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MiniMe

(21,717 posts)
Tue Aug 16, 2016, 07:05 PM Aug 2016

How Ronald Reagan zapped a recession with massive government spending

No one is more associated with the conservative cause of small government than Ronald Reagan.

He entered office in 1981 insisting that government deficits were too high, that taxes had to be cut, that spending had to shrink. His inaugural address declared "government is not the solution to our problem; government is the problem." His 1988 farewell address reiterated that "man is not free unless government is limited." Name-checking Reagan and these commitments has pretty much been an entry requirement for politicians into the GOP ever since.

But as people have noted over the years, there's a tension between Reagan's rhetoric and what actually went down between his inaugural and farewell speeches. Both the national debt and the size of the federally employed workforce rose during Reagan's tenure. Government spending grew as a share of the economy, then returned to exactly where it was when Reagan started.

But what's most interesting about this contradiction is that, in all likelihood, Reagan's failure to deliver on his own small government rhetoric is a big part of why the famed Reagan economic boom happened.

snip

http://www.theweek.com/articles/642128/how-ronald-reagan-zapped-recession-massive-government-spending


As all on DU have known, the Reagan myth is just that, a total myth.

23 replies = new reply since forum marked as read
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How Ronald Reagan zapped a recession with massive government spending (Original Post) MiniMe Aug 2016 OP
Say to conservatives that RayGun tripled the national debt and their reply is "he had to" and its uponit7771 Aug 2016 #1
That and unemployment skyrocketed during the 1st quarter FreakinDJ Aug 2016 #4
+1 uponit7771 Aug 2016 #15
He tripled the debt. louis-t Aug 2016 #2
Just like everything else, Dark n Stormy Knight Aug 2016 #3
That's it nikto Aug 2016 #20
Massive government DEFENSE spending. Enriching crony supprters. Crumbling infrastructure be damned. 63splitwindow Aug 2016 #5
Reagan Should Have Been Hung For Treason Yallow Aug 2016 #6
That word is sure thrown around a lot TransitJohn Aug 2016 #8
Attempting To Get People To Hate Government Instead Of Fixing It Yallow Aug 2016 #9
Unfortunately, your book comports with neither TransitJohn Aug 2016 #11
If true, the October surprise, gabeana Aug 2016 #14
Republicans with their small guvmnt and spending cuts griloco Aug 2016 #7
Yessssirrrree,,,, Cryptoad Aug 2016 #10
Reagan benefited from the fact that Carter was able to break OPEC and thus pop the commodity bubble. forest444 Aug 2016 #12
I have been saying this for years. Finally someone wrote an article pointing this out! Quixote1818 Aug 2016 #13
It's not a myth rather it's a delusional fantasy that some people cling cstanleytech Aug 2016 #16
Interesting, how everyone now wants to piss on Carter. He wanted us to take our economy in jtuck004 Aug 2016 #17
Well said. forest444 Aug 2016 #21
Raygun sucked. Under his administration the unemployment skyrocketed liberalnarb Aug 2016 #18
Military spending is a piss-poor way to stimulate the economy Major Nikon Aug 2016 #19
When is it going to trickle down to the rest of us? IronLionZion Aug 2016 #22
If it was a "Reagan Boom," then it was also a "Reagan Recession" JackRiddler Aug 2016 #23

uponit7771

(90,347 posts)
1. Say to conservatives that RayGun tripled the national debt and their reply is "he had to" and its
Tue Aug 16, 2016, 07:12 PM
Aug 2016

... a bullshit ass'd excuse.

louis-t

(23,295 posts)
2. He tripled the debt.
Tue Aug 16, 2016, 07:13 PM
Aug 2016

Most of it was because of huge tax cuts and increased military spending. During the Reagan years, the American public first got wind of the massive rip-offs by the military industrial complex. $600 wrenches and $2,000 toilet seats or whatever. Warehouses full of spare parts that would never be used.

 

Yallow

(1,926 posts)
6. Reagan Should Have Been Hung For Treason
Tue Aug 16, 2016, 07:59 PM
Aug 2016

""government is not the solution to our problem; government is the problem.""

Treason

Government of the people, by the people, and for the people is not the problem. People like Ronald Regan are the problem. Lying dirt bags who cut taxes on the wealthy, and stuck us with the bill. Us and our children.

TransitJohn

(6,932 posts)
8. That word is sure thrown around a lot
Tue Aug 16, 2016, 08:11 PM
Aug 2016

It does have a specific definition, and I wish that people of all political persuasions would quit labeling their political opponents with it erroneously.

 

Yallow

(1,926 posts)
9. Attempting To Get People To Hate Government Instead Of Fixing It
Tue Aug 16, 2016, 08:12 PM
Aug 2016

Is in my book the definition of treason. As America fails, other nations win. Attacking our government is for the direct benefit of our enemies. Agree?

gabeana

(3,166 posts)
14. If true, the October surprise,
Tue Aug 16, 2016, 08:21 PM
Aug 2016

was treason and his Iran Contra scandal sure was an impeachable offense

It was a very corrupt administration

forest444

(5,902 posts)
12. Reagan benefited from the fact that Carter was able to break OPEC and thus pop the commodity bubble.
Tue Aug 16, 2016, 08:17 PM
Aug 2016

Falling oil prices slowed inflation - with an assist from the Reagan recession, albeit at the cost of 10.8% unemployment - and falling inflation, in turn, pushed interest rates down sharply starting in August 1982.

In all, however, we had the same average rate of growth under Reagan as we did under Carter (3.3%). The difference being, of course, that while Carter left the national debt at a post-war low in relation to GDP (30%, federal only) under Reagan the national debt tripled (see chart above).

Quixote1818

(28,947 posts)
13. I have been saying this for years. Finally someone wrote an article pointing this out!
Tue Aug 16, 2016, 08:20 PM
Aug 2016

Of course it was the Gov. spending that got us out of the recession and not the tax cuts.

cstanleytech

(26,299 posts)
16. It's not a myth rather it's a delusional fantasy that some people cling
Tue Aug 16, 2016, 08:37 PM
Aug 2016

to because they are not able to deal with reality so instead they make up a delusional fantasy about Reagan as some sort of modern Davy Crockett/George Washington.

 

jtuck004

(15,882 posts)
17. Interesting, how everyone now wants to piss on Carter. He wanted us to take our economy in
Tue Aug 16, 2016, 08:47 PM
Aug 2016

hand, stop the spending, and get our inflation under control by being more responsible, put on sweaters and quit giving our enemies exactly what they want.

So much for that.

Reagan taught us that we could just borrow, that good jobs and producing things isn't necessary.

That has led us to the environmental and financial shit hole that is the US today, as everyone since then has been too cowardly to reverse our course.

So the next generation will be poorer, their world will be burning, and the folks who used it up and handed it to them may get to pay a price after all.

forest444

(5,902 posts)
21. Well said.
Tue Aug 16, 2016, 10:01 PM
Aug 2016

Carter's energy policy, moreover, is what finally broke OPEC and popped the burdensome commodities bubble brought about by Nixon's pulling out of Bretton Woods (I bet Tricky Dick loaded up commodities futures as he was doing so too).

The fall in commodities prices beginning in 1980 helped push down inflation and interest rates by 1982, thus making the Reagan recovery possible.

Had it not been for Reagan we could have actually had all that without the trillions in extra debt or the S&P collapse - or Iran-Cocaine-Contra, or the crack epidemic, or Executive Order 12333 (the one that lets the NSA spy on Americans), or Al-Qaeda, or so many other unnecessary and deleterious things we could have easily avoided.

Qué será.

 

liberalnarb

(4,532 posts)
18. Raygun sucked. Under his administration the unemployment skyrocketed
Tue Aug 16, 2016, 08:53 PM
Aug 2016

and the auto industry collapsed. He destroyed Detroit. Fuck him.

Major Nikon

(36,827 posts)
19. Military spending is a piss-poor way to stimulate the economy
Tue Aug 16, 2016, 09:50 PM
Aug 2016

This is especially true when there is no added economic protections you are gaining by that spending. Saint Ronnie loaded Cold War 2.0 during a time when the USSR was already swirling the drain. So the myth that Saint Ronnie beat the Soviets is just that. The fall of the USSR would have happened with or without his efforts. If anything, Saint Ronnie extended the Cold War by giving the Soviet hardliners more fuel to keep it going for as long as it did. So the reality is that he pissed away around a $trillion 1980's dollars. Although increased military technology occassionally has civilian applications, usually it just manages to kill more people more efficiently.

Had Saint Ronnie invested in infrastructure or education rather than the military, the economic returns would have been an order of magnitude higher.

IronLionZion

(45,462 posts)
22. When is it going to trickle down to the rest of us?
Tue Aug 16, 2016, 10:01 PM
Aug 2016


He increased defense spending during peacetime which created lots of STEM and manufacturing jobs in defense contracting. Other sectors of the economy were not so lucky

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