# Why Did Reagan's Deficits Lower Unemployment? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [January 25, 2013, 1:08am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280 "2013-01-25T01:08:11Z")\ **Posts on this page:** 14\ **Page:** 1
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [January 25, 2013, 1:08am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/1 "2013-01-25T01:08:11Z")
Obama has spent heavily…over $6 trillion added to the national debt. But the unemployment rate has not dropped below 8%-why is this? Reagan was heavily criticized for his deficits spending-but the unemployment rate dropped drastically during his first term. Obama has spent, but the UR rate remains very high-why is this? ---
**Author:** ![Lamar\_Mundane](https://avatars.discourse-cdn.com/v4/letter/l/85f322/32.png) [@Lamar\_Mundane](https://boards.straightdope.com/u/Lamar_Mundane)\ **Post date:** [January 25, 2013, 2:11am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/2 "2013-01-25T02:11:02Z")
> [@ralph124c](#): > > Obama has spent heavily..over $6 trillion added to the national debt. But the unemployment rate has not dropped below 8%-why is this? > Reagan was heavily criticized for his deficits spending-but the unemployment rate dropped drastically during his first term. Obama has spent, but the UR rate remains very high-why is this? The US unemployment rate is 7.8%. ---
**Author:** ![The\_Second\_Stone](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@The\_Second\_Stone](https://boards.straightdope.com/u/The_Second_Stone)\ **Post date:** [January 25, 2013, 2:20am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/3 "2013-01-25T02:20:31Z")
In my humble opinion it is because the billionaires and the multi-national corporations are undertaxed. So let’s raises taxes on them and see if unemployment goes down. We’ve done 30 years of the other way, so let’s give it 30 years to take effect. ---
**Author:** ![gaffa](https://avatars.discourse-cdn.com/v4/letter/g/e68b1a/32.png) [@gaffa](https://boards.straightdope.com/u/gaffa)\ **Post date:** [January 25, 2013, 5:44am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/4 "2013-01-25T05:44:16Z")
I’ve been [talking about this for years](http://boards.straightdope.com/sdmb/showthread.php?t=497542), but finally others are saying the same thing, [including Nobel Laureates…](http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/) There are fewer jobs due to automation. And no, the market will not magically make them appear, as every new business has been and will be set up in such a way to minimize hiring labor. iTunes and NetFlix employ dramatically fewer people than Tower Records and Blockbuster, and the current job market is reflecting that. As far as businesses being undertaxed, this is true. There is only an upside for them to eliminate labor, and no tax liability for doing so. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [January 25, 2013, 5:49am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/5 "2013-01-25T05:49:54Z")
Reagan’s deficits lowered unemployment by pumping money into the economy. It’s called stimulus spending. ---
**Author:** ![appleciders](https://avatars.discourse-cdn.com/v4/letter/a/85f322/32.png) [@appleciders](https://boards.straightdope.com/u/appleciders)\ **Post date:** [January 25, 2013, 5:56am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/6 "2013-01-25T05:56:00Z")
Uh, deficit spending is stimulative. That’s basic economics. Reagan’s spending lowered the unemployment rate. So did Obama’s. The unemployment rate remains high because four months ago it was _very_ high. This is what we call progress. It’s much harder than just burning the place to the ground or selectively remembering how long it took to get out of a much smaller recession thirty years ago. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [January 25, 2013, 7:25am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/7 "2013-01-25T07:25:35Z")
> [@appleciders](#): > > The unemployment rate remains high because four months ago it was _very_ high. This is what we call progress. It’s much harder than just burning the place to the ground or selectively remembering how long it took to get out of a much smaller recession thirty years ago. This. We just barely dodged what could have easily been The Great Depression Mark II. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 25, 2013, 7:34am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/8 "2013-01-25T07:34:15Z")
> [@gaffa](#): > > I’ve been [talking about this for years](http://boards.straightdope.com/sdmb/showthread.php?t=497542), but finally others are saying the same thing, [including Nobel Laureates…](http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/) > > There are fewer jobs due to automation. And no, the market will not magically make them appear, as every new business has been and will be set up in such a way to minimize hiring labor. iTunes and NetFlix employ dramatically fewer people than Tower Records and Blockbuster, and the current job market is reflecting that. Are we significantly more automated today than we were in 1999, when we had unemployment below what many economists thought possible? As for as the question in the OP, Reagan started out in a much shallower hole than Obama. So much wealth disappeared this time that the stimulus, though big, wasn’t big enough. Also, back then state governments didn’t start laying off people, which hurts still more. ---
**Author:** ![gaffa](https://avatars.discourse-cdn.com/v4/letter/g/e68b1a/32.png) [@gaffa](https://boards.straightdope.com/u/gaffa)\ **Post date:** [January 25, 2013, 7:53am UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/9 "2013-01-25T07:53:29Z")
> [@Voyager](#): > > Are we significantly more automated today than we were in 1999, when we had unemployment below what many economists thought possible? Definitely. Perhaps [this Associated Press series](http://news.yahoo.com/ap-impact-recession-tech-kill-middle-class-jobs-051306434--finance.html) will clarify. > [@](#): > > In the U.S., the economic recovery that started in June 2009 has been called the third straight “jobless recovery.” > > But that’s a misnomer. The jobs came back after the first two. > > Most recessions since World War II were followed by a surge in new jobs as consumers started spending again and companies hired to meet the new demand. In the months after recessions ended in 1991 and 2001, there was no familiar snap-back, but all the jobs had returned in less than three years. > > But 42 months after the Great Recession ended, the U.S. has gained only 3.5 million, or 47 percent, of the 7.5 million jobs that were lost. The 17 countries that use the euro had 3.5 million fewer jobs last June than in December 2007. > > This has truly been a jobless recovery, and the lack of midpay jobs is almost entirely to blame. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [January 25, 2013, 1:06pm UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/10 "2013-01-25T13:06:58Z")
There is a lot of talk about reshoring. Manufacturing is coming back to the u.s. in part because labor costs overseas have gone up, as have transportation costs. But also because the robot gets paid the same in the u.s. as in china. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 25, 2013, 5:36pm UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/11 "2013-01-25T17:36:47Z")
> [@gaffa](#): > > Definitely. Perhaps [this Associated Press series](http://news.yahoo.com/ap-impact-recession-tech-kill-middle-class-jobs-051306434--finance.html) will clarify. That doesn’t respond to my question. I’m not disputing the unemployment figures, just that automation has much to do with them. There are lots of reasons beyond automation for the jobless recovery. For instance, consumer spending has not bounced back as much. Companies are sitting on cash and not investing it in ventures which create jobs. You might also blame off-shoring, but that has nothing to do with automation, in fact those factories are less automated than ones in the US. In Silicon Valley, where we are seeing consumer demand, the job situation is very good, with lots of construction and increasing home prices - as well as crowded highways. ---
**Author:** ![bup](https://avatars.discourse-cdn.com/v4/letter/b/6bbea6/32.png) [@bup](https://boards.straightdope.com/u/bup)\ **Post date:** [January 25, 2013, 6:22pm UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/12 "2013-01-25T18:22:28Z")
**ralph** , part of the reason Reagan’s spending helped unemployment and Obama’s hasn’t (as much), besides the point someone else made about the percentage starting higher, is that many government jobs have gone away, which didn’t happen during Reagan’s term. A couple of million new jobs have been added to the private sector, but government (at all levels) has seen a drop of more than half a million jobs. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [January 25, 2013, 6:25pm UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/13 "2013-01-25T18:25:14Z")
> [@The\_Second\_Stone](#): > > In my humble opinion it is because the billionaires and the multi-national corporations are undertaxed. So let’s raises taxes on them and see if unemployment goes down. We’ve done 30 years of the other way, so let’s give it 30 years to take effect. And how will increasing taxes on businesses increase unemployment? I was watching something on the news that was saying the housing bubble was a big reason unemployment has lasted so long. Home construction employs a lot of people and we haven’t been building a lot of homes since 2008. ---
**Author:** ![The\_Second\_Stone](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@The\_Second\_Stone](https://boards.straightdope.com/u/The_Second_Stone)\ **Post date:** [January 25, 2013, 7:28pm UTC](https://boards.straightdope.com/t/why-did-reagans-deficits-lower-unemployment/648280/14 "2013-01-25T19:28:54Z")
Increasing taxes on businesses, such as GE, which is highly profitable and pays no taxes, will allow a number of things: reduce the tax burden on individual persons, allowing them to increase their payrolls, allow government to hire more workers, etc. Entities like GE are the reason the economy is topsy turvey. They are very rich and pay no taxes, continually shifting the burden to less wealthy and poor tax payers who cannot invest. The GEs invest in politicians who keep their taxes low and negative at all costs to those who cannot afford to “sponsor” politicians. These GE politicians have no incentive to get everyone working as their jobs depend on continued sponsorship, not on non-gerrymandered, non-sponsoring not as wealthy voters.