Robbie Wilson
By the time I was born in April of 1981, our country was feeling the effects of a decade of rising inflation and unemployment rates, both in full force at the beginning of the Reagan administration. After many years of wage and price controls in the 1970s, Reagan had perused the presidency with promises of promoting a rebirth of the free market system and to reduce the rising tide of deficit spending in the government, using the appealing and simplistic slogan: “It’s time to get government off our backs.” Although there are many who proclaim President Reagan’s economic policies were triumphant and should be considered the gold standard for our American system, I do not count myself among them. In fact, I contend that our current debt-ridden economy, a mere façade of it’s former greatness, once overflowing with pecuniary success and nearly unlimited potential for growth, is a direct result of Reagan’s implementation of “trickle-down” economics, or what many now refer to as “Reaganomics.”
In America’s current political scene, the Tea Party promotes a false narrative as to why and how the U.S. economy came to struggle through this epic, seemingly endless expansion of federal debt obligations, always quick to point blaming fingers at President Obama, a political tactic which seems to resonate loudly with the conservative base as well as some independent voters. Meanwhile, House Republicans attempt to recover favor in the court of public opinion after bungling last year’s debt ceiling negotiations, resulting in another government shutdown because of disagreements between the GOP leadership in Congress and the White House, not to mention their plethora of unsuccessful attempts to repeal or obstruct Obamacare despite its slowly growing popularity. However, there seems to be some turmoil in the conservative camp—many are shifting farther to the right and away from the more moderate GOP establishment—which could give the ultra-conservative Tea Party just the advantage they need this year to present an encore of their astonishing performance in the midterm election cycle of 2010. For many Americans, this Tea Party variety of conservatism is familiar, time-tested, and is rumored—only rumored, I said—to have worked for President Reagan, their archetype of what it means to be a right-wing political hero.
Frankly, I’m convinced of the dreadful possibility that a majority of voting Americans might once again swallow the Teabagger’s phony rhetoric. This would undoubtedly result in the rapid continuation of economic decline in America, which can be traced back to the inception and whole-hearted embrace of “Reaganomics.” The situation is already dire given the scarcity of jobs offering a livable wage, the ever-declining middle class, and the harsh atmosphere of social divisiveness, which seems to be the Tea Party’s calling card as well as their lifeblood. Our country, foundering like a ship at sea, has ventured into an unforgiving whirlpool, spiraling down into the dark abyss, yet there is still hope if Americans can start to comprehend the reasons for our economic decline, and then translate their newfound understanding into action by casting a well-informed vote in November.
First, we must all be cognizant of the fact that the present federal debt is just under $12 trillion greater than it was when George W. Bush assumed the presidency. During his tenure in office, the over-spending on failed, superfluous wars in conjunction with huge tax cuts, mostly favoring the very wealthy, efficiently burned through the budget surplus of $236 billion that was left over from the last half of the Clinton administration. Additionally, the deficit was on a descending trajectory after President Clinton’s two terms, which would have potentially eliminated the national debt completely over the decade that was to follow. Around the same time that George W. Bush was inaugurated, then Federal Reserve Chairman, Alan Greenspan, revealed to a Senate committee in January of 2001 that the government was paying the debt too quickly. Evidently, he had started to worry about the Fed’s ability to influence interest rates should the government nearly or completely pay off the debt, because the eventual outcome would be no more debt obligations to peddle to investors both at home and abroad—fundamentally the basis of the Fed’s power to control interest rates and to print more money.
It should come as no surprise that Greenspan, widely-known as a student of Ayn Rand and a Reagan appointee, rendered his stamp of approval to Bush’s arrangement for colossal tax cuts, largely reminiscent of the plan Reagan had conceived nearly two decades before, aimed mostly at benefitting the extraordinarily rich and their many corporate interests. This approach to government spending, about which there is nothing fiscally conservative, was absolutely the perfect plan to avoid paying off the national debt, a prospect which had so vexed Chairman Greenspan. The economic policies of Bush and the GOP during the early to mid 2000s effectively doomed the debt to balloon to a magnitude never before seen. When Bush-43 left office in the midst of a tanking Wall Street, the likes of which had not been experienced since the Great Depression, and exceptionally lax lending regulations, I began to realize that our political discourse had almost totally shifted away from paying off the national debt, as if it were now some preposterous delusion. Undeniably, the debt had exploded to almost $11 trillion under “W” and was moving swiftly higher, as the nation scrambled to prevent a fiscal disaster that could very well have ushered in an era of endless recession.
While there is plenty of blame to go around, we did not arrive at our current economic state because of the actions of Bush-43, our current “do-nothing” Congress, or even President Obama. As I mentioned before, we can attribute these problems to Reagan, the actor and former governor of California, who had fully embraced this new notion called “supply-side” economics. He campaigned on the idea that if we “get the government off our backs,” remove regulations from corporations, and merely let the wealthy use their money, power, and knowledge in a completely unfettered economy, all of us would eventually profit. Lower tax rates, fewer corporate regulations, as well as other measures, such as free trade agreements, were supposed to result in higher profit margins. All of this was supposed to trickle down later from the wealthiest earners, moving throughout the whole economy, eventually reaching those at the bottom.
In reality, Reagan’s tax cuts facilitated the rampant growth of our federal debt, which was approximately $934 billion at the time he was sworn in as president. When he left office in January of 1989, the debt had tripled to $2.7 trillion. Sadly, the precedent of gross over-spending in tandem with low tax rates, especially at the top, were carried on throughout the next administration under George H.W. Bush. When Bush-41 departed from the White House in January of 1993, the national debt was a whopping $4.2 trillion, which translates into four times the amount the debt had been at the end of President Carter’s term. It wouldn’t be until 1993 that a new Democratic administration, under President Bill Clinton, began pushing through tax increases, which would partially reverse the damage inflicted by the massive tax cuts Reagan had implemented.
Eventually, the deficit problem began to stabilize, with the total debt standing at $5.7 trillion and heading downward as President Clinton departed from office in January of 2001. When he left the Oval Office, he gave us a budget surplus and a plan to continue this trend of frugality over the next ten years. The outcome many of us expected was that through responsible taxing and spending, the excess $5.6 trillion in government funds would be used to pay down the national debt during the following decade. As I mentioned before, it was this notion of paying off the debt too quickly that spooked the Fed. Evidently, it was important enough that Chairman Greenspan decided to support George W. Bush’s new round of tax cuts, which were aimed primarily at the wealthy. Essentially, we had another dose of “voodoo economics” as soon as Bush-43 took office. Of course, the end result of George W. Bush’s version of “Reaganomics” was an astounding $10.6 trillion national debt as his presidency came to a close.
I cannot help but to point out how ironic it is that so many of the Republican leaders, those who were yelling and screaming the loudest during last year’s budget standoff—including Speaker of the House Boehner—were the most ardent supporters of the Bush era tax cuts, our expensive incursion into Iraq, as well as some very drastic bank deregulation policies. Essentially, they were falsely critical of President Obama about the debt crisis because they were, in fact, its key orchestrators. The GOP controlled House will only bring to a vote those fiscal policies that promote “supply-side,” “free-trade,” and deregulatory strategies, which have actually been proven over time to have the opposite effect on the economy than what their conservative champion, Reagan, had predicted some three decades before.
Over these past 30 years, “Reaganomics” has proven itself to be detrimental to our country’s capacity to generate decent pay for workers and incapable of providing the upward fiscal mobility required to sustain a growing middle class, which has traditionally been the backbone of our American economy since the end of World War II. Many Americans are beginning to notice how too much “free trade” can act as the primary ingredient to de-industrializing a society, which has presently been linked to the slump in the growth of manufacturing jobs in America. It should come as no surprise to any of us that the titans of industry are never too shy to outsource labor in the name of creating higher profits, regardless of the long-term effects these practices have had on our economy. Despite the many who say the “stagflation” of the 1970s was horrific, the job market experienced growth of about 26 percent overall for the decade. Ironically, the conservative reaction to “stagflation” yielded 6 percent less than that. Our country experienced just a 20 percent boost to job creation during the 1980s, when “Reaganomics” was first introduced, which continued well into the 1990s. President Clinton was able to temper the effects of “Reaganomics” by pushing through tax increases, although he continued to promote an agenda of relaxing trade regulations and additional “free trade” agreements.
What I find so terrifying about our current political state is that no matter how unsuccessful “Reaganomics” has shown itself to be over the past 30 years, many voters, especially those of the Tea Party ilk, still continue to rally in support of these failed ideas. All the Republican presidents we’ve had since Ronald Reagan have continued his legacy of unsuccessful economic policies, despite the fact that over the last ten years or so—now that “Reaganomics” has had ample time to marinate—the average net worth of American households has fallen almost five percent when adjusted to inflation. Incidentally, even during the so-called economic malaise period of the 1970s, household net incomes in the United States were rising—rising, I said—in the double digits on average. Even still, the Tea Party movement and many other Republicans would have us continue merrily along the “trickle-down” path. It is no secret that they have shot down practically every attempt President Obama and the Democrats have made to reform the tax code, banking regulations, corporate and trade regulations, and to increase taxes on the wealthy, not to mention blocking any legislation having to do with promoting workers’ rights, equal pay for women, or raising the minimum wage.
I will argue that all an American voter needs to do is step back and take a really long, hard look at our current economic situation. Almost all of the nation’s wealth has certainly traveled to the top as intended by “Reaganomics,” but it failed to trickle back down. Instead, all that extra capital, saved from tax cuts and generated through Uncle Sam’s subsidies, was sent overseas either to avoid monetary repatriation (a common tax dodge) or through the outsourcing of labor, which is cheaper and the profits are harder to tax. Our government has wasted trillions of dollars—money we have had to borrow—on foreign wars over natural resources, while doling out even more money over the years to banks and corporations in the form of bailouts, which is oftentimes misappropriated by the issuance of gigantic bonus checks for executives. It is time, therefore, for American voters to stop denying the obvious truths about this flawed Republican approach to building an economy. We can do this very easily by sending a clear message at the polls this November. We truly do have the power to change how we do business, a power realized only through the casting of our ballots. The past three decades we’ve spent under the looming shadow of “Reaganomics” has only yielded a widening gap between the top and the bottom earners of our economy, with the middle class rapidly collapsing into non-existence. It has obviously not brought forth the golden age of economic prosperity that Ronald Reagan so convincingly described. Indeed, the rich are getting richer and the poor are getting poorer; nothing trickles down. That’s the sad reality in which we live today. The myth of “Reaganomics” has been busted.
The Hefty Lefties 