Why am I having awful Reagan flashbacks?

Clarkmeister · #1 03-25-2003, 12:04 PM

Bush wants to keep his tax cut despite a deficit. Fine, I guess, except that he also wants to add in a prescription drug benefit. Oh, we've got to figure out how to pay for a 75B unbudgeted war with who knows how many other billions in 'payoff' fees to our allies.

Something wrong with this picture?

Jimbo · #2 03-25-2003, 01:40 PM

Something wrong with this picture?

Not as far as I can tell. Perhaps you should review Reagan's success prior to becoming too worried. [img]/forums/images/icons/smile.gif[/img]

Clarkmeister · #3 03-25-2003, 01:51 PM

While Reagan's presidency was successful in many reagards, the one area where it abjectly failed was in regards to fiscal responsibility. Note that if 10-15% of our annual budget wasn't dedicated to paying off (mostly)Reagans debt, we'd have plenty of money to fund this war, prescription drugs, tax cuts, and lots of other stuff. Is Bush's goal to increase the annual debt interest payments from 10-15% of the budget to 20%?

adios · #4 03-25-2003, 02:05 PM

Current yields on treasuries:

2 Year 1.65
5 Year 2.93
10 Year 3.96
30 Year 4.93

If I could sell people a 10 year bond at 3.96% yield I'd sell em all they wanted. The amazing thing is the demand is strong for them (with a slumping dollar no less).

As far as running a deficit in economically slow, to sluggish times it's the right thing to do IMO. I think it's fair to say that John Maynard Keyenes would agree. Hoover in the late 20's tried for a balanced budget, with higher taxes, and with tight money during economically slow times during his administration and look what it led to. As far as running Reagan running a huge deficit, I think the "peace dividend" and the end of the cold war were well worth it.

Clarkmeister · #5 03-25-2003, 02:13 PM

And thank God for those interest rates. When more (historically) typical rates were in effect, the % of our budget that went to interest was not the current 11%, it was as high as 30%. It is naive to think that we will continue to have this benign interest rate environment. As we float all those 6 month and 1 year T-bills we leave ourselves incredibly vulnerable to any increase in short term rates. Tacking on even more debt isn't prudent. Yes, using debt can be optimal. That isn't the case right now IMO.

As far as the myth of the Reagan "spending the Commies into defeat", its just that. The USSR was going to collapse regardless.

adios · #6 03-25-2003, 02:19 PM

"And thank God for those interest rates. When more (historically) typical rates were in effect, the % of our budget that went to interest was not the current 11%, it was as high as 30%. It is naive to think that we will continue to have this benign interest rate environment."

Right. This is one reason you run a deficit when times are slow.

"As we float all those 6 month and 1 year T-bills we leave ourselves incredibly vulnerable to any increase in short term rates."

Explain please.

"As far as the myth of the Reagan "spending the Commies into defeat", its just that. The USSR was going to collapse regardless."

It sure didn't hurt though [img]/forums/images/icons/smile.gif[/img].

HDPM · #7 03-25-2003, 02:40 PM

No, Clarkmeister has a point Jimbo. The problem when Reagan was in office was that Congress was Democrat. Now that it's a Republican congress, there is no excuse to continue with excessive spending. Where I disagree with Bush is in his ridiculous spending for social programs. It is not conservative. It is not the right thing to do. Of course politically it is seen as a necessary thing to overspend to bribe constituencies. And Republicans, even those seen as conservative in other areas, are guilty of socialist spending habits. There should be no prescription drug benefit, aid to AIDS in Africa, money to religious groups for various crap, or any other wasteful social spending. Roads and weapons are about all we need. [img]/forums/images/icons/smile.gif[/img]

Dynasty · #8 03-25-2003, 03:51 PM

The USSR was going to collapse regardless.

Totally wrong. It's too big a debate for me to really get into, but it's not reasonable to think the Soviet Union was simply going to collpase without massive pressure being put on it externally. I agree it wasn't as simple as "spending the Commies into defeat". The U.S and it's allies apllied pressue across the board for four decades. Without that pressure, the Soviet Union would still exist today and be far more influential than Russia is.

IrishHand · #9 03-25-2003, 04:55 PM

Do you seriously think the Soviet Union collapsed because of US "pressure"? Even a nice historian would say that's a gross exagerration. Reagan's fiscal irresponsibility (and foreign policy, for that matter) was at best one of a million other reasons which led to the collapse of the USSR. The most important reasons were internal.

I gotta go with Clarkmeister on this one - all empires flounder eventually...it's only a matter of time, and the more corrupt the empire, the quicker the fall. Just the nature of the beast.