The Cost of the Left-wing’s Ongoing Vendetta Against Reagan

In Memoriam:

Alexander Cockburn, co-editor with Jeffrey St. Clair of CounterPunch, has died after his silent two-year battle with cancer. Although he didn’t please everyone, his was an important voice. His mother was an English aristocrat and his father was a hell-raising journalist. Alex had the traits of both of his parents. He was educated at Oxford and was an engaging conversationalist.

Alex lived in the US for a long time and became a US citizen a few years ago. He wrote for the Village Voice and in the Reagan years had a column on the op-ed page of the Wall Street Journal, something that would be impossible today.

I will miss him and so will people who do not know who he was. The force has been weakened.

I will have more to say about him at a later time.

PCR

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The Cost of the Left-wing’s Ongoing Vendetta Against Reagan

By. Paul Craig Roberts

What causes some people to feel compelled to make uninformed digs at President Reagan? Is it just that they are brainwashed or, if they are thoughtful people, just too involved with other matters to be well informed about Reagan? How many of the digs at Reagan are deflective activity by Clinton/Bush/Cheney/Obama shills diverting attention from the real causes of our woes?

Reagan and his administration are not above criticism, but Reagan most certainly is not to blame for the financial crisis or for the neoconservative wars for American hegemony.

The Reagan administration’s interventions in Grenada and Nicaragua were not, as is sometimes claimed, precursors to Clinton’s war on Serbia and the Bush and Obama wars on Iraq, Afghanistan, Libya, and Syria, with more waiting in the wings. Reagan saw his interventions in the context of the Monroe Doctrine, not as an opening bid for world hegemony.

The purpose of Reagan’s interventions was to convince the Soviets that there would be no more territorial gains for communism. The interventions were part of Reagan’s strategy of bringing the Soviets to the table to negotiate the end of the cold war. Reagan believed that getting the Soviets to negotiate would be more difficult if they were still making territorial gains or gains that the Soviets might perceive in that way. Possibly, Reagan’s advisers were wrong to put a Marxist interpretation on political events in Grenada and Nicaragua, but that is the way Reagan understood them.

When Reagan understood what the Israelis had lured him into in Lebanon, he pulled out. Reagan opposed war as an instrument of American hegemony. It is the neoconservatives who use war to achieve hegemony. Reagan was not a neoconservative.

The left-wing is more interested to blame Reagan for the financial crisis than to understand the crisis. The left-wing accuses Reagan of deregulating the financial system and of setting up a “Plunge Protection Team” to rig financial markets.

I have found that giving people information that they do not want to hear is a frustrating experience. Heaven forbid that anyone would have to overcome their ignorance or rethink their prejudices. But I keep trying.

First, however, I want to answer two questions: What is the source of the left’s animosity toward Reagan, and “why does Roberts keep defending Reagan?” The latter question is usually answered for me by people who know nothing of my motives but are nevertheless comfortable in answering for me: “He was part of it and can’t admit he was wrong.”

The left’s animosity toward Reagan is a mystery. Consider Reagan’s economic and foreign policies. The stagflation that Reagaonmics cured was hurting the poor, not the rich. The rich raise prices; the poor pay the higher prices. There is always a risk of a cold war going hot. Negotiating the end of the cold war did not please the military/security complex, and apparently not the leftwing peaceniks either.

The first business of the new Reagan administration was to complete the Carter administration’s plan to save autoworker jobs by imposing quotas on imports of Japanese cars. Reagan did this even though it demoralized his conservative free trade supporters. Reagan got no thanks from the left who denounced him instead for bailing out his Republican buddies in the auto business.

I still hear from Readers hostile to Reagan that Reagan’s firing of the illegally striking air traffic controllers is proof that he was a “union buster.” One sometimes feels sorry for people who have so little grasp of politics. For a new president to let himself be rolled up by a poorly-advised, illegally-striking public sector union would have rendered Reagan impotent and without the power to achieve his ambitious agenda of changing the economic and foreign policies of the US. Even Reagan’s court historians do not realize Reagan’s extraordinary achievements in economic and foreign policy.

It wasn’t Reagan’s agenda that was anti-left; it was the rhetoric Reagan used in order to keep the conservative base in line. Conservatives did not understand supply-side economics any better than did the economics profession and Wall Street. Conservatives wanted a balanced budget, which is their solution to every economic problem. Reagan was talking about a 30% reduction in marginal tax rates (the rate of tax applied to increases in income) and about faster depreciation schedules for capital investments.

What this meant to conservatives was more budget deficits. Wall Street never lobbied me to repeal Glass-Steagall, but Wall Street did lobby me to water down the Reagan tax rate reductions.

On the cold war front, conservatives were very suspicious of negotiating with the Soviets. Some conservatives put out the story that Gorbachev was the anti-christ, that he would take Reagan to the cleaners and we would all end up living under the red flag of communism.

All of this was over the heads of the left-wing. Being creatures of words, the left was moved by Reagan’s words, not by his actions. Whatever words David Stockman and others put in his speeches about cutting back government and the welfare state, the record is clear that Reagan did not cut back government or abolish the welfare state.

I defend Reagan because I am fair and believe people should be judged on their real record, not on a fabricated or demonized one. More importantly, although people seem unable to learn from history, a lack of understanding can lead to the wrong lessons being drawn from the past.

For example, by the time of George W. Bush’s presidency, jobs offshoring by US corporations had reduced US GDP growth and employment opportunities in manufacturing. The Bush administration’s solution was to reapply the Reagan solution–tax rate reductions. However, Reagan’s tax policy was directed at increasing the supply of goods and services relative to demand in order to stop the rise in inflation and unemployment. Supply-side economics is not a cure for declining employment opportunities and GDP growth due to jobs offshoring. From a policy standpoint, the Bush tax rate reduction was pointless, and it was ineffective as an answer to an economy in decline from jobs offshoring.

The Republicans, however, misreading the past, thought that tax reductions and de-regulation were the stimulus that the economy needed. Their mistake has left us with a hollowed out economy with the once prosperous middle class in decline and with an ongoing financial crisis that is held off with the Federal Reserve’s policy of negative rates of interest on overpriced bonds.

If all the uninformed people who ranted about “Reagan deficits” and “tax cuts for the rich” had bothered to educate themselves about the policy that they so desperately wanted to demonize, a wider understanding of the Reagan era might have created an audience among Washington policymakers for writings by myself and others who stressed, to no effect, the adverse impact of jobs offshoring on the economy. Instead, this cancer, masquerading as the benefits of free trade, has gone untreated for 20 years.

I agree that this is a lot of history in a few words, but it suffices to make the point. Now to get on with Reagan’s non-responsibility for the financial crisis and war on terror.

The Presidents Working Group on Financial Markets, created in the last year of the Reagan administration, was labeled the “plunge protection team” by the Washington Post. The Working Group consists of the Treasury Secretary, Federal Reserve Chairman, and the financial regulators.

I do not know the reason the Working Group was formed other than it appears to be a response to the October 19, 1987 stock market decline. I suspect that there was concern that speculators either drove down the market by short selling or took advantage of a decline in the market to make money by short selling that worsened the crisis. If speculators were indeed gaming the market at the expense of pension funds, IRAs, and long term investors, the government might have felt obliged to come up with new regulations or to use moral suasion or even direct intervention in order to protect legitimate investors from the greed of speculators. If speculators short the market and the Federal Reserve buys long, the shorts don’t pan out for the speculators.

How the Working Group has evolved since 1988 I do not know. The Treasury itself seldom has any money, especially these days when it lives hand-to-mouth from bond auction to bond auction. It is the Federal Reserve that can create money. It would be easy for the Federal Reserve to offset the effect of short sales on the market average by purchasing stock index futures.

Whatever the original purpose of the Working Group, it was not to help protect the foreign exchange value of the dollar from a low interest rate policy that the Federal Reserve regards as a necessary response to the 2008 financial crisis in order to maintain the solvency of banks too big to fail, and it was not to disguise the exit of investors from the stock market. The purpose of the Working Group was to prevent private speculators from gaming the market or to make them pay a price if they did.

The Federal Reserve’s use of the Working Group has probably evolved with the crisis, just as the Federal Reserve has used its balance sheet in new ways that go beyond its normal operations. However, it is absurd to blame Reagan for the Federal Reserve’s different use or misuse of the Working Group twenty-four years later, if that is indeed what is occurring.

What explains the left-wing’s obsession with Reagan to the neglect of the serious war crimes of the Clinton, Bush, and Obama regimes and to the neglect of the destruction of the civil liberties guaranteed by the Constitution? Reagan is not responsible for any of this. Reagan had no war on terror, no PATRIOT Act, and no police state. Reagan neither assassinated nor put in indefinite detention any US citizen.

As for financial deregulation, it began two presidents after Reagan with the Clinton administration’s repeal of Glass-Steagall.

By curing stagflation, Reagan gave the economy a new lease on life. By ending the cold war, Reagan made it possible to curtail Pentagon spending and to balance the budget. It is not Reagan’s fault that Washington responded to the Soviet collapse with a new militarism in pursuit of world hegemony. That goal appeared with the neoconservatives’ “Project for the New American Century” a decade after Reagan left office.

Yet, the left-wing remains obsessed with Ronald Reagan, wasting its energy in uninformed tirades against an administration that many leftists are too young to have experienced and know nothing about.

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About Dr. Paul Craig Roberts

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.

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  1. First off, Carter and Volcker beat stagflation. Second, you don’t understand tax rates. How dare you impugn the small Bush tax cuts and ignore Reagan’s lowering of the top tax rate from 70% on income exceeding $200k to 28% on a top rate of $28k. I’ve enjoyed your commentary, but you seem unable to critique your past. Also, not mentioned is the decrease in the cap gains from 50% to 20%.

    Lowering cap gains will generate a spike in taxes, as firms liquidate their capital, moving it off-shore. Liquidation of capital is hard to justify at a 50% tax rate. Rather, firms would up-grade capital to get on a new depreciation schedule. This depreciation was an income stream for capital intensive firms, but at 20% is was worthless.

    Now, lets consider the effect of lower income tax rates. First off, it’s utterly moronic to tax someone living on 100% of their income as someone who lives on a fraction of it. The 70% tax rate suppressed executive pay. That was a good thing, good for the stockholders, good for the workers, good for the economy. My grandfather, president of a Fortune 100 paper firm never earned a $1/4 million/yr, after all he faced 70% taxation on income exceeding $200k. He retired in the mid 80′s. His successor got $1.3 million/yr. While my grandfather is angry to this day, it seems to me the stockholders should be mad.

    So, low taxes encourage capital lite production–executive profligacy, financialization, professional services, lobbying, corruption off-shoring and out-sourcing. High taxes encourage flight to domestic expenditures, and deductible avenues. Deductible avenues, and capital depreciation are far more productive than the alternative. I’m frankly shocked that you fail to understand this, you likely haven’t ever considered it.

    While Bush’s tax cuts exacerbated the problem, Reagan cut the top rate by more than half. How dare you point the finger at the tiny Bush tax cuts. Consider what I wrote, I will elaborate further, but you have work to do

    By: scottindallas . July 23, 2012 . 10:11 am |

    • This comment is amazing. Here is someone telling the supply-side economist, who was part of a small group that established the relative price effects of taxation and changed US economic policy to reflect those effects, that he doesn’t understand tax rates. Go tell Einstein that he doesn’t understand relativity.

      President Carter and Volcker most certainly did not cure stagflation. Carter lost the election because he
      and the economics establishment had no cure for stagflation. Stagflation was cured when the Reagan administration changed the economic policy from Keynesian demand management to Supply-side.

      By: pcr3 . July 23, 2012 . 10:24 am |

      • It strikes me as totally bizarre that a 32% tax cut and a lowering of the basis from $200k to $28k was just what the doctor ordered, but a 4% tax cut (from 39 to 35%) is beyond the pale. How is a 28% tax rate on a lower basis, better than the “irresponsible tax cut” of 4% on income over $325k? Your tax rate was lower on both bases, yet you decry the other as excessive. You aren’t even paying attention to your own arguments. You’re better than this. Don’t patronize us, answer the specific questions. Or, we’ll be forced to discount anything you say about Reagan. That’s petty, and I thought more of you. You resent being challenged, that too is petty. I’m not ideological, I’m not asking loaded questions, and I’m not afraid to be wrong. I have a problem with special deductions which are essentially command economy, but low taxes are what Confederate backwater states and backwater 3rd world nations resort to. Economically powerful states have done well with higher tax rates, (Germany, Scandinavians) Our consumer base is too lucrative to leave, and, it seems to me that high tax rates would drive firms to seek domestic expenses. Low taxes seem to facilitate labor arbitrage, and short term thinking and rewards for corporate execs.

        Why do we understand that athletes may be ruined by big pay days, but never extend the same thinking to execs? Why do we dare the athlete to find another multimillion dollar job, but never consider the same for execs. I understand a state can’t raise taxes, as they compete with other states, but the United States, is unparalleled in consumption, and will be for decades.

        You wrote that simple protectionism is illegal under our trade agreements, so, it seems tax rates may be the only way to do this. Your write about off-shoring and, I suppose only long for yesteryear. I suppose nostalgia has it’s place, but I’m trying to find avenues that comply with our contractual agreements. It’s sad you refuse to engage the specific questions, for they certainly address what you wrote in the article.

        By: scottindallas . July 24, 2012 . 1:09 am |

        • wish you had an edit button. I’ve written “you” meaning “your” and a few other similar screw ups of pronouns and prepositions.

          By: scottindallas . July 24, 2012 . 1:23 am |

  2. Present day conservatives still hold up Ronald Reagan as the pinnacle of conservatism, although what is presented as conservatism today has virtually nothing in common with Ronald Reagan conservatism. A good number of liberals and other leftists fall for the deception, not surprising considering they respond from emotion rather than critical thinking.

    Keeping to the two primary issues addressed in the article I can find no fault.. The most telling event, for me, was Reagan’s admission of blame and his subsequent withdrawal of troops from Lebanon after the marine barracks explosion. You would never see Bush or Obama own up to responsibility like that today.

    A good article, and informative. Thanks Dr. Roberts.

    By: Frank R. Light Jr. . July 23, 2012 . 2:20 pm |

  3. Let it be known first of all, that I’m not writing this in order to receive replies or to needlessly take up someone’s time in answering. Nor, am I looking for arguments. If absolutely noone replies, that’s okay by me. Personally, I think that President Reagan was one of the best presidents we’ve ever had. So, I’m not here trying to smudge his reputation or to say something ugly about him. In other words, the things I write here originate from no hostile intentions whatsoever. And, I would be the first to say that I am fairly near the bottom of the pole when it comes to ignorance regarding politics. That being said, I merely want to offer up something that may be of value.

    The question is, “Did President Reagan invade Grenada as a “first step” in opening the door towards achieving American global dominance?” Let it be first understood that the only way to know for sure why anyone does anything is if that person chooses to reveal it, or the answer is exceedingly obvious. Well, the latter is not the case. The reasons for invading Grenada are NOT exceedingly obvious. Therefore, we must rely on either the President’s spoken or written word on the matter, or witnesses to his words who are for the most part, honest men or women. And, we must consider that whatever he says or writes to be the truth, unless there is reason to believe otherwise. Anything that anyone might say regarding the President’s reasons for invading Grenada must be counted as mere speculation, if the President didn’t personally say or write them.

    It shouldn’t be necessary to find more than one speech or document in which the President has given his reasons for invading Grenada. If we can, then we may be reasonably certain that we have obtained the truth on the matter. If he is a man of honor, then he will NOT have contradicted himself in some other place. And if he does, then he is a liar and can’t be trusted regarding anything he says or writes on any matter. If they exist, then they are preferable to having to track down witnesses to what the President may have said in private on this subject.

    Thankfully, such a speech and documents do exist! In his Star Wars speech, President Reagan said,
    “On the small island of Grenada, at the southern end of the Caribbean chain, the Cubans, with Soviet financing and backing, are in the process of building an airfield with a 10,000-foot runway. Grenada doesn’t even have an air force. Who is it intended for? The Caribbean is a very important passageway for our international commerce and military lines of communication. More than half of all American oil imports now pass through the Caribbean. The rapid build-up of Grenada’s military potential is unrelated to any conceivable threat to this island country of under 110,000 people, and totally at odds with the pattern of other eastern Caribbean States, most of which are unarmed. The Soviet-Cuban militarization of Grenada, in short, can only be seen as power projection into the region, and it is in this important economic and strategic area that we are trying to help the governments of El Salvador, Costa Rica, Honduras and others in their struggles for democracy against guerrillas supported through Cuba and Nicaragua.”

    So, it would appear that President Reagan was trying to stop the “Soviet power projection” into the region. Or else, he was trying to protect the flow of oil! That’s all he said, that’s all I know.

    Here’s the problem:
    In this article PCR wrote: “All of this was over the heads of the left-wing. Being creatures of words, the left was moved by Reagan’s words, not by his actions. Whatever words David Stockman and others put in his speeches about cutting back government and the welfare state, the record is clear that Reagan did not cut back government or abolish the welfare state.”

    Now, I’ve personally never met President Reagan or even been in the same vicinity with him, as far as I know. But, PCR has! I’m willing to bet that PCR has sat down with President Reagan on several occasions in the Oval Office and had long discussions about lots of things. He could probably even write to us about how comfortable the seats were in the Oval Office or whether or not the President really DID have a jar of gourmet jelly beans on his desk. That being said, he knew the President much better than I did because I didn’t know him at all!

    And now here, PCR seems to be saying that President Reagan’s words didn’t always match his actions. In fact, according to PCR, President Reagan actually did make at least one speech in which he said he would reduce government and the welfare state, but instead, he did just the opposite! And, it sounds as if it was intentional, not accidental. I am not in a position to dispute PCR’s words. I haven’t done the research. At this point in time, PCR said this and I believe him. I have no reason to doubt otherwise. That being the case, isn’t it also possible that the President continued in his alleged less than honorable behavior and gave reasons for invading Grenada in his Star Wars speech that were in fact just the opposite (if that’s possible) of the actual reasons he gave for the invasion?

    Until further information becomes available, I have no choice but to answer, “I can’t be sure concerning why President Reagan invaded Grenada. But, we have the testimony of at least one witness who personally knew him (PCR) that the President was inclined to make promises in his speeches that he apparently had no intention of keeping. Therefore, having discovered that President Reagan was likely a man who couldn’t be counted on to keep economical promises made in speeches, should it come as a surprise to any of us if it turns out that he was also a liar in matters relating to Grenada?”

    By: Roger G. Mattingly . July 23, 2012 . 6:29 pm |

    • Roger, how can you be unaware that political speeches are political documents? Every politician has to
      make speeches that appeal to his supporters.
      So what is the point of this silly speculation of yours?

      By: pcr3 . July 23, 2012 . 8:49 pm |

      • Mr Roberts,
        I’m not ignoring your reply. You said somewhere in your comments section that you wanted us to do research before commenting. That’s exactly what I’m doing. It takes time. But, in a few days or so I’ll reply back.
        Roger

        By: Roger G. Mattingly . July 25, 2012 . 10:04 am |

        • Roger, we will be moving on to the next column, and this comment section will be closed.

          By: pcr3 . July 25, 2012 . 1:35 pm |

  4. Thank you, Dr. Roberts, for your efforts to bridge the gap between right and left in America. A life-long liberal, I’ve gradually become aware of certain blind spots in the world view I adopted as a child. For example, a “conservationist” really at heart should be somewhat “conservative,” otherwise he is (usually blindly) hypocritical. I worked for an NGO in Tokyo for a while, but couldn’t help notice how little progress we made while we wasted enormous amounts of paper, energy and other resources. I gradually became disenchanted with technology as a solution, too, when I became aware of the troubles it can cause, and how political/economic forces often conspire to hide these negative effects from public consideration. I find it disconcerting that most of the left refuses to reexamine the “technology will rescue the world” paradigm.

    I may never agree with you totally on Mr. Reagan, and I never liked his politics, but I always felt him to be basically a nice person in a difficult position. I have also become aware that he was a man of principle, as was his wife. I cannot say the same of any of the presidents that we’ve had since. A lot of people blame him for starting in motion the chain of events that led to America’s downfall. It is impossible to say what event really set it off. Kennedy was assassinated. Nixon took us off the gold standard. The FRB was created long ago. The worst I could say of Mr. Reagan is that he unwittingly pushed it in the wrong direction, but I am open to your protestations otherwise. The situation is much more complicated than left/right, and both sides have clearly been complicit.

    I would comment over on OEN, too, but I’ve been blocked from participation. Never banned, mind you. The cyber world strikes this naive old lady as full of intriging intrigues. Anyway, I found I just was not connecting with people on that site.

    By: Patricia Ormsby . July 23, 2012 . 8:08 pm |

    • well played sir.

      By: scottindallas . July 23, 2012 . 11:10 pm |

  5. In the previous article about the Libor Scandal I commented that the ‘Plunge Protection Committee” was created by a Ronald Reagan Executive Order, however I was not implying that Ronald Reagan had anything responsibility for the current massive financial frauds that are occurring. I was just stating a historical fact, but it occurred long ago, and is not connected with Libor or AIG. I am afraid that some interpreted it as a criticism of Reagan. I do disrespect Reagan for many things, but not that. He is certainly not one of my icons.

    By: Wayne Pacific . July 24, 2012 . 4:27 am |

  6. Dr. Roberts, if President Reagan were the 2012 candidate for office as opposed to having served his terms begining 32 years ago, would he have signed the Grover Norquist tax pledge? I bring up 3 particular cases: the Highway Revenue Act of 1982, the Consolidated Omnibus Budget Reconciliation Act of 1985, and the Tax Reform Act of 1986 in which he raised the capital gains tax. In reading up on those particular tax increases, I feel like they were productive, necessary means of increasing revenue. But the political climate today, particularly with the Republican party, seems to be zero tolerance for any sort of tax increase whatsoever–not just in income taxes–but across the board. How would President Reagan have dealt with having to (correctly, it appears to me) raise taxes in a climate such as this? Would he have signed Norquist’s pledge? ANd if any of my data is incorrect, I do apologize, but it appears to be in order. I know times were different back then, and he did lower the top tax rate dramatically from 70% to something like 28% (if I recall correctly). I certainly am not attempting to criticize the president, I just wonder how he would have met these modern restraints to budgetary concerns, etc.

    Thank you for all you do, sir. I read your column every time you post it. Cheers!

    By: Apefist . July 24, 2012 . 11:38 pm |

    • Prior to the Reagan administration, changes in tax rates were used by Democrats to change aggregate demand. Lower tax rates were used to increase aggregate demand in recessions, and higher tax rates were used to decrease aggregate demand in inflations. This was the accepted use of fiscal policy in post-war Keynesian demand management of the economy.
      The Reagan administration introduced a new element that had been overlooked by the Keynesians. Supply-side economists demonstrated that changes in tax rates also affected aggregate supply. Higher tax rates mean that less is supplied at every price, and lower tax rates mean that more is supplied at every price.
      If you want to know more, read my book, The Supply-Side Revolution, Harvard University Press, 1984.
      Therefore, the higher tax rates that demand management would use to fight inflation could actually make inflation worse by reducing the supply of goods and services. It was by incorporating the supply-side effects of fiscal policy into US economic policy that the Reagan administration was able to stop the stagflation that had unseated President Carter.
      For the Reagan administration tax rates were policy instruments for combating stagflation, not instruments for redistributing income. The tax rate reductions had a specific purpose, and the case the Reagan administration made for them related only to that purpose. It was not an open-ended endorsement of all tax reductions whatever the circumstance, which is what I read the “no tax pledge” to be. Therefore,
      although Reagan’s advisers might have differed among themselves over whether the President should endorse the pledge, with political advisers arguing in favor of the political appeal of the pledge and economic advisers arguing against compromising sound economic policy with politics, I believe the
      policy advisers would have prevailed with Reagan. In memory serves, the issue never came up.

      Some commentators have introduced much misinformation about the supply-side tax rate reductions.
      Prior to the “Reagan tax cuts,” the top rate on wage and salary income (“earned income”) was 50%, and the top rate on investment income (“unearned income”) was 70%. The Reagan tax cut reduced tax rates across the board by about 25% on earned income, reducing the top tax rate on earned income to about 36-38%. I don’t remember the precise number after all the various compromises. The reduction of the tax rate on unearned income from 70% to 50% resulted from an amendment to the administration’s bill by US Representative Brodhead, a liberal Democrat.
      The later reductions down to 28% on earned income were part of the later tax reform bill. The bill closed all sorts of tax loopholes that benefitted specific special interest groups and offset the revenue gains or most of them by reducing the tax rate on earned income. This leveled the field, doing away with different rates of tax on different economic activities.

      By: pcr3 . July 25, 2012 . 9:38 am |

      • Thank you, I appreciate you getting back to me so quickly.

        I wish I had a BS detector that automatically came on whenever pundits and talking heads started spinning on these issues. What you’ve said isn’t something you’d hear on Fox (other than by Andrew Napolitano, maybe) or any other mainstream news outlet because they are so painted red OR blue. Why not red AND blue, and some white for patriotic sensibilities. I’ve been following your columns around the web since about 2005, when I “woke up” as some are referring. It’s thanks to you and some others I listen to or read that the housing crash wasn’t a surprise, and I got by better than many with that extra preparation. I am indebted to you for that.

        Like many, I deplore the polarization that has gone on between the two parties. We all have way more in common than the differences that get so played up in the media. Would a viable 3rd (or 4th and 5th and…) party remedy this polarization? I have to admit seeing other countries with coalition govts. which seem to function more productively than the vitriolic gridlock we have here. It’s very hard to teach your son about the good things a democratic republic has to offer when you watch the news and it’s canned talking points, insults, and liars telling lies.

        How can someone vote for people they can’t respect? Thanks again to everyone who responded. I learn so much every time I come here.

        By: Apefist . July 25, 2012 . 1:40 pm |

  7. PCR you are right, it is very time wasting to read or check comments which do not refer to the topic, ending a cold war or not, be the new emperior of the whole world or not. – Leftists are they wrong or right in the description of the man Ronald Reagan as the occupant of the oval office. Leftists or not – a truthseeker comes to the judgemet, yes or no. You say yes – you have insiderknowledge more than i. I trust you.
    RR came 1985 to germany, to Bitburg, and said, the german soldiers in WWII must be respected, not all of them had murdered other people.
    This comment was in the Germany Matrix not welcomed. Richard von Weizsäcker President of Germany at that time had suddenly the problem to shame himself, because he was a deserter in 1945. He prefered to took a train to bavaria instead to the battlefield east-preussia against the russians. Millions of women, old men, children – and our Richy – were on the run before the russians. Richy was very proud of his decision to leave the murdering Wehrmacht till RR came and spoke friendly over the Wehrmacht. German Matrix-Historians have much problems with the friendly Bitburg-speech of RR till today. Leftists made and make here also a good job. Leftists in USA wanted not that RR went to Bitburg/Germany to meet Kanzler Helmut Kohl at a “WWII Soldatenfriedhof”. The US-hegemony over Germany is ongoing (51. [Puppet]state) . RR could not finish his good work. But Russia under Gorbachev left germany totally. – Dr. Lothar J. Ziegler, Stuttgart

    By: docziegler germany . July 25, 2012 . 2:43 pm |

  8. I have a lot of respect for PCR but I disagree with him on several points here.

    1. Reagan did have a lot of neoconservatives in his administration. His defense build-up followed closely the prescriptions of the neocenservative Team B which greatly overstated the military capabilities of the USSR. Richard Perle was the Asst. Sec Def. Elliot Abrams and Michael Ledeen had jobs in the administration. Wolfowitz was in the administration.

    2. The reduction in top marginal rates and capital gains tax rates coincided with the beginning of the horrific rise in inequality that has become catastrophic.

    3. PCR does not give sufficient credit to the drastic drop in oil prices that took place during Reagan’s term. Between the Fed’s lower rates and the much cheaper crude, Reagan had two large structural factors of the economy in his favor.

    4. The continuity of government plans that went into action on 9/11 began under Reagan, as I understand it. The group with Ollie North, Cheney and Rumsfeld and others were working on those plans for decades. This is all very suspicious in retrospect, not to say that Reagan could have known what they were up to exactly. Ollie North’s Rex 84 did attempt to put in place the procedures needed to establish a police state in the event of a national emergency. Thus can it be said that elements of the Reagan administration did lay the groundwork for our current police state woes.

    5. The wave of predatory speculative financial mergers and takeovers began under Reagan. This kind of unproductive asset stripping has left us with a terrible legacy of fabulously benefiting super rich speculators (like Mitt Romney) who add nothing to the real economy.

    In hindsight, Reagan and Thatcher and Milton Friedman deserve a lot of the blame for the terrible situation we are in now.

    By: Eric Saunders . August 25, 2012 . 5:17 pm |

  9. Dear Scott, I am very impressed that you know more about supply-side economics than the founders of the discipline.

    By: pcr3 . July 23, 2012 . 2:34 pm |

  10. Scott, please note that your comments are in violation of the rules that you agreed to abide by when you checked the box. As I have now reminded readers a half dozen times, the column addresses two questions. One is whether the Reagan administration’s foreign interventions were for the same reason as those of successor administrations. The other is whether the Reagan administration is responsible for the financial regulation that came after his term of office. The column is not about tax rates and their effects and whether you and your grandfather know more about taxes than others. As you appear to regard yourself as a very smart person, why is it that you cannot see that you are taking the discussion off in a direction that is not the subject of the column? Why do you think I should devote my time to answering your questions and explaining your mistakes?
    Let’s suppose you are 100% right, your comment is still off-subject and violates the rules
    to which you agreed. The comment section is not a forum for the agenda of commentators.

    By: pcr3 . July 23, 2012 . 2:46 pm |

  11. I wish you would hold to the policies you demand of others. You fallacious appeal to authority in no way addresses the specific and real effects and incentives I described. Alice Rivlin doesn’t seem to understand my argument either, but again CFOs, CFP’s and accountants get it immediately. I’m not talking about some ideological devotion to some policy, I’m talking about the real effects of taxation, and how a firm would respond.

    Do you deny that higher tax rates encourages flight to deductible avenues? Do you deny that those deductible avenues are more productive than the executives getting the booty. Cause an analysis of what has happened has shown this to be the effect. Again, intention and effects are different. I am suggesting that macro economists don’t necessarily really understand the effect of their policies, in fact, they may not even be looking at all the pertinent data.

    I assume that I’m actually responding to one of PCR’s minions and not the man himself, who described my economic paradigm as the best he’s seen–there are 3 markets, not free markets–the free market, the professional market and the utility market. We shouldn’t confuse free markets with utilities. And, there are at least two professional utilities major healthcare and banking. Utilities should be heavily regulated or wholly socialized, and gov’t should stay out of other markets. We can debate whether a market is a utility or not, but we should never treat one like it’s the free market.

    By: scottindallas . July 23, 2012 . 2:42 pm |

  12. supply side economics is an arbitrary construct. Economics seems to fit Newton more than a black white absolutist pattern. By Newton, I mean all actions have an equal and opposite reaction.

    Maybe we’ve rent the tax code so that the formulation I’ve described doesn’t work any longer. But the 64 tax code DID work like that according to a CFO that ran over 200 firms. It seems to me the major difference are the low tax rates and capital gains. Maybe you’re scared to consider my arguments, cause they might impugn your record, that’s for you to deal with. But the questions I asked aren’t leading, aren’t sophistic, but asked in earnest.

    By: scottindallas . July 24, 2012 . 1:16 am |

  13. I beg your pardon. I describe precisely how low taxes lead to our economic condition. Low taxes lead to Labor arbitrage (thank you) and off-shoring, out-sourcing, lobbying, think tanks, political corruption, executive profligacy, (which abets this whole system) I’ve described all of this, and how it does it. You’ve rather relied on the ideological replies you denounced. And, you have yet to address the specific charges and mechinisms I described which lead to the outcomes you decry. Just because you see a one cause while missing a more direct one, that I pointed out, is not, off-topic, but very much on point.

    Low taxes make for the corrupt lobbying positions, the obscene untaxed profits that these lobbyists pursue. The 70% on $200k suppressed top salaries, and kept execs honest and the country more modest. Further, it encouraged employee benefits such that pay and productivity grew in lockstep. You presided over the end of that, and the low taxes (declaring someone making $28k and 2.8 million in the same boat.)

    By: scottindallas . July 23, 2012 . 2:55 pm |

  14. Further, the direction that debate takes isn’t for you nor anyone to control. Are you an authoritarian or an earnest enquirer? Is this as ideological tract or fair discussion? The issue I’m raising is not addressed by anyone, yet no one refutes it. It’s not tangential to what’s going on. I made this argument to 50 MBAs from Columbia, Harvard, Wharton, Stanford, Northwestern, UT and SMU, none could refute it, but at least they will benefit from the policies. How does one get real honest discussion started? Or perhaps you lament the passing of Jim Crow, and the end of slavery. These things have to be pressed for, and the directly relate to the effects you describe. Just because you, still haven’t considered them doesn’t mean they don’t relate, rather it shows you to be too wedded to ideology and unwilling to entertain other aspects. What I describe is something that math and accountant can determine if they have merit, go ahead and consider the effects of depreciating capital and getting 50% of that back or just one fifth. I affects your investment decisions.

    By: scottindallas . July 23, 2012 . 3:01 pm |

  15. My grandfather doesn’t agree with me. After he showed his personal resentment at his successor’s salary, I said, “the stockholders should be the angry ones.” He gave me the love it or leave it speech. I’m no stranger to the pettiness of people, I try to glean their message, take all the lessons I can from it, draw conclusions and move on. Your reply is as petty as his. This saddens and confuses me, but I’m used to it. Perhaps you and David Stockman are more alike than I thought. You seem to hold Reagan and your legacy more dearly than truth, fact or debate. You’re not rare, rather I seem to be the rare one, who looks objectively and dispassionately at issues.

    I’d love to be shown where I’m wrong. I don’t understand why the democrats don’t advocate the policies I’m describing, it shows their cravenness. I believe in pursing the truth above all, that is not acceptible in our modern crony capitalist culture, and it wasn’t allowed in your white bigoted world either, for different reasons. The lack of real debate, real challenge, the utter nonsense of economist in the media is what’s destroying this country. When the fix is in, earnest questions are dangerous.

    By: scottindallas . July 23, 2012 . 3:10 pm |

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