Mark Robertson’s letter (2/7, “Reaganomics worked”) was well researched and generally correct except for one important omission. He forgot to mention that during Reagan’s eight years in office, our national debt nearly tripled, primarily because federal spending soared. Predictably, the combination of lower tax rates and increased spending gave our economy a boost, but we’re paying the price today.
The current stimulus package dwarfs anything we’ve done since the New Deal, and it will have serious long-term consequences. The national debt as a percentage of gross domestic product is approaching a level not seen since the early 1950s, in the aftermath of World War II.
There is no easy way out of this. At some point we’ll need to increase taxes, cut spending, or both. I just hope that when the current recession ends our elected officials will have the intelligence and courage to do the right thing.
“There are lies, damned lies and statistics.” Whoever first uttered that phrase must have tutored the defenders of Reaganomics.
At Ronald Reagan’s inauguration: Sky high interest rates? Given. Soaring inflation? Yeah. Climbing unemployment? Maybe.
But here is where reality intrudes and this situation is different. There was no war, no collapsing stock market, no epidemic of foreclosures spreading like wildfire, no plethora of large corporations cutting jobs like a barber in boot camp and no bevy of financial pirates grabbing their booty and scurrying like cockroaches for cover. Some clam that tax cuts and deregulation worked wonders in the 1980s. Perhaps, but most likely the rich just got richer and seeds were sown for our current woes.
Is Reaganomics the right thing for 2009? No. Barack Obama must oversee a process that stops the bleeding and starts the healing. What the defenders of Reaganomics refuse to acknowledge is that the bleeding was caused by years of financial system abuse by a lot of people who utter the mantra of Reaganomics while they line their own pockets.