According to Wikipedia, The four pillars of Reagan's economic policy were to:

1. reduce the growth of government spending,
2. reduce marginal tax rates on income from labor and capital,
3. reduce regulation, and
4. control the money supply to reduce inflation (sound money policy).

Considering the population of the United States is a little over 300 million I don't see how $150 million is going to help stimulate the economy...

Perhaps it is $150 Billion?

In a nutshell, the philosophy is to get money out of the hands of the government and into the hands of consumers, and that will propel the economy.

Today, the news is that Congress and the White House have teamed up hand over $150 billion to taxpayers and businesses, in the hopes of stimulating the economy.

Questions for debate:

1. Does this economic philosophy work? Will today's "stimulus package" hurt, help, or have no effect?

2. Why does it work/not work?

Wikipedia is not a reputable source as it is edited every day by the general public. Please provide peer reviewed articles to make your point.

Aside from that, the official package has not been released, so any discussion on it is pure speculation.

Congressional leaders announced a deal with the White House Thursday on an economic stimulus package that would give most tax filers refunds of $600 to $1,200, and more if they have children.

House Speaker Nancy Pelosi said Congress would act on the agreement — hammered out in a week of intense negotiations with Republican Leader John A. Boehner and Treasury Secretary Henry Paulson — “at the earliest date, so that those rebate checks can be in the mail.”

President Bush is hailing the deal with congressional leaders on tax rebates and business tax cuts as "an effective, robust and temporary set of incentives" that will boost the U.S. economy.

According to Wikipedia, The four pillars of Reagan's economic policy were to:

1. reduce the growth of government spending,
2. reduce marginal tax rates on income from labor and capital,
3. reduce regulation, and
4. control the money supply to reduce inflation (sound money policy).

Oh, please...

And apparently, someone doesn't watch the news too well:

http://www.msnbc.msn.com/id/22782454?GT1=10755

Now, I realize that this news story hasn't been "peer reviewed". Still, I think that if Pelosi, Boehner and Bush are all hailing an agreement, at least in principal, and express their hope to get it out as soon as possible, that we can probably take them at their word, no?

As to the questions...

1. Does this economic philosophy work? Will today's "stimulus package" hurt, help, or have no effect?

I don't believe that this stimulus package is really going to help much, if at all.

Far too many people have been acting pretty much like the government over the last several years - taking out home equity loans to finance lifestyles they couldn't have afforded any other way - or using credit cards until they're maxed out. Otherwise, those with lower incomes, while perhaps living frugally just haven't been able to put away much in the way of savings, or to begin investing.

The stimulus package is meant to be spent in the retail economy. But a recent poll of people across all economic backgrounds indicates that most people are going to use any tax rebate windfall to either put towards savings, or to pay down current debt. Those saying that they would actually spend it, was a paltry 12%. Hardly what's needed to jump-start the economy, is it?

Second, the devil as they say, is in the details. All we know right now, is that the President and Congress has agreed to a "tax rebate" program. But if I recall the last one in 2003, it wasn't so much a rebate, as a "loan". The $300 rebate back then was basically added back into what everyone owed at the end of the year. Getting a check for $600 this time in June that raises your taxes owed by $600 in January '09, or reduces your refund by that much maybe won't sound like such a good deal after all to some folks.

We're just going to have to wait and take a look at what the final wording of the bill says.

Wikipedia is not a reputable source as it is edited every day by the general public. Please provide peer reviewed articles to make your point.

Point of information:


Peer review, according to Wikipedia , is the "process of subjecting an author's scholarly work, research or ideas to the scrutiny of others who are experts in the same field". While it generally refers to academic work in technical and scientific fields, when it comes to political, economic, historical, social, and pop cultural articles (as well as those in technical and scientific areas), Wikipedia is, itself, one of the most heavily peer reviewed sources in human history - by definition. The fact that the lowly general public can edit and amend items and add footnotes and references means that it is subjected to more scrutiny and correction than any peer reviewed journal in existence. The fact that the contributors to Wikipedia are often experts in their fields - and their entries open to criticism and emendation from other experts in those fields - gives Wikipedia enormous credibility.

Further, the objectivity of any article at Wikipedia can be publicly called into question and debated. If you, scuba, question any of the assertions about Reagan's economic policy, it is your right (some would argue your duty) to raise those questions or make the appropriate corrections with pertinent annotations and sources. What you seem to view as a flaw, many would consider the wiki system's greatest strength. Do you, by the way, have any "peer reviewed articles" assessing of how well wiki programs work - and their relative reliability?

Please provide a better source than Wikipedia articles (if you can) to make your point about Reagan's economic policy, if you have one. Better yet, use those sources to correct any misinformation you might find at Wikipedia. Consider it a public service. Meanwhile, the rest of us can read Wikipedia, consider its sources, examine the foundation for its articles, and make up our own minds - without your censorious (and, so far as I can make out, groundless) complaints. Thanks.

Visitors do not need specialised qualifications to contribute, since their primary role is to write articles that cover existing knowledge; this means that people of all ages and cultural and social backgrounds can write Wikipedia articles.

Because Wikipedia is an ongoing work to which, in principle, anybody can contribute, it differs from a paper-based reference source in important ways. In particular, older articles tend to be more comprehensive and balanced, while newer articles more frequently contain significant misinformation, unencyclopedic content, or vandalism.

Wikipedia is not an indiscriminate collection of information

1. The agreement reached today would allow Americans to keep more of their money to stimulate consumer spending. The growth plan provides approximately $100 billion in temporary relief that will allow Americans to keep or spend more of their incomes. Under the agreement:

In 2008, taxes would be cut from 10 percent to zero percent on the first $6,000 dollars of taxable income for individual taxpayers and the first $12,000 of taxable income for couples. Taxpayers could receive rebates of up to $600 for individuals and $1,200 for couples. A minimum of $300 per person and $600 per couple would be available to those with at least $3,000 of earned income. This relief would be available to everyone with adjusted gross income less than $75,000 for singles and $150,000 for married couples filing jointly. It will be phased out for taxpayers above those income thresholds.
Everyone eligible for this relief would also receive an additional $300 per child. For example, this would mean up to $1,800 of tax relief for an eligible couple with two children.
2. The agreement would also offer incentives to spur business investment. The agreement would save businesses approximately $50 billion in near-term taxes through a temporary change to the tax code that will allow American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008. This will encourage businesses to expand and create new jobs now because buying equipment, software, and tangible property this year will dramatically lower their taxes. The agreement also increases expensing for small businesses.

The Agreement Reached Today Adheres To Principles President Bush Set Forward Last Week To Guide Deliberations

The growth package:

Is big enough to make a difference in an economy as large and dynamic as ours. The package is approximately $150 billion, an amount sufficient to provide a boost to the economy.
Is built on broad-based tax relief that will directly affect economic growth, not Federal spending that would have little immediate impact on our economy. The package is not a collection of spending programs – it does not include any government outlays beyond the minimum rebate check and refundable child tax credit.
Is temporary and will take effect right away so we can get help to our economy when it is needed most. The personal tax relief will begin to stimulate consumer spending and additional economic growth within about 60 days of enactment, when the first rebate checks are expected to go out.
Does not raise taxes or include wasteful spending provisions.
The Growth Package Announced Today Would Use Proven Methods To Keep Our Economy Healthy

The experience of the 2001 and 2003 tax cuts shows that providing tax relief to families stimulates the broader economy by boosting household spending. For example, rebate checks increased total consumption by about 0.8 percent in the quarter that the 2001 rebates were received and about 0.6 percent in the subsequent quarter. As the non-partisan Congressional Budget Office noted, "Most analysts agree that the 2001 rebate stimulated the economy."

The approximately $100 billion of individual tax relief included in the growth package represents a substantially larger amount than the tax rebates of 2001. In 2001, $38 billion was distributed in rebate checks, amounting to 0.4 percent of GDP. $100 billion amounts to 0.7 percent of current GDP.

In a nutshell, the philosophy is to get money out of the hands of the government and into the hands of consumers, and that will propel the economy.

Today, the news is that Congress and the White House have teamed up hand over $150 billion to taxpayers and businesses, in the hopes of stimulating the economy.

Questions for debate:

1. Does this economic philosophy work? Will today's "stimulus package" hurt, help, or have no effect?

2. Why does it work/not work?

The budgetary impact of the economic changes was estimated to offset between 1 percent and 22 percent of the revenue loss from the tax cut over the first five years and add as much as 5 percent to that loss or offset as much as 32 percent of it over the second five years.

In general, I think it's absolutely nuts for the government to hand over money to people in the name of "injecting money into the economy," because it's simply adding to the deficit.

In general, I think it's absolutely nuts for the government to hand over money to people in the name of "injecting money into the economy," because it's simply adding to the deficit. There may be times when it is beneficial to dig into the Big Credit Card, on a one-shot only basis, and toss it into the money supply if it is intended to head off some economic calamity, but making it a tax cut means permanently reducing your immediate tax revenue and never addressing the added deficit. Proponents of tax cuts often claim that those tax cuts stimulate the economy to such a degree that it more than offsets the loss in tax revenue. Others say that they don't even come close: (Congressional Budget Office paper on tax cuts)

If I'm understanding that correctly, in their best-case scenario, even after churning that stimulus money for 10 years, you still only get 32% of that tax revenue back.

On the other hand, if the government keeps taxes at current levels and spends that $150 billion in their normal fashion, doesn't it get "injected" into the economy just the same? Social Security checks, Medicaid and Medicare payments, operating expenses, pork and bombs - isn't that all stimulus as well? And at the same time it's going toward obligations they have to pay for anyway. In fact, you could make a good case that $150 billion in pork projects would help the economy more than a tax rebate, since all of the money would stay in America for at least one cycle. Put that same money into the hands of Average Joe, and Best Buy is going to sell a record number of (Chinese) big-screen TVs when those checks hit this summer.

I think the reason that today's version of Reaganomics is so prevalent is that it has an irresistible rationalization: increase revenue/strengthen the economy by lowering your taxes. Everyone wants to believe it's true, and no politician is willing to suggest that actual austerity is the best path to economic strength.

----------------------------------
I should have made this a poll question: What are you going to do with your rebate check? I'll be using most of it to pay down some debt - maybe erase the last trace of my student loans - and some of it will probably go towards buying some cheap Chinese electronics. Sorry, economy, I won't be much help to you.

What's interesting in the big picture is that this stuff seems to be going in 15-20 year cycles. It also seems to be tied to insane expectations at the top, then harsh reality sets in.

I would agree to the cyclical nature of this economic philosophy. It really happens in nearly all economic models truthfully.

What I hate about the nature of our economy is that people literally believe that the government is holding the reigns specifically and on their own. Truthfully, the decisions we make as businesses and consumers impacts the economy as much or more than any government tax break or regulation.

The US consumer has been overextended for better than 2 decades, saving is down, and immediate gratification is now the American way when it comes to fiscal matters. That philosophy seems to be a part of US fiscal policy across the board.

The real question is what does that have to do with Reaganomics???. Truthfully. This isn't necessarily Reaganomics in its truest form, but more likely the "kid in a candy store" American financial policy. I WANT IT NOW!!!....

Think about this. 2-3 decades ago, if you weren't credit worthy, you didn't get a house. NOW- not only can people with poor credit get a mortgage, but also people with little or no down payment. It comes with a price. It always does... but as Americans we don't live with any sense of responsibility.

Spoken like a true liberal. "Nuts for the government to hand over money to people"...... John?

Just whose money is that anyway? Where did it come from in the first place? Ahhhh.. maybe "the people"? So it's not really "handing it over" exactly now is it? Isn't it really more like giving it back? And giving people back their own money is "nuts"?


Aquilla

You can call me liberal, but I prefer the term "fiscally responsible."


It's not our money. It's our kids' money. The government borrowed $150 billion more dollars to do this - there isn't a big pile of excess tax revenue that they are giving back from. Don't forget, they still have to pay their normal bills, and they still have to borrow to even do that.

My question is would keeping those tax dollars in the general fund, and not giving it to consumers possibly increase productivity and possibly create new jobs? By pumping $100 billion consumer dollars (if that was what actually was going to happen) in to the economy, the intent is to create more demand for consumer products and services.

Those dollars are not coming from any general fund - we haven't had excess funds since Clinton's surplus. Those dollars come from more borrowing. So people are going to do what they are going to do, save or spend, but whatever good that comes from that is going to be balanced against the harm from more debt - whatevere that may be. There are economists out there that don't think that running a deficit is a big deal, but most of us get very nervous when we think about that growing national debt. At the very least, it drains off money to pay off the interest.

First, I didn't know we were out of debt under the Clinton Administration. We may have had budget surpluses, but no debt? According to Treasury Direct, the debt outstanding was more than twice at the end of the Clinton Administration as it was at the end of the Bush 41 Administration.

So, again I ask, that if we are not to send more money directly to the consumers, what is the solution. No matter what we do, we will be borrowing money. How do we help the American people without borrowing? What is your suggested solution?

I find it interesting that almost everyone who is participating in this debate largely agrees with each other. Both scubatim and aevans176 have stated very well my feelings on the matter. Also, JohnfrmCleveland's point about increasing debt to pay for the "stimulus package" should not be ignored. I think we all agree on the following points:

1. The US government is way, way in debt and there are no easy answers to get us out of debt.
2. The US consumer has been "spoiled" by the immediacy with which they can make purchases without worrying too much about affordability.
3. The effect of the "stimulus package" will either be small or zero.

The previous post by aevans176 also made a good point about the "stimulus package" that I'd like to reinforce. Giving money to the consumer is not "trickle down" economics; it is almost the opposite of that. I find it surprising that the so-called "Reagan Republicans" are in favor of this program -- I can't imagine Reagan would have ever advocated something like this.

The previous post by aevans176 also made a good point about the "stimulus package" that I'd like to reinforce. Giving money to the consumer is not "trickle down" economics; it is almost the opposite of that. I find it surprising that the so-called "Reagan Republicans" are in favor of this program -- I can't imagine Reagan would have ever advocated something like this.

I never said we were out of debt under Clinton, just that we had a surplus (more revenue than costs) for a few years. For those few years, the U.S. didn't have to borrow to pay their bills, and if they wanted to try something like this rebate, they would not have had to borrow to do so.

You don't have to give money directly to consumers, that just happens to be a popular thing for politicians to do around election time. Other options are: cutting back government spending - the markets love this one. You can target a relief package to hit the economic trouble spots - like putting all $150 billion towards the mortgage crisis, for instance - but there are fairness issues. Or you can just sit back and let the chips fall where they may - there is an awful lot of feeling on this board that the people and banks involved with bad mortgages are getting exactly what they deserved. Of course, those bankruptcies end up costing all of us in the long run.

But when they make it a tax cut, it becomes permanent, and without cutting spending, all they will have done is lost tax revenue, year after year. That means more borrowing.

I don't see manipulating tax rates as the road to economic prosperity. I do believe in balanced budgets and paying down debt, but those are long-term, painful cures. I would welcome the new president restoring tax rates to those of the Clinton era - they hit me about the same, and it didn't seem to hurt the economy at all. Anything to stop the deficit spending.

We were definitely using less borrowed money, but according to the information I found, the national debt did not shrink, it just slowed down a little.

The linked chart shows how sharply the national debt rose under Reagan/Bush 1, how it contrated under Clinton and the almost obscene higher movenemt under Bush 2.

http://www.cedarcomm.com/~stevelm1/usdebt.htm

No. In his last year in office, the national debt actually went down - from 5.776 trillion at the end of 1999 to 5.662 trillion at the end of 2000.

US National Debt by Presidential Term

Also, as a percentage of GDP, it went down from 68% to 57% during his presidency. Supply side economics has only served to increase the national debt. It did so under Reagan, it has done so under Bush. The only thing that appears to have reduced the debt was Clinton's choice to do the exact opposite of supply-side economics by increasing taxes.

Reagan & Bush were spending insane money to build up the military and then to prosecute a war... but you knew that.

Clinton (as I have said a zillion times) properly drew down the US Mil since there was no "big" enemy and as such save a lot of money during a boom that was unprecedented. Sort of a right place right time. Bush II (This Time It's Personal) is prosecuting 2 wars which is doubly expensive...

SO comparing Clinton's good luck to RBBs situations and drawing the conclusion that Clinton was somehow "better with money" is, well, unfair.

That doesn't change the fact that there wasn't a "surplus" of money under Clinton.

Unless some freak miracle occurs, there will not be a generation that will see our government out of debt. As long as our debt exists, borrowing will continue.

To make it easier to comprehend, take a family budget. Given interest rates, which have not even been addressed in this thread, unless the debt is completely eliminated, finance charges continue to add up. Unless my family has enough "surplus" or savings built up to pay off debt, we will continue to "borrow" time by being charged interest which gets added to our balance. This applies to every form of debt be it mortgage, auto, personal, or credit cards. I may be paying down the debt, but I am still in debt, and until the lottery hits, I will continue to borrow.

Reagan & Bush were spending insane money to build up the military and then to prosecute a war... but you knew that.

SO comparing Clinton's good luck to RBBs situations and drawing the conclusion that Clinton was somehow "better with money" is, well, unfair.

SO comparing Clinton's good luck to RBBs situations and drawing the conclusion that Clinton was somehow "better with money" is, well, unfair.

To make it easier to comprehend, take a family budget. Given interest rates, which have not even been addressed in this thread, unless the debt is completely eliminated, finance charges continue to add up. Unless my family has enough "surplus" or savings built up to pay off debt, we will continue to "borrow" time by being charged interest which gets added to our balance. This applies to every form of debt be it mortgage, auto, personal, or credit cards. I may be paying down the debt, but I am still in debt, and until the lottery hits, I will continue to borrow.

"Finance charges," or "debt service" in Federal Budgetspeak, is counted as part of the yearly budget, right there with Defense, Medicare, etc. So, no, our finance charges are not tacked on to the principle. When there is a budget surplus, for that year's budget more money comes in than goes out, including "finance charges." So there is some extra money there to pay off some principle, and I think Clinton chose to do that with at least some of the surplus. We didn't borrow more money in those years, and we actually paid a little bit down.

Here is a link to an incredibly wrong prediction of future budget surpluses. From Bush's crack team in 2001. Sit back and enjoy.

In the terms of the deficit, we will continue to borrow until the debt is gone. You simply can't tell me that even when you pay down a small amount, that we don't continue to borrow.

This is copletely off topic anyway.

Way to go scubatim. Argue a point for several posts. When it appears you have sawed off the limb you are perched on, you declare we are off topic.

Deficit spending is part of the Reagan/Bush/Bush economic mantra. Whether or not the stimulus package is a good or bad thing, it busts the budget Bush was so smug about a couple of months ago and adds to the debt.

In the sense we still have debt we have borrowed, but no one thinks of borrowing in this way (except perhaps you). People think of borrowing to mean adding new debt -- a sense of "taking on". So, yes, while it is absolutely true that under Clinton we still had debt, we were (towards the end of his presidency) not adding new debt; or in the more conventional sense, we were not borrowing.

It appears many that lable themselves as liberal hold Mr. Clinton to the highest regards and feel he can and did do no wrong.

SO comparing Clinton's good luck to RBBs situations and drawing the conclusion that Clinton was somehow "better with money" is, well, unfair.

Although I "label" myself a "liberal," it appears to be the other way around. Notice how BA was feeling sorry for Reagan/Bush/Bush.



You might want to check that limb again.

I must be the only one....However, just because we lowered the debt, we still passed it on to further generations. This issue about the nation's debt is ridiculous to even try to discuss given the fact that I am not aware of a time in history that we were not in debt. So, as I have tried to express before, using debt as a reason this package is irresponsible is irrelevant. Even though we have been working with deficit spending, doing nothing has not seemed to work. We obviously are not going to get Congress to get the budget balanced and stick to it, doing nothing was accomplishing just that.

I have not sawed anything off, and I stand by the fact that even though very little of the debt was paid down, we were still working with borrowed money, thereby making the point of using borrowed money to stimulate the economy being irrelevant..

What always amuses me about discussions such as these, liberals like to bring up individual presidents, but ignore the body of government that is responsible for spending the nation's money.

In 1997 the political logjam was finally broken. The dramatic results proved the critics of the capital gains cut wrong; investment, new business creation, economic growth and job creation soared to record levels, and the United States enjoyed historic prosperity. Federal receipts from the capital gains tax cut of 1997 increased by 75 percent after four years.

l The rate of business capital investment has undergone a U-turn — from negative business investment
spending in the two years before the tax cut to an average annual increase in business investment of more than 10 percent in the three years after the tax cut.
l Contrary to forecasts of revenue decline, federal revenues overall and from the capital gains tax increased in the four years since the investment tax cuts. Total federal revenues increased $740 billion (2003-07), and capital gains tax revenues increased from $55 billion the year before the tax cut (2002) to an estimated $110 billion in 2006 (all figures adjusted for inflation to constant 2006 dollars).

l The rich did not get a huge tax cut from the capital gains cut; in fact, the percentage of income taxes paid by the rich increased from 34 percent to 39 percent from 2002 to 2005 (the most recent year for which data are available).
l The capital gains tax cut did not only benefit wealthy Americans; more than half of all tax filers
with capital gains had incomes of less than $50,000 in 2005 and more than two-thirds had incomes of less than $100,000.

In 1997 President Bill Clinton and a Republican Congress reached an agreement to lower the capital gains tax from 28 percent to 20 percent. According to Congressional Budget Office tax collection data, in 1996, the year before the capital gains tax rate cut, the total amount of net capital gains on assets sold was $335 billion. A year later, capital gains had jumped to $459 billion. (The tax cut was retroactive to May 1997.) In 1998 they climbed to $562 billion. In 1999, total capital gains exceeded $669 billion. A similar process occurred with the 2003 reduction; in 2002, realizations were at $301 billion; by 2006, they reached $683 billion.

Scubatim,

Your entire post is about capital gains tax cuts. According to your source, Bush's 2003 capital gains tax cut only provided $55 billion more in revenue in 2006. Did it stimulate the economy? Sure. Did it do so enough to be beneficial in the long term? No. Why because in 2006, despite the increase the deficit for that year was still $248 billion.

And the surplus under Clinton could not have come solely from a capital gains tax cut. The numbers don't add up. So you are talking about stimulating the economy through a capital gains tax cut during a time of budget surpluses. You had higher income taxes to create revenue and lower capital gains tax to stimulate investment. That is not the situation that exists now.

The fact is you are still using your funny way of determining the health of the economy. To you, it seems, the more money people have in their pockets, the better the economy is. Well, that's not so. And supply-side economics - combined with a deficit - only masks the existing problem