Sorry but that's just not how it went. Leaving for vacation tomorrow or I'd take the time to find the appropriate charts and graphs. If you just look at GDP charts following the Early 80's recession you will find that Government (G) spending lurched up, Consumer (C) spending increased after the increase in G, business Investment (I) increased last, after excess capacity was soaked up the increased G and C spending. It's pretty easy to see if you look at a chart of GDP over these years. Business has no incentive to spend if they are already below capacity. Big deficit spending from increased G lower revenues through tax cuts stimulated C, ultimately leading to bushiness to increase investment.

I was around 20% in the Reagan administration. During a recession businesses go below capacity captial (K, not $) lies idle. There is no incentive to increase investment until the K slack is taken back up for most industries. So if say 10% of industries (young industries usually) are still interested in investing you get about 2% of the economy involved in actively growing. The rest of the contributors to I are actually doing less than they were before to increase I, so you actually see a net drop in I in absolute terms and as a % of GDP. So I wasn't the catalyst for growth in the 80%, it only contributed later on after consumers and government led the way.

I too had a Reagan of my mind. I had to write a big paper on the early 80's recession (not huge, but some 27 pages in the end). I tried to fit the data to what my preconception of Reagan were, but I couldn't. Sure Reagan was hard on unions, pushed a lot of bank regulation, and cut taxes, but the man spent a TON OF $$$$$.

There has been no sustained period of exceptional economic growth (over 5% for more than 5 years) since the 20's that has happened when government didn't increase expenditures significantly (run deficits).

Yes government can be inefficient, this should really be looked at as an opportunity rather than an hindrance. I don't think that it is probably as inefficient as you might think, but if it was it should be easy to realize huge gains in efficiency by reforming it. If you could perform the same tasks for less and just plowed the money into more government services or infrastructure development it would translate into immediate increases in GDP. If you just sent the money go JOB CREATORS who are already operating in a business environment that is under capacity they would pocket the money and say thank you very much.