The Economic Recovery Plan

I like looking at history and seeing how situations have previously been handled. It tells me something about problem solving and maybe more importantly, about the nature of people. 

“Our situation now is in some ways similar to that which confronted the United States and other Western nations shortly after World War II. Many economists then were predicting a return to depression once the stimulus of wartime spending was ended. But people were weary of wartime government controls, and here and in other nations like West Germany those controls were eliminated against the advice of some experts. At first, there was a period of hardship — higher unemployment and declining growth. In fact, in 1946, our gross national product dropped 15 percent, but by 1947, the next year, it was holding steady and in 1948 increased by four percent. Unemployment began a steady decline. And in 1949 consumer prices were decreasing. A lot of the experts underestimated the economic growth that occurs once government stops meddling and the people take over. Well, they were wrong then, and they’re wrong now.”

Ronald Reagan February 26, 1982 9th Annual CPAC Conference

Business as usual is taking place in Washington, DC. When that happens, business as usual on Main Street usually suffers. Take a look at history.

A Hemorrhaging Economy

Well, after hundreds of billions of dollars to private businesses, it looks like it hasn’t helped. Many are still on the verge of bancruptcy, laying off workers, and even shutting their doors. Voices from the present and the past have been very clear that these measures are not the answer. Maybe as things get worse, more people will start to listen.

“Inflation has one cause and one cause only: government spending more than government takes in. And the cure to inflation is a balanced budget. We know, of course, that after 40 years of social tinkering and Keynesian experimentation that we can’t do this all at once, but it can be achieved. Balancing the budget is like protecting your virtue: you have to learn to say “no.”

This is no time to repeat the shopworn panaceas of the New Deal, the Fair Deal and the Great Society.”

Ronald Reagan March 1, 1975 2nd Annual CPAC Convention

It’s amazing to see without any measurable success in now, roughly 70 years of “tinkering”, that the answer to our troubles is more government “tinkering”. Let the people do the “tinkering” and then see what happens. Just give us a chance.

Federalism vs. The Federal Government

There are essentially 2 schools of thought on the role of the Federal government. Unfortunately, this one is being discarded to our detriment.

(a) Federalism is rooted in the knowledge that our political liberties are best assured by limiting the size and scope of the national government.

(b) The people of the States created the national government when they delegated to it those enumerated governmental powers relating to matters beyond the competence of the individual States.

All other sovereign powers, save those expressly prohibited the States by the Constitution, are reserved to the States or to the people.

Ronald Reagan October 26, 1987 Presidential Executive Order 12612

Contrast what President Reagan presented as the proper role of the Federal Government against what we’re hearing these days from Washington, DC politicians of all stripes.

Failure Of The Free Market

The economy looks to be in quite a mess. Is it time to look elsewhere? Maybe so. Say, like, Russia.

“Some people, even in my own country, look at the riot of experiment that is the free market and see only waste. What of all the entrepreneurs that fail? Well, many do, particularly the successful ones. Often several times. And if you ask them the secret of their success, they’ll tell you it’s all that they learned in their struggles along the way — yes, it’s what they learned from failing. Like an athlete in competition, or a scholar in pursuit of the truth, experience is the greatest teacher.”

Ronald Reagan May 31, 1988 Address at Moscow State University

So if we continue to bail out the private sector in the name of ‘protecting’ people, might we be “protecting” them from experiences that will be the cornerstone of their future success?

Economic Recovery Program

We have a choice of creating jobs for people, or creating an environment that lets people create jobs. And keep their freedom.

“Let us not overlook the fact that the small, independent business man or woman creates more than 80 percent of all the new jobs and employs more than half of our total work force. Our across-the-board cut in tax rates for a three-year period will give them much of the incentive and promise of stability they need to go forward with expansion plans calling for additional employees.”

Ronald Reagan April 28, 1981 Economic Recovery Program speech before Congress

There are 2 camps on this issue. Expansion plans of business owners and expansion plans of the government. I know which one I’m rooting for.

Economic Choices

Sorry for the absence. 6 days of the flu and counting…

I love this quote. It captures the essence of the Conservative movement. Sadly, the GOP has largely abandoned these principles.

“But beyond this, beyond this we have to offer America and the world a larger vision. We must remove government’s smothering hand from where it does harm; we must seek to revitalize the proper functions of government. But we do these things to set loose again the energy and the ingenuity of the American people. We do these things to reinvigorate those social and economic institutions which serve as a buffer and a bridge between the individual and the state — and which remain the real source of our progress as a people.”

Ronald Reagan March 20, 1981 CPAC speech

Setting loose the individual versus providing employment, housing, healthcare and retirement for people. The choice is becoming much clearer again. Do you want freedom or the promise of security? (there is no guarantee)  I’ll take freedom every time.

Government To The Rescue

I’ve been wondering lately just how people have come to the conclusion that somehow the government can solve all our problems. I’m sincere in this.

“But back in the 1960′s, when I began, it seemed to me that we’d begun reversing the order of things–that through more and more rules and regulations and confiscatory taxes, the government was taking more of our money, more of our options, and more of our freedom. I went into politics in part to put up my hand and say, “Stop.” I was a citizen politician, and it seemed the right thing for a citizen to do.

I think we have stopped a lot of what needed stopping. And I hope we have once again reminded people that man is not free unless government is limited. There’s a clear cause and effect here that is as neat and predictable as a law of physics: As government expands, liberty contracts.”

Ronald Reagan January 11, 1989 Farewell speech on national TV.

As a business owner, I understand this last principle. I long for others to grasp it as well.

Economic Recovery Plan

So what will it really take to get this economy on it’s feet?

“Our confidence flows not from our skill at maneuvering through political mazes, not from our ability to make the right deal at the right time, nor from any idea of playing one interest group off against the other. Unlike our opponents, who find their glee in momentary political leverage, we [nourish] our strength of purpose from a commitment to ideals that we deeply believe are not only right but that work.”

Ronald Reagan 1987 speech “A Future That Works”

I’ll take a “citizen legislator” over a “skilled politician” every time.

The Cost Of Stimulation

Sometimes a short-term fix seems less uncomfortable or easier to accomplish. But what if it stood in the way of a long-term solution?

“To assure a sustained recovery, we must continue getting runaway spending under control to bring those deficits down. If we don’t, the recovery will be too short, unemployment will remain too high, and we will leave an unconscionable burden of national debt for our children. That we must not do.”

Ronald Reagan January 25, 1983 State Of The Union Address

The experts are always wrong on this stuff (“Well, we didn’t realize…” blah, blah, blah…), but one group will know the truth. Our children. They’ll know for certain if we traded expediency for growth.

A Stronger Economy

I sometimes wonder if individual citizens have not seen a balanced personal budget in so long that they have no qualms when the Federal one is a shambles…

“The economic recovery package that I’ve outlined to you over the past weeks is, I deeply believe, the only answer that we have left. Reducing the growth of spending, cutting marginal tax rates, providing relief from overregulation, and following a noninflationary and predictable monetary policy are interwoven measures which will ensure that we have addressed each of the severe dislocations which threaten our economic future. These policies will make our economy stronger, and the stronger economy will balance the budget, which we’re committed to do by 1984.”

Ronald Reagan April 28, 1981 State Of The Union Address

It seems so odd to hear a politician recommend a course of action that deliberately excludes politicians, that some might think I was making it up. Nope, it was true. And it worked.