Our prime minister, Jens Stoltenberg, that has the same education as me, an economist from the University of Oslo, participated in a discussion on Norwegian Tv yesterday about the new revised national budget. There he said the following (that was new to me) about "dynamic tax policy" and supply side economics, that not even Bush senior believed in it and he called it voodo economics.

"In the 1960s, Bush won two contests for a Texas Republican seat in the House of Representatives, but lost two bids for a Senate seat. After Bush's second race for the Senate, President Nixon appointed him U.S. delegate to the United Nations and he later became Republican National Committee chairman. He headed the U.S. liaison office in Beijing before becoming Director of Central Intelligence. In 1980 Bush became Reagan's running mate despite earlier criticism of Reagan “voodoo economics” and by the 1984 election had won acclaim for his devotion to Reagan's conservative agenda".

A related term is Laffer curve economics

So my question is, was Bush senior a better president for the USA than Regan that brought USA from the worlds largest creditor to the worlds largest debitor nation?

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Kjell Gunnar Bleivik:: Financial information at your fingertips
Learn object oriented programming where it started

In absolute terms, true, as a % of gdp, that is not a true statement.

The US Public debt as a percentage of GDP is in line with the other G8 nations (I believe its lower than Germany, France, Belgium and of course much lower than Japan's debt)

To understand HW Bush, you have to understand that he was an old school 'big government' Republican. People seem to forget that historically, the Republicans were the heirs to the Whigs and Federalists which advocated a strong central government; whereas the Democrats were the heirs to the 'Republican' party of James Madison which favored states' rights.

The flip essentially occurs at the Great Depression. Now of course the Democrats are associated with Big Government and Republicans are associated with 'small' government / states' rights.

The historical context of Reagan's economic policies was the stagflation which occured in the late 70s as a result of the oil shocks. They were looking at double digit inflation, double digit unemployment, double digit interest rates. Approaching the macroeconomic conditions of the late 70s and early 80s by looking at the Supply Side, from a Keynesian perspective, is quite rational. The differences between 1980 and 1930 are apparent (1930 = high unemployment, low interest rates, absolute DEFLATION = demand side push appropriate).

Bush is a little bit different. Unfortunately Bush is best remembered for his line [and Congress will push for new taxes and I'll tell them:] "Read my lips, no new taxes" which was very well received in 1988 but of course haunted him in 1992. Basically the reason why he had to reneg on the promise was the S&L scandals and what was essentially an expensive government bailout (which by the way had bi-partisan support)

In my mind the difference between the two is that Reagan had an ideology, Bush adopted popular ideologies out of political expediency, but at the end of the day he was still an old school Big Government Republican.

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Interesting answer.

The first time I heard the term Voodoo economics, was yesterday.

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Kjell Gunnar Bleivik:: Financial information at your fingertips
Learn object oriented programming where it started

Really, actually I am surprised to hear that....

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Reagan opined that cutting tax rates would increase revenue as you took smaller slices of a larger economic pie.

Results from states raising cigarette taxes do not support this conclusion.

At some point, the Laffer Curve would of course be a truism, ie. if the tax rate were indeed 100% you would most likely collect $0 since it would really just act as a prohibition, but within the reasonable range of taxes, I have yet to see an example where it holds true.

I thought that it might hold true with respect to cigarette taxes imposes in NYC which were the highest in the nation, relatively easy to avoid since neighboring jurisdictions imposed much less taxation where making a relatively cheap trip by train could yield serious savings and yet it still seems to be yielding more revenue....

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Interesting does not imply that I agree

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Kjell Gunnar Bleivik:: Financial information at your fingertips
Learn object oriented programming where it started

You misunderstood me, I was surprised that you hadn't heard 'Reaganomics' referred to as 'voodoo' economics before.

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