Repealing the Eighties DEBT, LIES, AND REAGANOMICS

‘A MOUNTAIN of debt!” “A house of cards!” “A foundation of quicksand!” “We’re stealing from our children!” Such are some of the simplistic notions used widely in efforts to deny the explosion of real economic growth attendant upon Ronald Reagan’s Presidency. The ongoing myth-making has as its central features the arguments that the public debt acquired during the 1980s laid the foundation for future economic weakness, and that the Reagan economic policies encouraged the accumulation of private debt for unproductive purposes.

With respect to the public debt, the narrow myths are 1) that the reduction in marginal tax rates yielded record deficits, and 2) that the deficits were used politically to constrain social spending. The larger myth is 3) that the deficits were in some (undefined) sense far too large and therefore economically destructive. Let us consider these myths one by one.

About the Author

Benjamin Zycher

Benjamin Zycher is a senior fellow at the American Enterprise Institute.

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‘A MOUNTAIN of debt!” “A house of cards!” “A foundation of quicksand!” “We’re stealing from our children!” Such are some of the simplistic notions used widely in efforts to deny the explosion of real economic growth attendant upon Ronald Reagan’s Presidency. The ongoing myth-making has as its central features the arguments that the public debt acquired during the 1980s laid the foundation for future economic weakness, and that the Reagan economic policies encouraged the accumulation of private debt for unproductive purposes.

With respect to the public debt, the narrow myths are 1) that the reduction in marginal tax rates yielded record deficits, and 2) that the deficits were used politically to constrain social spending. The larger myth is 3) that the deficits were in some (undefined) sense far too large and therefore economically destructive. Let us consider these myths one by one.