Deficit Chicken Hawks vs Ronald Reagan

Once upon a time, there was a President. He was elected in the middle of a recession, following an economic crisis and a decade long bear market. He came into office on high flying oratory, but was regarded by many as a lightweight.

Once in office, he passed a variety of legislation over the objections of a hostile opposing party. The pundits and the thinktanks derided his big spending, his tax cuts, and his reorganization of government. He had very different priorities than the prior president, and tried to put his stamp on government in a variety of reprioritizations.

The President had barely been in office for 18 months when the pushback to his agenda became fierce. The media and the opposing political party all focused on the budget deficit. Most of it had been accrued long before this President came into the office, but that did not stop him from getting the full blunt of the blame. “We must stop this fiscal profligacy, or it will be the end of us!” the critics all cried.

But the president ignored the critics, and put forth a deficit laden budget that contained a massive stimulus and tax cuts. He even joked about the debt issue: “I am not worried about the deficit. It is big enough to take care of itself.

By the second year of his presidency, the stimulative effects of the deficit had their impact. Unemployment began to come down, incomes went up, and the stock market roared ahead.

By now, it should be obvious that we are not discussing President Barack Obama, but rather the 40th President of the United States, Ronald Reagan.

Which raises an interesting question: We seem to be overrun with Austerians, newly minted deficit chickenhawks who recently have discovered the evils of deficit spending.

What would all of these deficit foes have said to Ronald Reagan during the first 2 years of his Presidency?  Mr. President, we cannot spend more than we take in? Mr. President, we cannot afford those tax cuts — or to spend so much on the military?

The current president, who obviously has very different priorities than RR, is in many ways following his path: Huge deficits, tax cuts targeted to his electoral base, allowing policiies of his predecessor to expire.

I find it terribly amusing that some conservatives have latched onto the deficit as their key issue, when they took the idea of deficit spending to great new heights! Whether you are looking at the economic policies of Ronald Reagan or George W. Bush, reining in the deficit was clearly of no concern. (Forget speechifying, I refer to actual policies).

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I continue to see the Austerian movement in the United States as thinly disguised partisan politics. These are people who will say anything to keep the subsidies and tax benefits flowing to their electoral base. They will say anything –regardless of whether they actually believe these things — to thwart the opposing fellows priorities.

Anyone who believes the new deficit fighters care about deficits has not been paying attention. This is simply about power and money and legislative priorities and cash. With only a very few exceptions, it has nothing to do actual fiscal priorities and debt loads and deficits.

The vast majority of these new deficit chickenhawks — who voted for unfunded entitlement program (prescription drugs), who gave away trillions in unfunded tax cuts, who voted for a trillion dollar war of choice, are simply not to be believed. Their past actions speak far louder than anything they might say today.


Originally published at The Big Picture and reproduced here with the author’s permission.

2 Responses to "Deficit Chicken Hawks vs Ronald Reagan"

  1. Guest   July 13, 2010 at 9:46 pm

    Barry if you do not see the difference between the time of Reagan and the current situation you are either lacking in IQ or not willing to accept reality.1. Reagan’s stimulus was done in the way of tax cuts and defense spending increase not federal government dictating how money should be spent.2. He also faced a congress controlled by the opposing party, so there was compromises made.3.Rrevenues increase when the economy recovered despite the tax cuts.4. My gripe is when the economy recovered he did not slow down the rate of increase in government spending.I was a dairy farmer during the eighties I suffered from the bubble the previous administration had created from the increase of dairy support prices and loans made to farmers who were poor business risks. The mentality was if a person wanted to farm a loan was available. Sounds similar to the Housing crisis which was the prime drive for today’s crisisWe have recessions because corrections need to be made due to imbalances in the system. There was an opportunity for a lot of people in Wall Street to be taught a hard lesson recently but the government interfered and has put itself onto a path if insolvency in the process.Sorry but Tarp should have never been passed! I do not believe the US economy is based on 4 big institutions but rather 114 million households. I happened to believe in some respects Wall Street was somewhat of a victim since they were creating packages for housing and education and government spending but they should have also been a gate keeper and they did not do their job and they should be gone – history. It would have been rough for 6 months to a year but light would be much brighter now. Some of the major actions that should have been done were reduce the pay roll tax and capital gains to zero for a year and then slowly ramp the taxes back up not giving new life to Golden Sachs.Give an example how backwards we are – GM went into bankruptcy with about 80 billion dollars of debt of which half was accumulated in the last 10 years to shore up their pension fund and medical fund for their retires. They were no longer a car company but a pension company that produced cars to feed their pension. Fast forward to this summer – they are ready to offer stock, reason, to feed their pension fund.I currently work for a global company that manufacture AG equipment. I have traveled to manufacturing plants in India and Mexico. I see in those plants a young educated workforce working in plants that recently seen a lot of capital improvements.Unless we get a educated straight talk people in government we are doomed. House cleaning is required!

  2. Eric   July 14, 2010 at 12:56 pm

    During the Regan years, the deficit as a percent of GDP started at 2.5%, went as high as 6% and was about 3% at the end of his second term. The gross federal debt went from about 35% to 50%. Ignoring partisanship issues, the state of the federal balance sheet at the beginning of the respective presidents’ terms is an important distinction. Obama entered office at a time when gross federal debt was about 75% of GDP and the deficit was about 3% of GDP.