Maybe Reagan was on to something...

Discussion in 'Politics' started by Ricter, Jan 28, 2012.

  1. Ricter


    "...good points about post-modern recessions, (i.e., the last three, starting in 1990, 2001, and 2007, and which have all been followed by agonizingly slow recoveries) and [he] then ends by asking, “And what about Reagan? Reagan who?” in making the point that very fast recovery following the 1981 recession was largely driven by monetary policy decisions.

    "[instead]... let’s look at the behavior of government spending following the last four recessions (i.e., the 1981 recession as well as the three “post-moderns”). The graph below measures real government spending relative to the previous business cycle peak.

    <img src="">

    "So, 16 quarters after the start of the 1981 recession government spending was up nearly 19 percent relative to the pre-recession peak, while 16 quarters after the Great Recession of 2007, it’s up less than 1 percent. Let’s do some quick math. If we mimicked government spending growth from the 1981 recovery, government spending today would be about 18 percent higher than it was in the last quarter before the recession began – adding about $440 billion (in $2005) to overall GDP. This would lead to a roughly 3 percent boost to GDP and more than 3 million extra jobs not including any multiplier effects. Put a run-of-the-mill 1.4 multiplier on this and you have well over 4 million extra jobs – or roughly 40 percent of the entire “jobs gap” caused by the Great Recession that would now be filled.

    "Yeah, this is one thing about the 1981 recovery I’d like to replicate."

    Posted January 27, 2012 at 10:29 am by Josh Bivens
  2. Lucrum


    What exactly is it you want the government to spend MY tax dollars on that they're not already spending on?
  3. Ricter

  4. Federal tax revenue increased in the 1980s from increased economic activity. Today, the ratio of parasite (gov't and other teet-suckers) to taxpayer is much higher. The spending is not going where it should be to benefit the business cycle.
  5. Lucrum


  6. I'll address that, at least as far as I'm concerned.

    Spend $ to protect America, as in reality, not contrived wars. We don't need to have the ability to kill everyone on the planet 100 times over.

    Spend $ to protect America from the inside. Not from artificial fears, but from actual foes within our borders.

    Spend $ to protect Americans from faulty equipment/pharmaceuticals/bridges/ etc. Basically, safety standards.

    Spend $ to run our court system. Hopefully paid back, partially, by those who are found guilty.

    Spend $ to build roads.

    Spend $ on police, as in number one above. Fire protection also.

    Spend $ to help our banking system protect ourselves from ourselves - to a point.

    Do not spend $ in our bedrooms or our churches.

    DO NOT spend $ on on foreign wars, unless our direct security is threatened.

    I'm sure there's more, but that's just off the top of my head.