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Laffer tells Varney that reducing the deficit will require a "sea change just like Ronald Reagan brought"

November 25, 2009 4:33 pm ET

From the November 25 edition of Fox News' Your World with Neil Cavuto:

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    • Author by political_left-religious_right (November 25, 2009 4:42 pm ET)
      3  
      Oh, Reagan actually reduced the deficit--no wonder the neocons love him.

      Of course, anyone who knows history knows that the deficit absolutely ballooned on his watch--but the neocons love him, anyway.
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    • Author by blueline99 (November 25, 2009 4:43 pm ET)
      4  
      I meandered on to this chart... it's pretty eye opening...

      First if you go to the website you will see that Reagan did more to increase our debt as a % of GDP since WWII.

      If you look at the extra expense that President Obama has done, it's really just an extra tip to what President Bush did.

      I know, you can't show facts to Republicans, but they really have it backwards... but Laffer is the king of lying statistics.

      And if you think that the chart is somehow a lie or partisan... here's one from Wikipedia which is derived from government figures.

      [http://en.wikipedia.org/wiki/File:USDebt.png]



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    • Author by wookie (November 25, 2009 4:43 pm ET)
      2  
      Yep, if only we had someone with the budget balancing skills of St Ronnie...
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    • Author by Publius39 (November 25, 2009 4:53 pm ET)
      2  
      What is with this love affair that the right has with Reagan? They give him credit for things that he either did not do, or accelerated the problem. He did not have a hand in the collapse of the Soviet Union, he exploded the deficit, contributed to the rich-poor gap increase, crippled the environmental movement, and helped usher in the age of the disappearing middle-class. He was the opposite of everything that he supposedly supported by slashing social programs to keep government small, but increasing defense spending to off-set any minimal gains that he might have gotten from kicking people out of hospitals and snatching funding from the needy.
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    • Author by shaggles (November 25, 2009 4:55 pm ET)
      2  
      That was a sea change all right. Not one that reduced the deficit, mind you, but a sea change none the less.
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    • Author by pete592 (November 25, 2009 4:58 pm ET)
      4  
      Just like Reagan brought...
      [http://lh4.ggpht.com/_COsjOIxX8ws/SZ8aZIMcnRI/AAAAAAAAB0M/G99pERhhrdQ/National-Debt-Graph.png?imgmax=800]
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      • Author by Handyman (November 25, 2009 5:08 pm ET)
        1  
        Pete - You seem to be able to put your hands on good information - do you know of a chart that shows distribution of wealth during the various administrations?

        Thanks for your factual imput, it is appreciated!!
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        • Author by pete592 (November 25, 2009 5:25 pm ET)
          1  
          You're too kind. My only weapons are the Google and a good memory. Typically a Google image search can net stuff like this pretty easily.

          Here's something from Kos that may resemble what you're looking for. Sourcing is unknown though.
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    • Author by mjh (November 25, 2009 5:09 pm ET)
      1  
      Laffer tells Varney that reducing the deficit will require a "sea change just like Ronald Reagan brought"


      Raygun -- the one who tripled the deficit. Yeah, that's a "sea change," all right.

      This guy Laffer is living up to his name . . .

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    • Author by mhughen (November 25, 2009 5:24 pm ET)
      1  
      I believe the poplar phrase and belief was "deficits dont matter," as ours was tripled by a so called 'conservative'.
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    • Author by mk3872 (November 25, 2009 5:30 pm ET)
      1  
      Oh, great. More piercing insights from Mr. "lowering taxes raises govt revenues". Brilliant!
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      • Author by caels (November 25, 2009 6:00 pm ET)
        2  
        The Laffer Curve (he didn't come up with it though) does have some validity. But the idea was hardily something revolutionary, it goes back into the 14th century and was put forth more rigorously by Keynes. The Laffer Curve suggests there is a sweet spot between taxing too much and taxing too little. For example, if the government taxed everyone at 98%, there would be no incentive to work and so the tax revenue would be nearly zero. On the flip side, if that rate is only 2% the government would not take enough revenue in. So, yes, there is a certain point where lowering taxes does actually increase revenue.

        The problem is, this argument doesn't even remotely apply in the way Laffer and Reagan used the curve to justify their policies. This argument really only works when you are talking about extremes. If you want to jack up rates to 80%, you are going to see a decrease in tax revenue since the incentive and ability to grow, invest, and work will be cut. However, when you are talking in the ranges of tax cuts of the Bush administration the Laffer curve just doesn't work. Cutting taxes 10% doesn't guarantee that revenue increases like Laffer and Republicans suggest it does. The growth and incentive isn't enough (and it isn't even enough to substantially increase growth at all) to make up for the tax revenue loss.

        Oddly enough, it appears that the "sweet spot" is actually a higher tax rate, where we meet the point where revenue is the maximum.

        Really though, this argument is just a nice theoretical model that really only applies in policy practice when you are talking about extreme taxation on either end.
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    • Author by caels (November 25, 2009 5:47 pm ET)
      4  
      Yes, we are running out of time; how is it possible to handle these levels of public debts we have? It could be days now,
      I mean, sure countries like Japan (+170% Debt/GDP), Singapore (+113%), Italy (+103%), Belgium (+80%), Israel (+75%), and France (+67%) having been running debt levels higher than ours for years and years without economic ruination - but we know its right around the corner! We know that every one of those countries are on the absolute brink of collapse as we speak right now. It's coming, some day ...

      Honestly, if Italy or Japan can handle that level of debt without economic ruination we can easily take it on. We are the United States, if we can't manage what Japan and Italy have been handling for years and years then that is sad (and our 10-year outlook is much lower actually). Conservatives are actually doing what they accuse liberals of, de-valuing America as the greatest nation by suggesting we can't handle levels of debt that much weaker countries have managed.

      Side note. Laffer is a failure, supply-side has demonstrated over and over again to be empirically invalid (and I don't even think the theoretical underpinning is there).
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    • Author by nerzog (November 25, 2009 5:52 pm ET)
      3  
      Oh, come on. Everybody knows (wink, wink) that Reagan's tax cuts quadrupled Federal Revenues overnight, and those lousy Democrats SPENT IT ALL on Welfare Cadillacs and Art Museums.

      At least, that's what Rush told me.
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    • Author by terrapin53 (November 25, 2009 6:34 pm ET)
      3  
      Since at least 1981, the republican mantra has been to reduce taxes and borrow money in that deficits and debt do not matter as long as the rich get richer and poor get poorer. They have performed their mantra well and so afraid that Obama will pull it all apart.
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    • Author by Samurai Cowboy (November 25, 2009 9:06 pm ET)
      2  
      The Reagan Years: A Statistical Overview -- Over 150 charts debunking the Reagan Myth and supply-side economics. Includes an in-depth statistical comparison of the United States to other rich (and more liberal) countries, showing how the U.S. comes in last on almost every important list.
      http://www.huppi.com/kangaroo/1THE_REAGAN_YEARs.htm This was written by Economist Steve Kangas before his murder in 1999 in Pittsburh, PA. on the orders of Richard Mellon Scaffe.
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    • Author by Boxer1979 (November 25, 2009 9:37 pm ET)
      1  
      Laffer tells Varney that reducing the deficit will require a "sea change just like Ronald Reagan brought"

      Reagan the messiah in the neocons' eyes.

      Yep. He cut for corporations and the rich and raised taxes that are still in effect to this very day. Also spent money on "Star Wars." Yep that reduced the deficit.

      *Facepalm*
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