Ronald Reagan::Barack Obama; Budget and Inflation

I'm listening to Richard Reeves' book President Reagan, which is read by George Wilson. Let me say this: Wilson's Reagan imitation is priceless!

What interests me are the parallels between the early 1980's and now. In both time periods, America experienced a deep recession, which was often likened to the Great Depression. Both President Reagan and President Obama said we need to act quickly to get America economically moving again. And both blamed the policies of the other party for the economic mess.

When Reagan was told that his tax cuts for the rich would hurt the poor, his response was, "Look, we tried your tax-and-spend way for the past few decades, and look where it got us!" (my paraphrase, based on my memory). And Barack Obama recently dismissed the Republican call for more tax cuts and a minimal role for government by saying that we used that approach for the past decade, and it led to our current mess.

Who is right? It's tough to tell! Reagan's policies were enacted, and the economy indeed got better. At the same time, the Bush tax cuts and refunds did not prevent our present recession. How connected is the economy to ideology? Does liberalism necessarily lead to a bad economy, and conservatism to a good one, and vice versa? It's just something I wonder.

Another point: From what Reeves says, there seemed to be agreement between Reagan and Keynesians that more government spending was connected with inflation. One reason Reagan cut government spending was to lower inflation. And Keynesians believed that the government should create demand through more federal spending, but should cut taxes and spending when the economy was overheated, in order to prevent high inflation.

I'm not exactly sure what the relationship is between the federal budget and inflation. I think the difference between Reagan and the Keynesians, though, was that Reagan wanted to cut taxes and government spending during the lean years. Keynesians, by contrast, would say that the lean years were the right time for the government to boost its spending.