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reagan.stu

VIEWS: 50 PAGES: 24

  • pg 1
									Today’s Lecture:

Ronald Reagan and the New Conservatism

Number:

24

Lecture Organization: • Class Announcements • Brief Review

• Reaganomics • Taxation and Wealth

Time

Brief Review
The death of the Roosevelt coalition Failures in the 1960s Rise of Nixon -- wasn’t really a “true” conservative (not in a Reagan way)

Laissez Plantation Faire Hegemony

?

Time 11/9/2009

Copyright, Sean Wilson. 2007

4

Reaganomics
Reagan Myths “cutting spending” -- Reagan never actually cut federal spending; he only cut the rate of GROWTH in federal spending

-- Federal budget became larger in both dollars and inflation-adjusted dollars
(None of the conservatives ever cut spending; they just spend it on different clientele)

Reaganomics
Reagan Myths cutting inflation -- Reagan’s economic policies did not purge inflation -- Paul Volker, a Carter appointee, did

Chairman, Federal Reserve
-- appointed by Carter in 1978 -- term of office is 4 years Monetary Policy -- set interest rates extremely high -- this purged inflation and threw the economy into an extremely deep recession in 1982 -- Reagan re-appointed him

Reaganomics

Economic policy -- “supply side” macroeconomics

The Basic Idea Two basic economic forces

Suppliers

Buyers

1/18/2007

(C) Copyright Sean Wilson. 2007.

9

The Basic Idea

Investment corporate taxes wages Suppliers

Basic idea: •expand the capacity to produce • lower the cost of business

1/18/2007

(C) Copyright Sean Wilson. 2007.

10

The Basic Idea

Basic idea: • 2/3rds of economic growth is due to consumer spending (consumer culture) • You must have a viable middle class to play capitalism properly • by increasing aggregate demand, you will kick-start the economy
Buyers Wages Welfare?? middle class tax cuts stimulus package?

Time 1/18/2007

(C) Copyright Sean Wilson. 2007.

11

Taxation and Wealth

top marginal rate -- cut the top rate to 50% in 1981 (phased in, 3 years) -- then cut it to 28% in 1986, but also cut out the loopholes -- during the 1990s, Clinton raised the top rate to 39.6% by the end of the decade. -- Bush trimmed it to 36% ???

How Rich People Make Money

Income

Assets

-- 1 million dollars -- taxed at top rate (after deductions) _______________ $650,000 (assumes 35%)

-- 10 million at 5% growth

Answer: Question:
Take a guess: how much $500,000 is that? -- taxed at 15% (capital gains) -- $75,000 in tax ----------------------------

Time

$425,000

Taxation and Wealth
deficits cyclical versus structural -- prior to Reagan, deficits were cyclical. After Reagan, they are structural.

-- David Stockman: this is due to “Rosy Scenario” and the failure to achieve the growth targets.

Tax Cuts

Taxation as a percentage of GNP (1995)

50%

Sweeden = 50%

Denmark = 49%
Finland, Netherlands, Norway = 47%
Question: Question: What percent of GNP Are government lower? does we higher or control in America?

Taxation as a percentage of GNP (1995)

45%

Belgium = 45%

France, Austria = 44%

Taxation as a percentage of GNP (1995)

40%

Italy = 42%

Greece = 41%
Germany = 40%

Taxation as a percentage of GNP (1995)

35%

Canada = 37%

New Zealand = 36%
Spain = 36% “England” = 35% Switzerland = 32%

Taxation as a percentage of GNP (1995)

29%

America = 29%

Japan = 29%

Taxation as a percentage of GNP (1995)

0- 17%

20 - 30%

30 - 40%

40 - 60%

100%

Libertarian

Liberal

communism

Conservative

“Socialism”

American Political Conservatism = 25 – 29 %

American Political Liberalism = 30 – 35 %
Time

President Obama

interesting time -- what does this election represent and what will happen in the future two paths

-- Jimmy Carter or “Ronald Reagan for the Democrats”


								
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