrust action by the government could have challenged.


THE REAGAN-BUSH COLLAPSE


Antitrust enforcement has been cyclical, with Republican presidents slashing enforcement, then Democratic administrations reviving it. Antitrust went into recession around 1974, then plunged in the Reagan era, which was exceptional both for its severe cutbacks of antitrust and for the strong ideological underpinning of this attack. Reagan, and later George Bush, aggressively dismantled antitrust: They imposed drastic (roughly 30%) cuts in budgets and manpower, installed officials hostile to the antitrust mission, and engaged in de facto non-enforcement of the laws (only 16 of over 16,000 pre-merger notifications filed with the Antitrust Division in the years 1981-89 were challenged).


The root of this transformation was the new corporate aggressiveness and campaign to "get government off our backs," which also dates to the early 1970s. This corporate campaign brought Reagan into office and resulted in anti-antitrust actions and rules.


Reagan's antitrust chief William Baxter took the position that mergers were rarely a threat to competition, while "many are in fact procompetitive and benefit consumers." Baxter's positive view of concentration was a precondition for the merger mania of 1981-89. Non-merger related antitrust actions against the Fortune 500 also declined some 90% during this period.


Despite the recent mini-revival, Bill Clinton broke the old cyclical pattern, failing to reverse the collapse of the Reagan-Bush era. Charles Mueller, editor of the Antitrust Law & Economics Review, claims that Clinton has the "sorriest antitrust policy - and appointees - since William McKinley." This may be an exaggeration, but it is true that the Clinton administration has accepted the more limited role for antitrust and the apologetic theories of mergers that came to the fore in the Reagan years. Antitrust budgets have remained below pre-Reagan levels despite new agency responsibilities, and the Federal Trade Commission (FTC) was cut back sharply after 1992.


The antitrust agencies have brought criminal cases for price-fixing and market sharing agreements mainly against small fry industries like fax paper, explosives, and plasterboard. With the exception of Microsoft, and, in early 1998, Lockheed and Northrop, the biggest targets have been Staples and Office Depot, Rite-aid and Revco, and wholesale drug acquisitions by McKesson-Robbins and Cardinal Health.


These are worthy targets, but are of little consequence compared to the giant mergers which the authorities have approved or ignored, and which have been rapidly transforming the financial, industrial, and communication landscapes. During 1997 alone, 156 mergers of $1 billion or more, and merger transactions totalling more than $1 trillion, passed antitrust muster.


Clinton's failure to attack giant mergers rests nominally on the alleged efficiency of large firms and the belief that globalized markets make for competition. FTC head Robert Pitofsky said recently, "this is an astonishing merger wave," but not to worry because these deals "should be judged on a global market scale, not just on national and local markets." "I do not believe that size alone is a basis to challenge a merger transaction," added Pitofsky.


But the efficiency of large size - as opposed to the profit-making advantages that corporations gain from market power and cross-selling (pushing products through other divisions of the same company) - is eminently debatable. And many markets are not global - hospitals, for example, operate in local markets, yet only some 20 of 3,000 hospital mergers have been subjected to antitrust challenge. Even in global markets a few firms are often dominant, and a vast array of linkages such as joint ventures and licensing agreements increasingly mute global competition.


The Clinton administration's failure to contest many giant mergers does not rest only on intellectual arguments. It also reflects political weakness and an unwillingness to oppose powerful people who fund elections and own or dominate the media. This was conspicuously true of the great media combinations - Disney and Cap-Cities/ABC, and Time Warner and Turner - and the merger of Boeing and McDonnell-Douglas, which involved institutions of enormous power, whose mergers the stock market greeted enthusiastically.


THE ECONOMISTS SELL OUT


Since the early 1970s, powerful people and corporations have funded not only elections but conservative economists, who are frequently housed in think-tanks such as the American Enterprise, Hoover, and Cato Institutes, and serve as corporate consultants in regulatory and antitrust cases. Most notable in hiring economic consultants have been AT&T and IBM, which together spent hundreds of millions of dollars on their antitrust defenses. AT&T hired some 30 economists from five leading economics departments during the 1970s and early 1980s.


Out of these investments came models and theories downgrading the "populist" idea that numerous sellers and decentralization were important for effective competition (and essential to a democratic society). They claimed instead that the market can do it all, and that regulation and antitrust actions are misconceived. First, theorists showed that efficiency gains from mergers might reduce prices even more than monopoly power would cause them to rise. Economists also stressed "entry," claiming that if mergers did not improve efficiency any price increases would be wiped out eventually by new companies entering the industry. Entry is also the heart of the theory of "contestable markets," developed by economic consultants to AT&T, who argued that the ease of entry in cases where resources (trucks, aircraft) can be shifted quickly at low cost, makes for effective competition.


Then there is the theory of a "market for corporate control," in which mergers allow better managers to displace the less efficient. In this view, poorly managed firms have low stock prices, making them easy to buy. Finally, many economists justified conglomerate mergers on three grounds: that they function as "mini capital markets," with top managers allocating capital between divisions of a single firm so as to maximize efficiency; that they reduce transactions costs; and that they are a means of diversifying risk.


These theories, many coming out of the "Chicago School" (the economics department at the University of Chicago), suffer from over-simplification, a strong infusion of ideology, and lack of empirical support. Mergers often are motivated by factors other than enhancing efficiency - such as the desire for monopoly power, empire building, cutting taxes, improving stock values, and even as a cover for poor management (such as when the badly-run U.S. Steel bought control of Marathon Oil).


Several researchers have questioned the supposed benefits of mergers. In theory, a merger that improves efficiency should increase profits. But one study by Dennis Mueller, and another by F. W. Scherer and David Ravenscraft, showed that mergers more often than not have reduced returns to stockholders. A study by Michael Porter of Harvard University demonstrated that a staggering 74% of the conglomerate acquisitions of the 1960s were eventually sold off (divested) - a good indication that they were never based on improving efficiency. William Shepherd of the University of Massachusetts investigated the "contestable markets" model, finding that it is a hypothetical case with minimal applicability to the real world.


Despite their inadequacies, the new apologetic theories have profoundly affected policy, because they provide an intellectual rationale for the agenda of the powerful. They also gain support because the system is "doing well," at least for a sizable elite. And the increase in global trade and investment gives a surface plausibility to the idea that relaxation of antitrust is both harmless and necessary for "competitiveness."


THE CASE FOR ANTITRUST


Given the weakness of antitrust law - the periodic capture of government by business, gutting of antitrust action, and ensuing burst of concentration - is antitrust not tilting at windmills? In his book Folklore of Capitalism (1937), Thurman Arnold argued that antitrust was a "lightning rod" diverting reformers from serious actions (public ownership, regulation) to calls for enforcing the unenforceable. Antitrust laws were unenforceable, he claimed, because they were attempts to halt the progress of efficiency.


But Arnold greatly overrated the importance of efficiency in explaining merger activity, and he undervalued both the benefits of antitrust and the costs of failing to implement it. Recently, for example, the government's failure to enforce the antitrust laws following airline deregulation in the late 1970s has meant high costs to consumers. A series of mergers has allowed the top four airlines to control 70% of the business at six major hubs, to effectively block entry, and to behave increasingly as a group oligopoly.


"Where Southwest [Airlines, a low-cost outsider] flies, fares are low, but in the rest of the United States, competition ranges from limited to non-existent....The difference between fares in the two markets is astonishing," noted a recent analysis. A one-way economy ticket on Southwest from Seattle to Spokane (223 miles) costs $53. Outside Southwest's territory, a ticket from Detroit to Pittsburgh (198 miles) costs $333.


The social costs of the conglomerate merger movement of the 1960s (a 74% divestment rate) and the junk bond-based merger frenzy of the 1980s were also great. From 1984-88, merger outlays averaged $184 billion a year, whereas corporate investment in new business facilities averaged $84 billion. The money used to buy other companies could have been invested in factory buildings, machinery, and other productive purposes. The supportive environment of a pro-merger antitrust (and tax) policy encouraged such wasteful behavior.


Apart from mergers, antitrust action also yields large benefits in breaking up ordinary restraints of trade - and would accomplish even more with greater resources and political support. Consumers have benefited from breaking up cartels that fix bid prices for government contracts in road building, or in the prices of construction materials, strawberries, and opticians' supplies. In one famous case more than a half century back, an antitrust attack on a cartel selling tungsten carbide caused its price to fall from a range of $225 to $453, to $27 to $45 per pound.


Most important and most difficult, however, remains the problem of bringing mergers under control. The ongoing centralization process in the media, and throughout the economy, is incompatible with democracy, and the bias in antitrust policy toward considering only efficiency should be strenuously opposed. Real cost savings from mergers, as opposed to making higher profits through marketing power, are usually small or non-existent in mergers of large firms.


Microsoft, for example, threatens to gain total control over computer software and related information technologies. Its "Windows" software has 86% of all PC operating system sales, and its "Office" suite (word processor, spreadsheet, and database) has 87% of the market for such packages. Moreover, in 1996 and 1997 it bought or invested in 37 other companies. Microsoft has such deep pockets that it can afford to underprice or give away software for as long as it takes to drive a competitor out of the market - a threat now faced by Netscape.


A democratic bias in antitrust policy would incorporate size limits and entirely rule out mergers beyond a certain absolute size and market share. For large firms that do not exceed these limits the acquiring company should have to prove substantial real cost savings to justify any acquisitions.


Thurman Arnold had a point in suggesting the danger of too much reliance on antitrust. It would be a fatal error to allow neoliberals to privatize public agencies and deregulate monopolistic industries, in the hope that antitrust would then make these industries competitive. Privatization is often socially damaging in its own right (see "Privatization: Downsizing Government for Principle and Profit," D&S, March-April 1997), and antitrust certainly does not assure competition.


Deregulated monopolies and oligopolies tend to remain in that condition, and under recent antitrust rules they are not only immune from antitrust attack, but are often permitted to merge with one another (see "Antitrust History", pp. 12-13). William Shepherd concludes that, since the antitrust agencies "have virtually given up all attempts to treat dominance" under deregulation and privatization, "antitrust is perhaps becoming a haven for dominance rather than a cure for it. Recognizing the danger is a necessary first step toward avoiding a future of monopoly power in telecommunications, railroads and electricity.""

[trickblue]

http://img.photobucket.com/albums/v628/cowboyszone/thread_stuff/duck_season.gif

[WiPatfan]

Jterrell,

I don't understand you at all. Do you want an Democrat in office or a Republican?

The Clintons try to spin Obama's reasonable point that Reagan's administration had an influence on America to be that "Obama endorses Reagan and Obama is a secret Republican." Now you have both Clinton and Obama on stage bashing Reagan in front of the entire country.

A huge proportion of independents LIKED Reagan. Reagan hating is not a great idea in the general election to those who think he won the Cold War and ensured the security of this country. Security will matter in the general election.

So in order for the Clintons to win the nomination, they feel the need to torpedo Obama's moderate stance that Reagan made a difference. That's playing well in Wisconsin, Ohio, Florida and Pennsylvania, let me tell you.

The Clintons will win the nomination, (too much money, too many favors that are owed) but at what price?

You must have signed up with the Clinton Campaign to spread rhetoric across the internet. If so, please let them know that they are sinking the party. They have the nomination, now step back.

[Yeagermeister]

http://img.photobucket.com/albums/v628/cowboyszone/thread_stuff/duck_season.gif

:bow:

[Cajuncowboy]

I've seen some moronic articles in my life but WOW! This has to be in the top 2.

Right up there with any of the ones Otero posted.


Stupid, just plain stupid.

[Cajuncowboy]

Well I have to differ. I knew many that had signs in windows saying...Closed due to Reganomics.

Sorry... I distinctly remember them because one family was such a close member of the family I called them Aunt and Uncle even though we were not really related.

You do know that some business closed because of poor management.

It was convenient and popular to blame the sitting President, just as it is today.

[jterrell]

Jterrell,

I don't understand you at all. Do you want an Democrat in office or a Republican?

The Clintons try to spin Obama's reasonable point that Reagan's administration had an influence on America to be that "Obama endorses Reagan and Obama is a secret Republican." Now you have both Clinton and Obama on stage bashing Reagan in front of the entire country.

A huge proportion of independents LIKED Reagan. Reagan hating is not a great idea in the general election to those who think he won the Cold War and ensured the security of this country. Security will matter in the general election.

So in order for the Clintons to win the nomination, they feel the need to torpedo Obama's moderate stance that Reagan made a difference. That's playing well in Wisconsin, Ohio, Florida and Pennsylvania, let me tell you.

The Clintons will win the nomination, (too much money, too many favors that are owed) but at what price?

You must have signed up with the Clinton Campaign to spread rhetoric across the internet. If so, please let them know that they are sinking the party. They have the nomination, now step back.

I want the candidate that will erase Bushonomics/Reagenomics and balance the budget. I want one that has an idea of what they are talking about and not just grandiose ideas.

Who last balanced the budget? Bill Clinton.

This article is not directed at Hillary or meant to champion Hillary, it is a general point that Democrats have to be careful of buying into the Reagen as great President nonsense when economically he was a disaster for most folks making normal blue collar wages.
Did he have successes? Yes, he did. He is no where near the worst President of our time but he is often put forth as a great president merely by the fact he was the last decent Republican imho.

You are right, Independents and Repubs love Reagen. We, as Democrats, have allowed that lovefest to go on long enough. It is time to call him out on the portion of his policies that were clearly flawed, especially since those are the ones Repubs base economic policy on this very day. All of those articles the Repubs love to post all champion that Bush economic policy as well. It is laughable but it is allowed because Democrats have been the party of weenies for 8 years. Man up and tell it like it is about their false ideals and fake record.

Because Hillary is likely to win we do not need to worry about "appearing" more conservative or moderate because her policies actually are more conservative than Obama's. It is funny how Hillary-bashers are quick to note her willingness to do what it takes to win and question her credibility when she has years of actual data to suggest where she stands on virtually every issue known to man.

[jterrell]

You do know that some business closed because of poor management.

It was convenient and popular to blame the sitting President, just as it is today.

Sure they did. But the stated opinion was a false one. Not all business owners loved Reagen.

That is really that simple.

Tell all the victims of outsourcing how they need to run their business better....

I know how they can... by outsourcing of course....except that only drives up the price of talent here because we bring less and less people up through the ranks. My salary keeps going up but my younger relatives who would die to work in this field can't get a job at 1/4th my hourly rate.

Businesses in general are stupid and short-sighted. It is the cost of the short-term money train thinking we have.

[Mavs Man]

http://wwwimage.cbsnews.com/images/2003/04/03/image547508x.jpg

"The American president Reagan was myth! Perpetrated by the Iraqi state government by esteemed president Saddam Hussein. He was an actor and you did not even notice! Very good...he was a puppet president and we had you all fooled like the American swine that you are."

[BrAinPaiNt]

You do know that some business closed because of poor management.

It was convenient and popular to blame the sitting President, just as it is today.

And some closed due to the reasons I listed.

Also I was arguing the point of what the poster said...not all small business owners loved Ronny. To say that they all did, and there were not a good number who disliked him, is flat out WRONG.

[Sasquatch]

Let's not forget Reagan's foreign policy. His attempt to normalize relations with Pinochet in Chile, coziness with the fascist government of Argentina, praise of Marcos in the Philippines, Rummy's mission to woo Saddam even after it was known that he used chemical weapons, sponsorship of murderous Nicaraguan Contras (El Mozote Masscare of 1981 which Elliott Abrams of all people denied ever happened), and support of South African paramilitaries and the Apartheid regime make him a president we can all be proud of.

[arglebargle]

Reagan came in with this positive message, and it made some folks feel good about themselves again. Regardless of what he actually did, he will be remembered fondly by some for that alone.