Authored by Craig Wilson via DailyReckoning.com,
Stuart Varney, the Fox Business economic host, started out his discussion based around the presentation of Ronald Reagan’s presidency. In his initial discussion layout, Varney identified that during Reagan’s tax cut policy ranging from January 1983 until Reagan’s exit in 1989 the U.S economy grew at an annual rate of 4.8%.
When beginning his discussion with David Stockman, Varney asked about the various disagreements on what economic growth can experienced from tax cuts. Stockman directed on the 4.8% quote,
“That’s selective data. We had a massive and deep recession in 1981 and 1982. The Federal Reserve had to slam on the breaks because of double digit inflation because of President Jimmy Carter.”
“The economy then did bound back when Volcker finally got the inflation job done and took his foot off the break to allow the financial system to start expanding where tax cuts helped. Beyond that they were funded by massive deficits. We added $1.8 trillion so between the monetary ease and the massive deficits we got growth. We can’t ignore the reasons for that growth.”
When asked whether he would expect growth because of potential Trump tax cuts he urged,
“Absolutely not. There’s not a snowball's chance because it didn’t happen then. If you take 1981 to 1989 as a whole, growth was 3.4%. That’s pretty good but the same growth rate that we had from 1953 to 1980 with no change.”
“What we have now is an economy that is so impaired with debt, currently reaching $64 trillion, not one or two. We have a government that is so buried in deficits and debt that it couldn’t do the kind of massive deficit finance tax cuts that accidently happened under Ronald Reagan. He wanted a balanced budget. He wasn’t a Keynesian, he tripled the national debt by accident.”
When Varney pressed back that it was the Democratic party members in Congress who would not negotiate on budgetary means Stockman told a different story. He began, “As the former Budget Director I have more credibility on that than anyone else. I can tell you right now that the Republicans wouldn’t cut it either.”
“All the things that Donald Trump wants to cut today I left in the vault at OMB as failed cuts from 1981. Republican’s wouldn’t cut it.”
via http://ift.tt/2snxwUs Tyler Durden