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Friday, April 10, 2009

A Critical Reminder on the Economy

An important Investor’s Business Daily editorial is titled “Reagan’s Legacy: Our 25-Year Boom.”

The piece provides a crucial reminder of where our economy was when President Reagan arrived in office, and how his pro-market policies launched the U.S. economy on a quarter-century period of robust growth. IBD observed:

It was Reagan who brought America's capitalist economy roaring back to life, ending energy price controls, slashing income tax rates by 25% and dramatically reducing tax rates on capital gains. Americans had been told for years — as they're now being told again — to expect diminished standards of living. Then they watched as the Reagan years set in place one of the most durable and remarkable booms in incomes and wealth in history.


But what about now? IBD warns:

Today the question is: Can Reagan's free-market miracle survive? Or was it just a brief interlude of history? President Obama has presided over the greatest expansion of government in history. Spending on the various bailouts and stimulus programs now totals $4 trillion — about a third of our total national output. And it looks to grow even bigger. He has proposed new taxes and new rules that will put the government's hand into our lives as never before. Expanding government spending from the 50-year average of 20% of GDP or so to as much as 25% will require sweeping new taxes — and not just on the rich.


IBD closing questions:

So is Reagan's dream of free-market capitalism dead? Or is it just sleeping, as in the 1970s, waiting for a new champion to emerge?


Read the entire editorial, and then ask yourself: Are Obama and Company taking us in the right direction or the wrong direction?

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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