Thursday, October 31, 2013

The lie behind the Reagan Revolution

I remember the Reagan Revolution. I remember the promises made for these tax cuts. They said that the tax cuts would raise revenue. They did not. They said that the tax cuts were fair. They were not. They said that the tax cuts would help the economy. They did not.

What did those tax cuts do? The only thing we can be certain of at this point is that the Reagan tax cuts have helped the wealthiest to accumulate money at a faster rate than the rest of us, at the expense of the rest of us. The Bush Tax Cuts only piled onto the damage done by Reagan. Fortunately, the Bush Tax Cuts have expired, but they need to be restored for the first $250,000 again.

Since the massive tax rate cuts to the top rates, the elite among us have been transformed from producers to rent-seekers. There is simply no economic basis to support the idea that a man who makes $20 million a year is more productive than a man who makes $8 million a year. Or $4 million a year. Or even $250,000 a year. Who gets to decide this stuff? Lawyers? They certainly help the cause of upward redistribution of income.

If you're a highly placed executive in any Fortune 500 company, your *friends* get to decide how much you will be paid while drinking martinis. But that's beside the point.

In almost every study I've ever read, the Reagan and Bush tax cuts have done nothing, NOTHING!, to help the economy. The one trend that is common across all studies is the observation that the top 1% have been accumulating wealth at a rate faster than at any other point in American history with one major exception: the period just prior to the Great Depression.

If the Reagan and Bush tax cuts had truly worked as advertised, we would not be spilling so much ink over the Great Recession, the still high rate of unemployment or the enormous concentration of wealth in the hands of about 400 families in the United States. Remember Reagan's "Trickle-Down Economics"? I don't think water was what he had in mind. Bush Sr. called it Voodoo Economics and he was right.

The long term effect of the Bush and Reagan tax cuts was to marginalize and nearly destroy the middle class. We see it in the Tea Party. We see it in the Occupy Movement. Both groups are pretty angry at the upper class, even if the former is just a useful tool for the Koch Bros.

Few people remember Eisenhower because many of the people who do are dead. Few remember that Eisenhower presided over a great economic boom even with 90% plus marginal tax rates on the highest incomes. He believed that every bomb and every missile was a theft from the poor and the hungry. He was a Republican. But today, he'd be called a socialist.
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