The President proposes the budget.
EVERY Reagan budget was dead-on-arrival at a hostile, Democratic controlled Congress.
Reagan got the budgets he asked for. Putting it off on Congress is just a cop out.
Felling revisionist today, huh? The fact is, Tip O'Neill promised spending cuts as part of a budget DEAl, that he then never delivered on, as a deliberate attempt to put the government in a huge deficit.
Fact: Interest rates eased after Reagan slashed tax rates.
The long-bond yield was 13.45 percent in 1981. By the time Reagan left office in 1989, it had dropped to 8.45 percent. Mortgage rates fell from 14.70 percent to 10.13 percent over the same period.
Fact: Inflation cooled.
In the year before Reagan's tax cuts took effect, the annual rate of consumer inflation was 13.5 percent. In the first year of his tax cut, 1981, inflation was 10.3 percent. In the second year, it was 6.2 percent. By the third and final year, 1983, inflation had dropped to 3.2 percent. When Reagan left office, inflation stood at a tame 4.8 percent.
Fact: The economy reached full employment.
Before Reagan's full tax-relief package took effect, the jobless rate hit 9.6 percent. But as tax cuts worked their magic in the economy, unemployment dropped every year after 1983, reaching a low of 5.3 percent in 1989.
Tax cuts benefited minorities, too. The jobless rate among blacks plunged from 19.5 percent in 1983 to 11.4 percent in 1989.
Fact: Government revenues nearly doubled after Reagan's sweeping tax cuts.
Before his 25 percent across-the-board cut in individual income-tax rates went into effect, government receipts from individual income taxes trickled in at $244.1 billion. The year Reagan left office, they totaled $445.7 billion -- an 82 percent jump.
In the tax-hiking, supposedly "fiscally responsible" '90s, by comparison, individual tax receipts rose a comparable 86 percent.
More key, individual tax receipts grew at a compound annual rate of 6.9 percent from 1980 to 1989 (compared with a 7.1 percent rate from 1990 to 1999).
Meanwhile, however, federal outlays grew at a faster 7.6 percent compound annual clip from 1980 to 1989, causing the yawning budget gaps.
Yes, Reagan ballooned defense spending. But Democrats, who controlled appropriations back then, refused to give him the corresponding cuts in other domestic programs -- and instead increased spending.
In fact, the Democrat Congress outspent every one of the nine budgets Reagan proposed, but one.
As for other countries, they will do no such thing. First, there is no country more powerful or stable than the US. Our current accounts "deficit" reflects not jobs going overseas but foreigners investing here.
If there's any investing to be done, it will have to be foreigners. We don't save any money to invest here.
Second, the largest holder of US securities is US citizens or corporations.
Nice way to obscure the fact that almost HALF of the debt is owed to foreigners. According to Federal Reserve data, $2.2 trillion of this 'public' debt, rising to a new record over 46%, is owed to foreign investors and foreign central banks - - not to U.S. citizens. The share of foreign holdings zoomed upward since 1992.
Third, countries that are large holders of US instruments, incl dollars, will not want to shoot themselves in the foot by destabilizing the currency they hold. All the "what if" is just wind and noise.
...or, they could start a "run on the bank" to avoid being left holding the bag. Please note the Euro, which started trading at around 84 cents, is now worth over $1.30, as more and more nations do business in it rather than thte dollar. Perhaps the run has started...
