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| 2004/6/10 [Politics/Domestic/California, Politics/Domestic/President/Reagan] UID:30721 Activity:insanely high |
6/10 Why is Reagan credited with "winning the cold war"? Isn't it basically
Gorbachev's doing? All Reagan did was quadruple our national debt.
http://www.theatlantic.com/politics/foreign/reagrus.htm
http://www.cnn.com/SPECIALS/cold.war/kbank/profiles/gorbachev
\_ He is credited with it because he did. I laughed my ass off the
other day when one of the complaints from some leftist blog was
bitching that Reagan destoying the Soviet Union put an end to any
hope for detente. Unreal.
\_ In Soviet Russia, Cold War wins YOU!!
\_ Well, Gorbachev himself credits Reagan with ending the cold war:
http://csua.org/u/7om
\_ He says "made a huge, possibly decisive, contribution to creating
conditions for ending the Cold War". That's not the same.
\_ Pretty close though. Within epsilon.
\_ So Hitler made a huge, possibly decisive etc. for ending
the Third Reich, by his various blunders. The conditions
for ending aren't the ending.
\_ Hilter didn't come out and say 3rd Reich is going
away and I'm going to make it happen. Reagan said
that he was going to bring about the end of Soviet
communism and he put into place policies to that
end. That is the difference. I know YOU don't care
but I still felt like mentioning it.
\_ Wow, talk about turning reality on its head. A good
rhetorical attempt at twisting words to suit your
agenda but silly when presented to an audience with
more than 1 brain cell.
\_ When the Soviet Union collapsed, I didn't hear anybody crediting
Reagan. I heard credit going to the collapse of their economy.
\_ And the entire intel community saying "Holy shit. We didn't
expect that..."
\_ Two words: Zero Option. Look them up.
\_ USSR collapsed because Gorbachev was an idiot, really. Although
his reforms that were meant to modernize the party and the economy,
he accidentally unleashed forces that lead to the disolution of the
soviet union. Today he might be writing in his memoirs that this was
his original intention, but that's complete bs. The truth is that
he was plain incompetent as a leader. His reforms, specially in the
economic areas, usually didn't go beyond rhetoric.
\_ His reforms led to greater freedom and the breakaway of the
client states and so forth... whatever he intended, incompetent
or not, this was basically his doing. He clearly intended moving
towards more openness and reducing the command economy.
\_ Well, the ussr had their own expensive vietnam going on in
Afghanistan. They had to spend hugh sums on this war, and on
continuing the cold war with the US increase in defense
spending (modernizing and expanding), and SDI. The ussr
couldn't keep up, financially - their old economy collapsed
on itself. Reforms were the result which we all know didn't
work out so well. So the Reagan administration's was able to
end the cold war w/o firing a shot by outspending the ussr.
Probably a good use of the money considering the alternative.
\_ so why didn't China and North Korea collapse? They never kept
up. it's just not that simple.
\_ You said it yourself. They never kept up. The USSR was
attempting to keep up and couldn't play that game. China
and NK haven't tried and haven't kept up either. If China
or NK was to engage in an all out WWIII style blood bath
like the US & USSR were prepared to do for almost 50 years
they were be crushed like bugs before it even started. If
the same thing happened with the USSR, the odds are good
that all human life on the planet would have been snuffed
out. If China or NK tried to keep up they would collapse
too. Why? Because our system, our culture, and our
society are superior.
\_ right... so if life would have been snuffed out anyway,
USSR could have really cut back without any particular
danger to their empire. So it seems to me the real
difference is that under Gorby, the USSR failed to
keep up the autocratic iron fist. China never let up.
\_ no, they couldnt because eventually something like
star wars would have worked and other tech advances
would have made their land forces obsolete as well.
if we had continued dumping billions into SW we might
have a functional system today which would make their
nukes useless, or useless enough. our modern land
forces of today would have obliterated their forces
of 25 years ago. I agree with the iron fist part,
except: 1) the USSR had to do something, Gorby tried
something and lost, 2) China has not kept up and can
not stand up to the US today. China is not the US
military equal the USSR once was.
\_ exactly. liberlize economy first, but retain strong
political control, like what putin is doing today.
\_ It takes Leadership to cut taxes, recognize your enemies in the face
of nuclear war, and spend on defense.
(And defined in this way, as many Americans do, Democrats don't
have Leadership.)
\_ JFK? Reagan increased the total tax burden on the middle class
btw. He cut income taxes and raised payroll taxes, shifting
the overall tax burden down. Overall collections as a percentage
of GDP changed only very slightly.
\_ You need an unbiased URL to prove the first two sentences, and
not from an opinion column.
\_ Reagan DID lower income and corporate taxes but raise
payroll taxes. It shoudlnt' be too hard for you to find a
URL. -second opinion
\_ Then find one. Your opinion is worth the bits it takes
to print them. Probably less.
\_ Look, I am not going to do your research for you. Taxes
as a percentage of GDP is a prety easily obtained stat.
Is the WSJ unbiased enough for you?
http://www.opinionjournal.com/columnists/mhelprin/?id=65000365
http://www.opinionjournal.com/columnists/mhelprin/?id=65000365
\_ Dumbass. Yes, you, dumbass:
First two sentences. That does not include "JFK?".
The person who makes the unconventional claim must
back it up.
\_ The only reason it is "unconventional" to you
is that you are economically uneducated. I do
not have the time to educate you, that is something
you have to do yourself. Here is more data:
http://www.huppi.com/kangaroo/L-taxgrowth.htm
Look at Federal tax burden as a percentage of GDP
in 1980 and 1989.
\_ Are you JUST NOT FUCKING UNDERSTANDING?
"First two sentences."
\_ Okay, I see the confusion. You should have
said second and third sentences. I will
research this and get back to you. I am
busy at work right now.
\_ It is in this book:
http://csua.org/u/7ol
Look at the source of federal revenue through
out the Reagan Era. The percentage amount from
payroll taxes increases and from income
decreases. Reagan raised payroll taxes
numerous times. Here are CBO numbers:
http://csua.org/u/7on
Income tax dropped from 8.9 to 8.0
while Social Security went from 5.8 to 6.7,
perfectedly offsetting the decrease.
\_ and the ad hominem begins. conservatives lose!
\_ Actually, I'm a Democrat, and I'm not thinking
of switching. I just can't stand it when
some liberal makes a claim far out of left
field without some backup. Republicans think
we're all idiots, and I'm not going to help them
with that myth.
\_ No, we don't think you're all idiots. If that
were so we would've destroyed your entire
movement decades ago. We think that many of
you are well meaning but either confused or
simply wrong and the rest are simply selfish to
the point of being evil. I do appreciate you
coming forward and trying to bring the level of
debate above the usual "yoo teh suk!" that we
see on the motd from the fringes and the echo
chamber. --conservative
\_ It takes Intelligence not to waste trillions on nukes and star
wars and tax cuts while promising balanced budgets and accruing
massive debts. Defined in this way, Republicans don't have
Intelligence.
\_ The same Americans would say that if we had Carter in there,
we wouldn't have spent as much, the Soviets wouldn't have
spent as much, and the Evil Empire would still be there.
The same Americans would say the deficit-spending was money
well spent, and without big government too.
\_ Reagan also passed some of the biggest tax _increases_
of any President.
\_ Do I have to continue this?
The same Americans would say that raising taxes was
necessary to support defense spending in the arms race
with the Soviets, to keep Social Security solvent,
and to not let the deficit go wildly out of countrol
and to not let the deficit go wildly out of control
(and it was wild) -- all worthwhile causes.
\_ But wait, so its okay to raise taxes to pay for
war and control the deficit?! Why can't we do that
now?!
\_ Because tax cuts stimulate the economy. Lowering
taxes asctaually increases revenue!
taxes actaually increases revenue!
-- voodoo economist
\_ Hehe, ok so you're saying that raising taxes
stimulates the economy? That high taxes will
increase revenue *over a period of time* and
not just initially? That high taxes create
private sector jobs? Okey, dokey!
\_ Of course it is more complicated than
that. Taxes spent in economically useful
activity tends to grow the economy faster
than when that activity doesn't happen
or only happens at the whims of the
market. Universal public education, paid
for by taxpayers, has been shown to be
a win by many diverse economies. I think
universal healthcare is too, as
demonstrated by countries like Canada,
where they spend less as a percentage of
GDP (by far) but get similar results. Tax
money wasted stupidly or in fraud is
always a drain on the economy. Compare
The Netherlands vs USA economic growth
rates over time to see that higher tax
rates do not always strangle the economy.
\_ So you're saying the command economy is
better than the demand economy. I think
the failure of the Soviet Union and now
China moving to a demand economy buries
that idea. Money siphoned off to the
government can never be spent as
efficiently as money spent directly in
the private sector. What the government
can do that the private sector can not
is big public works projects that benefit
everyone such as building/maintaing the
highways, defense, dams, and other large
projects that are unlikely to yield
direct monetary benefit or are impossible
for the private sector to deal with.
Re: Netherlands. Uhm, yeah, let's
compare a homogenous highly controlled
tiny country that doesn't have a military
or any of the other problems the US has
as a large nation and only super power to
the Netherlands(???). It isn't even
worth discussing. How about you compare
the US to some other country or group of
high tax countries that can almost equal
the US in some way? You know, the apples
to apples thing? Try Germany, France,
Britain, etc. combined. Netherlands?
That's laughable. The mouse that roared.
\_ Heh. In my current game of Victoria,
I am playing as Netherlands. It's
1850s, I still control Indonesia, and
I am rivalling the US for the #2
world power status (Britain is #1).
Netherlands used to be powerful back
in the days. Didn't they make Japan
a satellite state at one point?
-- ilyas
\_ Those in favor of the war should pay more taxes.
\_ That would be great! We could all choose
what government services we want to pay
for. I have no kids, so screw education!
I also have no need for social security,
medicare, or welfare, so I'm not paying
for them either! I think you should run
for office on that ticket.
\_ Amen, brother! I'm totally in favor of us
each only contributing as much as we take
out! My taxes would drop from a total
burden of just over 50% (fed, state, etc) to
about 5%.
\_ Sure. Make sure to vote for me. I'll
be running as CSUA party in '08.
\_ You're using CSUA account...that's part
of education. As for social security,
you'll need it unless you plan to
die before 67.
\_ I don't need the CSUA account, I'm
paying way more in taxes for
education than the value of a CSUA
account. Do you really think you'll
get back even a fraction of the
money you put into social security
now? Here's a hint: save money.
\_ No but it's more for helping out
those who need it. How do you like
seeing those senior citizens sleeping
out on your streets if there's no
social security? Here's my hint:
MAX out your 401k. Save money is
not getting you anywhere.
Same goes with welfare. No welfare
means more bums in yoour neighborhood.
or maybe you pay extra tax to have
govt to deport them somewhere else
or pay extra to move to richer place.
It's totally your choice.
\_ No welfare means fewer crack heads
after they either get jobs or
starve to death. I'll pay an extra
1% for funeral costs for the first
year or two it takes to shake the
garbage people out of the country.
\_ But what if the crackheads
decide to start burglarizing
your house and carjacking you
so they can afford to eat?
Now you've been robbed and
possibly shot and you then have
to help pay the $50K per year
to keep them in prison.
\_ Prison? No, 2nd amendment.
Anyway I think more highly of
people than you do. Most
will work if forced to.
\_ It doesn't take much
carjacking to eat. drug
adicts rob to pay for their
habit, not their dinner.
(yet another legalization
arg.) -phuqm
\_ I have to disagree whether you
need education or not. In someway
you used the education fund already
by having gone to public schools and
UCB. Just because you don't need
it now doesn't mean you got ripped off
by the govt. Without this education
fund, your parents would have paid
a premium to get you educated.
\_ Very little of your education costs
go to teaching students. If this
was a pure undergrad school most of
us could easily afford it with a
part time job.
\_ I think you pay education not solely
for yourself, but for a better
society. Just imagine what's like
to live in state with no public
education. You'll end with so many
kids on the streets doing random
things.
\_ Duh, that's what the second
amendment is for.
\_ Yeah, that is working out
real well in places like
Afghanistan and Congo.
\_ They don't have the other
body of laws or culture to
support a non violent pro-gun
culture. The Congo? Yes,
when barbarians get weapons
they kill each other. Big
surprise.
\_ You'll never know if you need welfare.
\_ I'm hungry and cold. Send me your money.
\_ We PRC Chinese made the USSR collapse. We kicked them out of the
house and cozied up with Uncle Sam. Then we did a punitive
expedition against Vietnam, after which the USSR sent huge amounts
of money to their Vietnam lackey. USSR also had to deploy many
divisions along the world longest land border. Not long after
we punished the Vietnamese for being traitors, the USSR invaded
Afghanistan in part to surround China, and got their butt kicked
there. In conclusion, it is us who brought down the USSR. We
rule.
\_ Kind of true. If a large country was supporting Afghanistan/Iraq,
I am sure the outcome would be different. Too bad the Soviet
is too chicken to do what the US did to them in Afghanistan!
\_ The Soviet? What is the Soviet? Whatever it is there isn't
a the Soviet anymore. Perhaps that is why the Soviet didn't
do anything about Iraq?
\_ The USSR invaded Afghanistan for oil and a warm water port. Why
would they want an even longer border with China? Not only is
this not even "kind of true", it isn't even internally
consistent.
\_ Really? Then how come Afghanistan has neither a port or oil?
They have invaded Afghanistan just to put another satelite
country under their belt. I think that was the main point,
though most Russians themslves don't know what was the point
of this war. I have read somewhere that it was mostly
Brezhnev's idea who after having recieved lots of literary
awards for his WWII trilogy "Malaya Zemlia" imagined himself
to be the world's greatest military commander and ordered the
Afghanistan invasion right before his death.
\_ Warm water port to a river? What for?
\_ Uh, you're kidding right? Russia and then as the USSR
has been trying to get a warm water port for _hundreds_
of years.
\_ I just don't see how a river port is worth invading a
country.
\_ Yes, but their goal was to reach Mediterranean Sea,
not the Indian Ocean. They were actually pretty close
to reaching the Mediterranean but were prevented
by the British and other allies of the Ottoman empire.
\_ Why would they want a longer border? No, it's not that
they want a longer border, it's just that the USSR likes to
threaten and bully. That's what the USSR is about. Until
it fell apart. Warm water port is just part of the whole
picture. Mostly USSR wants to dominate the region, with
help from friendlies like India and Iran.
\_ So they conducted a 10 year war in Afghanistan just because
they're mean? And a warm water port and a shitload of oil
was secondary? Ok, yeah, that makes lots of sense.
\_ they thought it's gonna be just a few months.
countries that sent most aid to the mujahadeens:
us, china, saudi arabia. china was poor and
stingy. why would it send aid in this case?
and no, there is no oil in afghanistan. ussr
has plenty of oil, they don't need more oil. |
| 5/25 |
|
| www.theatlantic.com/politics/foreign/reagrus.htm Atlantic Monthly Sidebar February 1994 Reagan and the Russians The Cold War ended despite President Reagan's arms buildup, not because of it--or so former President Gorbachev told the authors by Richard Ned Lebow and Janice Gross Stein Shortly after the Berlin Wall was torn down, prominent political leaders and commentators concluded that the US military buildup under President Ronald Reagan had won the Cold War. "We were right to increase our defense budget," Vice President Dan Quayle announced. "Had we acted differently, the liberalization that we are seeking today throughout the Soviet bloc would most likely not be taking place." Even Tom Wicker, a New York Times columnist with impeccable liberal credentials, reluctantly conceded that the Strategic Defense Initiative (SDI) and the Reagan buildup "seemed to impress the Soviets as a challenge that they might not be able to meet." Forty years of arms competition, so the argument goes, brought the Soviet economy to the brink of collapse. The Vatican's Secretary of State, Agostino Cardinal Casaroli, said, "Ronald Reagan obligated the Soviet Union to increase its military spending to the limits of insupportability." When the Soviet Union could no longer afford the competition, its leaders decided to end the Cold War. A modified version of this argument holds that the American military buildup simply worsened the Soviet economic quandary; Neither the strong nor the weak version of the proposition that American defense spending bankrupted the Soviet economy and forced an end to the Cold War is sustained by the evidence. The Soviet Union's defense spending did not rise or fall in response to American military expenditures. Revised estimates by the Central Intelligence Agency indicate that Soviet expenditures on defense remained more or less constant throughout the 1980s. Neither the military buildup under Jimmy Carter and Reagan nor SDI had any real impact on gross spending levels in the USSR. At most SDI shifted the marginal allocation of defense rubles as some funds were allotted for developing countermeasures to ballistic defense. If American defense spending had bankrupted the Soviet economy, forcing an end to the Cold War, Soviet defense spending should have declined as East-West relations improved. CIA estimates show that it remained relatively constant as a proportion of the Soviet gross national product during the 1980s, including Gorbachev's first four years in office. Soviet defense spending was not reduced until 1989 and did not decline nearly as rapidly as the overall economy. To be sure, defense spending was an extraordinary burden on the Soviet economy. As early as the 1970s some officials warned Leonid Brezhnev that the economy would stagnate if the military continued to consume such a disproportionate share of resources. The General Secretary ignored their warnings, in large part because his authority depended on the support of a coalition in which defense and heavy industry were well represented. Brezhnev was also extraordinarily loyal to the Soviet military and fiercely proud of its performance. Soviet defense spending under Brezhnev and Gorbachev was primarily a response to internal political imperatives--to pressures from the Soviet version of the military-industrial complex. The Cold War and the high levels of American defense spending provided at most an opportunity for leaders of the Soviet military-industrial complex to justify their claims to preferential treatment. Even though the Cold War has ended and the United States is no longer considered a threat by the current Russian leadership, Russian defense spending now consumes roughly as great a percentage of GNP as it did in the Brezhnev years. The Soviet economy was not the only economy burdened by very high levels of defense spending. Israel, Taiwan, and North and South Korea have allocated a disproportionate share of resources to defense without bankrupting their economies. Indeed, some of these economies have grown dramatically. A far more persuasive reason for the Soviet economic decline is the rigid "command economy" imposed by Stalin in the early 1930s. it absolved Soviet producers from the discipline of the market; and it gave power to officials who could not be held accountable by consumers. Consequently much of the investment that went into the civilian sector of the economy was wasted. The command economy pre-dated the Cold War and was not a response to American military spending. The Soviet Union lost the Cold War, but it was not defeated by American defense spending. Former Soviet officials insist that Gorbachev's decisions to withdraw Soviet forces from Afghanistan and to end the arms race were made despite the Reagan buildup and SDI. In 1983 Gorbachev, then the youngest member of the politburo, visited Canada and spent long hours in private conversation with Aleksandr Yakovlev, then the ambassador in Ottawa. The two men talked openly for the first time about the deep problems that the Soviet Union faced and the urgent need for change. To their mutual surprise they agreed on the folly of the Soviet intervention in Afghanistan and the necessity of ending the Cold War before it led to catastrophe for both superpowers. Both men hoped to reduce the burden of military spending in the USSR, and thus free resources for domestic reform and renewal. By the time Gorbachev became General Secretary, in March of 1985, he was deeply committed to domestic reform and fundamental changes in Soviet foreign policy. "I, like many others," he observed recently, "knew that the USSR needed radical change. If I had not understood this, I would never have accepted the position of General Secretary." Within a month of assuming office he attempted to signal his interest in arms control to the United States by announcing a unilateral freeze on the deployment of Soviet intermediate-range missiles in Europe. The deployment of the SS-20, Yakovlev explains, was a "stupid and strange policy" that defied logical explanation. Yakovlev considered the deployment illogical and self-defeating before President Reagan announced SDI and the buildup of American military forces. Gorbachev felt free to make a series of proposals for deep cuts in his country's nuclear arsenal because he was confident that the United States would not attack the Soviet Union. In conversation with his military advisers he rejected any plans that were premised on war with the West. Since he saw no threat of attack by the United States, Gorbachev was not intimidated by the military programs of the Reagan Administration. "These were unnecessary and wasteful expenditures that we were not going to match," he told us. If both superpowers were to avoid the growing risk of accidental war, they had to make deep cuts in their strategic forces. Reagan's commitment to SDI made it more difficult for Gorbachev to persuade his officials that arms control was in the Soviet interest. Conservatives, some of the military leadership, and spokesmen for defense-related industries insisted that SDI was proof of America's hostile intentions. In a contentious politburo meeting called to discuss arms control, Soviet armed forces chief of staff Marshal Sergei Akhromeyev angrily warned that the Soviet people would not tolerate any weakening of Soviet defenses, according to Oleg Grinevsky, now Russia's ambassador to Sweden. Yakovlev insists that "Star Wars was exploited by hardliners to complicate Gorbachev's attempt to end the Cold War." President Reagan continued to regard the Soviet Union as an "evil empire" and remained committed to his quest for a near-perfect ballistic-missile defense. To break the impasse, Gorbachev tried at the two leaders' summit meeting in Reykjavik to convince Reagan of his genuine interest in ending the arms race and restructuring their relationship on a collaborative basis. For the first time, the two men talked seriously about eliminating all their countries' ballistic missiles within ten years and significantly reducing their arsenals of nuclear weapons. Although the summit produced no agreement, Reagan became "human" and "likable" to Gorbachev and his advisers, ... |
| www.cnn.com/SPECIALS/cold.war/kbank/profiles/gorbachev -> www.cnn.com/SPECIALS/cold.war/kbank/profiles/gorbachev/ The man credited with helping end the Cold War was born into a peasant family on March 2, 1931, near Stavropol. He joined the Communist Party in 1952 and completed a law degree at Moscow University the following year. During the early 1960s he became head of the agriculture department for the Stavropol region. By the end of the decade he had risen to top of the party hierarchy in the region. He came to the attention of Politburo members Mikhail Suslov and Yuri Andropov, who got him elected to the Central Committee in 1971 and arranged foreign trips for their rising star. In 1978 he was back in Moscow, and the next year he was chosen as a candidate member of the Politburo. His stewardship of Soviet agriculture was not a success. As he came to realize, the collective system was fundamentally flawed in more than one way. A full Politburo member since 1980, Gorbachev became more influential in 1982 when his mentor, Andropov, succeeded Leonid Brezhnev. He built a reputation as an enemy of corruption and inefficiency. Gorbachev finally rose to the top party spot in March 1985. Almost from the start, he strove for significant reforms, so that the system would work more efficiently and more democratically. Hence the two key phrases of the Gorbachev era: "glasnost" (openness) and "perestroika" (reform). Hoping to shift resources to the civilian sector of the Soviet economy, Gorbachev also began to argue in favor of an end to the arms race with the West. Throughout his six years in office, Gorbachev always seemed to be moving too fast for the party establishment, which saw its privileges threatened, and too slow for more radical reformers, who hoped to do away with the one-party state and the command economy. Desperately trying to stay in control of the reform process, he seemed to have underestimated the depth of the economic crisis. He also seemed to have had a blind spot for the power of the nationality issue: Glasnost created ever-louder calls for independence from the Baltics and other Soviet republics. He was successful in foreign policy, but primarily from an international perspective. While his arms control agreements with the United States could be seen as in the Soviet interest too, the peaceful breakaway of the countries of Eastern Europe, followed by German unification and NATO membership for the new Germany, appeared to old-line Communists more a sell-out. With Gorbachev on vacation in the Crimea, they staged a coup. However, they failed because of incompetence, lack of support from the military and massive street protests in Moscow. After the coup, Gorbachev lost the political initiative. This now belonged to the leaders of the various Soviet republics, in particular the president of Russia, Boris Yeltsin. At the end of the year, Gorbachev was forced to resign as president of a Soviet Union no longer in existence. Since that time, he has been blamed by many Russians for their current political and economic predicament. In the West, he remains the 1990 Nobel Peace Prize winner who helped end the Cold War. |
| csua.org/u/7om -> www.reuters.co.uk/newsPackageArticle.jhtml;jsessionid=BNWNJBMEP3N0ECRBAEKSFFA?type=topNews&storyID=524322§ion=news World pays tribute to Reagan MOSCOW (Reuters) - The father of Soviet Perestroika reform Mikhail Gorbachev has praised Ronald Reagan as a partner on the world stage who made the key contribution to ending the Cold War between the nuclear superpowers. Reagan, the former US president, died on Saturday at his Los Angeles home at the age of 93. "We were destined to meet in the most difficult years of the 20th century when we felt on both sides that we faced the threat of a nuclear war," said Gorbachev, Soviet ruler in 1985-1991. "Reagan entered history as a man who made a huge, possibly decisive, contribution to creating conditions for ending the Cold War," he told reporters. In 1985, devoted anti-Communist Reagan and freshly appointed Communist party leader Gorbachev, who was in his first steps of reforms, held their first meeting in Geneva. "After a first round of talks I told my aides he was a true dinosaur and Reagan told his aides I was a stubborn Bolshevik," Gorbachev said. "However, within 1-1/2 days we made progress, which allowed us to sign an important document," Gorbachev said it was Reagan's personal charm which helped in the initial stages of the difficult process of mending relations between the two and their countries. Gorbachev's foreign minister and close ally Eduard Shevardnadze echoed Gorbachev's words. "He was eloquent, witty," Shevardnadze told Reuters in the Georgian capital Tbilisi, where he lives after his opponents forced him to quit as the Caucaus nation's president last year. "He could always find an exact word in a conversations... Gorbachev specifically praised Reagan, viewed in Moscow as a hawk, for daring to step past his immediate political sentiments for the sake of a more important goal. "In fact, he set himself a task to remain in history as a peacemaker," he said. |
| www.opinionjournal.com/columnists/mhelprin/?id=65000365 View latest article by Mark Helprin WRITTEN ON WATER Riderless Horse Someone should pay as much attention to the tax burden as the Fed does to interest rates. BY MARK HELPRIN Tuesday, October 3, 2000 12:01 am EDT Performing with the subtlety of an Olympic rider, Alan Greenspan sits astride the interest-rate horse, his actions semi-invisible until things take a turn for the worse. Everyone knows how powerful the horse is, how influential in the economy, and thus its every movement is closely observed. Even in local papers that report on hogs' breath and Donny Osmond reruns, interest rates are tracked to the hundredth of a percent, which is as it should be. If you have a powerful horse you must watch it and ride it, or it can get away from you. But there is another horse in Washington, and it has no rider. Which is to say that though everyone is aware of it, and it causes a great deal of trouble and anxiety, it is not the object of a system of observation and control as thoughtful or finely calibrated as the one that keeps watch on its interest-rate sibling. Though it is a much larger horse, not even The Wall Street Journal keeps track of it. This is the tax horse, and although it's bigger than Bucephalas, it doesn't have a rider. Although you may be able to come up with a fairly accurate number for the prime rate or the long-bond yield, unless you are Grover Norquist you probably don't have a clue about variations in the rate of taxation--that is, the total burden of taxes on the economy--which is only peripherally related to tax rates. Tax rates vary bracket by bracket and impinge upon demographic cohorts of ever-changing numbers. The income to which they are applied varies according to many factors. As anyone who has paid real estate taxes in more than one locality knows, rates can be rendered meaningless by variations in assessment. Even were income tax rates fixed in place, the actual rate of taxation could move hither and thither. Inflation can lift masses of taxpayers to higher brackets, as can their successes and the growth of the economy. Ineluctable demographic changes can put differing numbers of people at variously income-rich or meager stages of life, at diverse moments. The compliance policy of the Internal Revenue Service, congressionally mandated exclusions and limitations, the system moderating the effect of punitive rates by driving transactions into the underground economy, and the effect of many other minutiae that an accountant would love to talk to you about as he followed you through the Louvre or the Canadian Rockies, all mean that tax rates are only one determinant of the rate of taxation. And yet tax rates, and most commonly their tax rates, are what most people use to form a picture of how taxes influence the economy. If they are lucky enough to participate in the federal withholding system, they may even believe that the forced interest-free loan the government compels from them every year somehow becomes a gift when their overpayment is refunded. To obtain a clear picture of the effect of taxes it is necessary simply to measure federal, state, and local taxes as a proportion of gross domestic product, and in that way eliminate a forest of confusing variables in favor of taxation's real cost. Of course, taxes result in benefits, even if with abhorrent inefficiency, but so too do borrowings. We track the cost of borrowing without consideration of its justifications, but with an eye to its effect on the vigor of the economy. chart Taxes as a percentage of GDP is a measurement that at first glance seems anything but charismatic. Graphed with the Y-axis representing 100%, the first chart shows what you get. So if it is a horse, it is almost a dead horse, and why beat it? Why bother to track a rate that's as flat as an astronaut's haircut? Because in today's economy, with a GDP of $10 trillion, each 10-point demarcation on this graph represents a trillion dollars. Looking at it with a tighter focus, as in the second chart, a different image emerges. The seemingly variationless line now takes on some character. The difference between 1985 and 1996 thus is 203 percentage points. In a $10 trillion economy, that spread is worth $203 billion, and a hundred billion here and a hundred billion there soon amounts to real money. In fact, in 1998, the total cost of interest "paid by persons" (rather than by business), was $172 billion. A little blip in the apparently stable rate of taxation is therefore the equivalent of either doubling or totally eliminating the entire burden of interest costs in the consumer sector. Looked at another way, the 203 percentage points represent an 8% increase over the rate of taxation in 1985. Taxes consume 25% of mean pretax family income, and are therefore two-thirds more of a cost than the proportion of pretax family income (15%) consumed by payments of interest and principal. Which means in turn that the effect of this seemingly innocuous variation in what at first glance looks like a flat line is equivalent to 167% times 8%, or more than a 13% equivalent rise in interest rates. In fact, it's more, as the multiplier is based on the repayment of principal as well as interest, although it is offset by the fact that businesses, where the economic impact of interest rates is felt more keenly, pay approximately 25 times in interest expenses what they pay in taxes. Interest rates moving 13% even in 11 years it would be extremely worthy of note. The equivalent has occurred in the rate of taxation (in terms of effect). This should be monitored--not just by the mysterious hoot owls of the Federal Reserve, but by the public. For one thing, it has not, as many predicted, been the poison of enterprise. Perhaps the increase in taxes served, accidentally, as the ballast that prevented a buoyant economy from drifting off into the inflationary stratosphere. It would be very interesting to determine what the rate of taxation was, as perhaps a leading indicator, just before the onset of growth, contraction, or stagnation. Bands running along the X axis where the rate was tracked in time could then show, historically, where the rate had led. That is, if on the average a rate of taxation of, for example, 19% corresponded to a growth rate of 6%, a band running from left to right at the 19% level would be labeled "+6%." By looking at the graph, you would be able to see the rate of economic growth or decline that the present rate of taxation historically called forth. Undoubtedly there would be many counterintuitive surprises in such a graph, not least because of the ever-presence of multiple causes, but patterns might emerge subtly within the apparent contradictions, which would allow judgments as informed as those in regard to interest rates. Taxes change far more slowly, of course, and move more in response to political than economic effects, but the rate of taxation does change with each new tax law, demographic shift, and fiscal resolution of the states and localities. The tax horse is more powerful than the interest-rate horse. |
| www.huppi.com/kangaroo/L-taxgrowth.htm Summary There is no historical evidence that tax cuts spur economic growth. The highest period of growth in US history (1933-1973) also saw its highest tax rates on the rich: 70 to 91 percent. During this period, the general tax rate climbed as well, but it reached a plateau in 1969, and growth slowed down five years later. Argument Before examining the effect of tax cuts on growth, it should be pointed out that the very premise of this conservative myth -- that growth is good -- is false. The population explosion is adding approximately 1 billion people to this planet every decade. Under the attendant threats to the environment, including global warming and ozone depletion, economists and environmentalists today are increasingly calling for a sustainable economy. It is a sign of how backwards we actually have it that we consider an economy healthy only if it grows, and the faster the better. Even so, examining this issue is important, because conservatives see growth as an economic goal, and tax cuts as the best way to achieve that goal. So we should study tax cuts for their efficacy in achieving desirable outcomes. A review of American history makes the opposite case that conservatives would like it to make: high growth usually coincides with high taxes. And the supercharged economies that resulted produced high growth for decades afterwards. World War II was followed by the boom times of the 50s and 60s. The reason why wars are good for the economy is a matter of controversy -- one likely theory is that war compels government to invest heavily in manufacturing. Whatever the reason, the point is that these economic boosts occur during a period of unusually high taxation. Hate taxes though they may, people resort to them when their survival is on the line. The following chart shows economic decline and growth during the Great Depression: Year %Change in GNP President ---------------------------------- 1930 - 94% Hoover 1931 - 85 Hoover 1932 -134 Hoover 1933 - 21 Hoover/Roosevelt 1934 + 77 Roosevelt 1935 + 81 Roosevelt 1936 +141 Roosevelt 1937 + 50 Roosevelt 1938 - 45 Roosevelt 1939 + 79 Roosevelt As you can see, the Depression worsened under Hoover's watch, and recovered during Roosevelt's. By the beginning of Hoover's presidency, the bottom 80 percent of all American income-earners were off the tax rolls entirely, and the rich were taxed at a record low 25 percent. By the end of 1932 this top rate was raised to 63 percent, and by 1936 it was 79 percent. Roosevelt instituted a vast new array of taxes, including corporate taxes, inheritance taxes, dividend taxes, gift taxes and excise taxes. And during this era, the top tax rate soared to 91 percent, and the bottom rate to 18 percent -- again, the highest in US history. In 1944, federal taxes reached 217 percent of the GDP -- again, the highest in US history. The US emerged from World War II as the world's only economic superpower. From 1947 to 1973, it experienced phenomenally high growth; The top tax rate remained between 88 and 91 percent until 1964; afterwards, the rate was reduced to 70 percent, still stratospheric by today's standards. The economy slowed down after 1973, for reasons that economists are still debating. But what is not debatable is that taxes started falling for the rich in 1978 (with a capital gains tax cut). Reagan accelerated these cuts with a vengeance: the top income tax rate was slashed from 70 to 28 percent. Bush and Clinton raised them somewhat, to 396 percent today. But that is still roughly half of what it was during the 50s and 60s. It has remained stuck in low gear, dropping from 34 to 25 percent a year. Individual worker productivity has taken an even more severe hit, dropping from 28 percent in the postwar years to about 1 percent after 1973. Some point to the Reagan expansion (that is, the upturn in the business cycle that occurred between 1983 and 1989) as proof that low taxes result in boom times, but this claim is easily disproven. Correlation is not causation, of course, but the point is that lower top rates on the rich have done nothing to revive the extraordinary growth of the postwar years. But if changes in the top tax rate apparently have no effect on the economy, what about general rates? Since World War II, federal tax collections have remained surprisingly stable, fluctuating within a few points of 18 percent of the GDP. State and local taxes have been steadily rising since World War II, which resulted in a steadily growing tax burden until 1969, when tax collections reached a plateau that has not changed since. Recall EH Carr's analogy about road systems: at the turn of the 20^th century, there were so few road signs and traffic laws because there were so few cars. However, as roads became more heavily traveled, more traffic lights and laws became necessary to maintain safety and smooth functioning. And this has happened to our economy as well: it has become larger, faster, more complex and interdependent. As long as government could grow to provide it with the traffic lights and laws to ensure smooth functioning, it could continue to grow. Once government stopped growing, the economy followed suit five years later, as indicated by the above chart. Another explanation, less partisan but certainly as plausible, is that economies grow quickest when they are undeveloped, and when they mature they slow down. A good analogy is that of an infant growing faster than a teenager. Many economists believe it is the utilization of technology. For example, World War II saw a burst of scientific inventions and productive technology. That would increase productivity, much like inventing a sewing machine would increase a seamstress' work from one to five shirts a day. Once a seamstress hits five shirts a day, she will not be able to increase her number much more than that, due to the limitations of the sewing machine. the thousands of technologies created during World War II played themselves out suddenly, and growth slowed down dramatically. When the US emerged from World War II, it had the largest and best-functioning economy in the world. The other industrialized nations lay destroyed, and had to start rebuilding from scratch. Although the US has remained the most prosperous nation in the world ever since, these other nations have been growing faster than the US And they have been doing so with far higher tax rates! Far more serious factors affect growth, although, in truth, economists do know exactly what they are. Nobel laureate Robert Lucas, one of the world's most famous conservative economists, has spent over a decade looking for the secret to economic growth, and has not found it. Nobel-bound Paul Krugman, one of the world's most famous liberal economists, admits that the mystery of growth is "deep and poorly understood." People who claim that tax rates affect growth are not serious economists; more often they are journalists, radio-talk show hosts, politicians and other types of snake oil salesmen with easy solutions to complex problems. You can dismiss their bumper sticker slogans with perfect confidence. If taxes have such a weak effect on growth, then we should consider tax cuts or hikes for their other effects, like income distribution or alleviation of poverty. Conservatives can no longer decry these programs on the basis that they will harm economic growth, since these assertions are completely unfounded. |
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| csua.org/u/7on -> www.cbo.gov/showdoc.cfm?index=1821&sequence=0#table4 Standardized-Budget Surplus or Deficit and Related Series, 1962 to 2003 (Percentage of potential GDP) Detailed historical data are maintained by the Office of Management and Budget and published annually as part of the President's budget submission. a From 1962 through 1988, the Postal Service was on-budget. a From 1962 through 1988, the Postal Service was on-budget. a Includes unemployment compensation, Supplemental Security Income, the refundable portion of the earned income and child tax credits, Food Stamps, family support, child nutrition, and foster care. a Includes unemployment compensation, Supplemental Security Income, the refundable portion of the earned income and child tax credits, Food Stamps, family support, child nutrition, and foster care. a Excludes deposit insurance, receipts from auctions of licenses to use the electromagnetic spectrum, timing adjustments, and contributions from allied nations for Operation Desert Storm (which were received in 1991 and 1992). b CBO calculated fiscal year numbers from quarterly national income and product account data from the Bureau of Economic Analysis. a Consists of deposit insurance, receipts from auctions of licenses to use the electromagnetic spectrum, timing adjustments, and contributions from allied nations for Operation Desert Storm (which were received in 1991 and 1992). a Consists of deposit insurance, receipts from auctions of licenses to use the electromagnetic spectrum, timing adjustments, and contributions from allied nations for Operation Desert Storm (which were received in 1991 and 1992). |