Economics, Pethokoukis

What would Reagan say if he were giving the State of the Union speech next week?

8.23.12 Ronald Reagan

When Ronald Reagan was elected president in 1980, the top income tax rate was 70%. Inflation had averaged nearly 9% over the previous eight years. The unemployment rate was over 7%. China’s GDP, in nominal terms, was 3% of America’s. US publicly held debt was 26% of GDP. Discretionary spending was about the same as mandatory spending, about $300 billion a year. The Federal Register of regulations had 73,000 pages. Intel could fit 100,000 transistors per square inch on an integrated circuit. The Dow Jones industrial average was under 1,000 and at roughly the same level as in 1966. The four biggest US banks held 15% of total bank assets. The top 1% of households had an average annual income, adjusted for inflation, of $800,000 a year. Health care spending was 10% of GDP. Apple Computer was about to go public in a month, achieving a market capitalization of $2 billion. More than 19 million Americans worked in manufacturing.

Reagan lowered tax rates, slashed nondefense discretionary spending, supported the Volcker Fed’s war on inflation, and cut the Federal Register by a third.

Today, the top income tax rate is 40%. Inflation is less than 2%. The unemployment rate is nearly 8%. China’s GDP is half of America’s (three-fourths based on purchasing power parity). US publicly held debt is 76% of GDP. Mandatory spending is now 70% larger than discretionary spending (which is 20% lower than where it was in 1980), around $2.2 trillion a year. The Federal Register of regulations has 80,000 pages. Intel can fit 2.5 billion transistors per square inch on an integrated circuit. The Dow is at 14,000. The four biggest US banks hold more than 50% of all total bank assets. The top 1% of households have an average annual income, adjusted for inflation, of $1.3 million a year. Health care spending is 18% of GDP. Apple has a market cap of more than $400 billion. Just under 12 million Americans work in manufacturing.

So what would pro-growth, pro-market, pro-free enterprise Reagan — who would have been 102 today — talk about if he was the guy giving the State of the Union address next week? Would across-the-board tax cuts be his top priority? Would fighting inflation? Deregulation? Ending the Fed?

What would Reagan say?

I would like to think he would advocate new ideas based on timeless principles such as ending the tax code’s bias against investment and parents, eliminating crony capitalist subsidies for banks, health care reform built around competition and choice, using technology to create a world-class K-12 education system, and lower the cost of higher learning.

What do you think Reagan would say? What would Reagan do?

7 thoughts on “What would Reagan say if he were giving the State of the Union speech next week?

  1. He would have lots of ideas about how to make the system better. But Tea Party Republicans would make his life so miserable, because of his extreme left-wing ideas, that he would not be able to get anything done.

    • Just like Obama can’t get anything done, because the OWS-acolytes make his life so miserable because of his extreme right-wing views. Right..?

  2. What would Reagan say if he were giving the State of the Union speech next week?

    He would say many nice things as he always did. The problem is not Reagan’s speeches but how his actions diverted from those speeches.

  3. He’d deregulate. 80K pages in the Fed Register!
    I have to go the pharmacy every 15 days to buy over the counter allergy pills after showing my driver’s licence and signing a statement that I won’t cook meth! Can you believe this???????

  4. Friends, you miss the tide of history: there was no Tea Party during the time of Ronald Reagan because one wasn’t necessary. The Tea Party has formed because of circumstances, i.e., wild, out-of-control government spending and an increasingly intrusive government . . . . not because of the passage of time. Had we learned and kept the lessons of Ronald Reagan, there would never had been a need for the Tea Party.

    • Friends, you miss the tide of history: there was no Tea Party during the time of Ronald Reagan because one wasn’t necessary. The Tea Party has formed because of circumstances, i.e., wild, out-of-control government spending and an increasingly intrusive government . . . . not because of the passage of time. Had we learned and kept the lessons of Ronald Reagan, there would never had been a need for the Tea Party.

      But Reagan was responsible for the growth of government too. After promising to eliminate several departments because they were not constitutional he increased their funding. After promising to be a fiscal conservative he convinced fiscal conservatives to raise the debt ceiling and accept massive increases in taxes and spending. He was a fraud who talked a good game but acted just like a typical Democrat.

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