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Now for some real gibberish.
Strict monetary (as opposed to fiscal) policy was responsible for unwinding inflation, as well as precipitating sharp recession. Recession, in turn, delayed the beneficial effects of the tax cuts on investment and drove up the budget deficit. A lot. Ironically, it was the enactment of tax cuts without by spending cuts that forced the Fed into a tighter monetary policy. The subsequent recession caused serious budgetary imbalance.
Yes, yes, there are plenty of good stats about 81-88. Unemployment rate down, CPI growth down, GDP growth up... yada, yada...
The defcicit doubled, suckas.
I don't think supply side works. I think the prosperity of the mid 80s had much more to do with the business cycle and monetary policy than it did with tax cuts. But don't take it personally, I don't think Clinton's fiscal policy had much to do with the 90s boom either.
MMMMMM, NC State....
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I don't think it was genetics that made those chicks' boobs so nice.
As for the tax cuts...in the 1980s, Reagan cut taxes and government revenue actually went UP. I know, it sounds like a paradox, but it works.
When taxes are cut, the economy usually grows and more jobs are created because 1) the "rich" (who do all the investing in this country) have more money to invest in existing businesses, and 2) the everyday consumer has more disposable income to spend on "stuff", which creates a higher demand for products that companies must produce. In turn, the growth in the business sector (which includes new businesses who have the incentive to start-up in a better economy) means more people become employed, which means that more people are paying federal income taxes instead of collecting unemployment. Furthermore, higher corporate revenue generates more taxes for the government.
There is not a finite set of wealth in this country. Wealth can be created, and the best way to get existing businesses to create wealth, and get new businesses to start up, is to provide tax and economic incentives.
In 1963, John F. Kennedy (yes...a Democrat) proposed cutting the top marginal tax rate from 91% down to 70%. After he was killed, LBJ implemented that tax cut and tax revenues increased by 33%. Reagan cut the top marginal tax rate again in 1983, from 70% down to 28%, and the same thing happened -- total tax revenues increased by 99.4% during the 1980s. Both were admittedly "tax cuts for the rich," but in the end, government revenue went up due to increased overall wealth and prosperity. Everyone ended up winning. However, the key to avoiding deficits is to spend that tax revenue wisely, and I think Bush needs to reevaluate his spending initiatives in light of the fact that we're about to go to war.
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