A LASTING BULL MARKET
June 16, 2004
President Reagan's ambitious economic policies, which ended a decade of stagflation and gloomy consumer confidence, may well be regarded as his greatest legacy, say Lawrence Kudlow and Stephen Moore.
When Reagan took office, inflation was at 15 percent; the top federal income tax rate was 70 percent; the top tax rate on investment income was 91 percent; and interest rates were 21 percent. The American people were deeply discouraged.
Reagan's free market, supply-side economic cure -- marginal tax cuts, stable currency, trade globalization and deregulation -- unleashed the longest economic boom (1982-2000) in U.S. history. According to Kudlow and Moore:
- After reaching its low of 800 in 1982, the Dow Jones industrial average increased by an average of 12 percent a year, reaching a high of 11,722 in 2000.
- This Reagan bull market raised the net worth of U.S. households by $30 trillion.
- From 1980 to 2000, the United States created 30 million new jobs -- more than all the other industrialized nations combined.
- Prosperity under Reagan was broad: median family income grew by a real 10 percent in the eighties and by almost another 10 percent in the nineties.
The lesson learned from Reaganomics, hopefully learned for all time, is that when American entrepreneurs and workers are liberated from heavy-handed and intrusive fiscal policies, punitive tax rates and destabilizing monetary policies, the economy's growth potential is almost limitless, say Kudlow and Moore.
If Washington can resist four key prosperity killers -- high inflation, large tax increases, re-regulation and trade protectionism -- more growth is possible.
Source: Lawrence Kudlow and Stephen Moore, "The Gipper's Gift Was a Lasting Bull Market," Investor's Business Daily, June 14, 2004.
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