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Originally Posted by astralis
gunnut,
i don't think that was FDR. we ran up plenty of deficit during the depression years and WWII (this in particular), but the massive employment gained through the use of government spending more than off-set the financial costs of the deficit.
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Keynesian economics, it's ok when applied carefully in small amounts and not prolonged use. What we have here is government intervention gone awry.
Quote:
Originally Posted by astralis
however, in the case of reagan and bush, this deficit spending did not produce a similar economic gain, simply because 1. there wasn't that much economic "slack" to soak up, 2. gains in our economy are increasingly coming from efficiency, produced by technological growth. bush probably would have done better for the economy had he geared the tax cuts for technology sectors, or better yet, a combination of tax cuts and funding for high-technology research (which, to his credit, the latter of which he has done, but IMO not enough).
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In Reagan's case, I would argue his voodoo economics actually worked. He cut taxes for the rich to stimulate spending and investment. The top income bracket went from paying 70% in income tax to 25% under Reagan. The result was the boom in the late 80s and 90s.
Bush just tried not to raise taxes.
Quote:
Originally Posted by astralis
reagan's best move when it came to domestic policy was paul volcker, and sticking by that guy while he killed inflation. when it came to following reagan's own mantra of reversing government growth, though, that never happened on reagan's watch. at best, reagan slowed down the rate of growth by a small amount...for a few years...and then the rate of growth went right back up afterwards.
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I agree that Reagan didn't decrease the size of the government. He had to work with a hostile congress in building up the arms. He had to give something.