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The Legacy of Ronald Reagan

November 1st, 2013 · No Comments · ALEC, Capitalism, Democracy, Economics, Education, Fascism, Health Care, Labor, Lobbying, Politics, Populism, Taxes, The Budget, Wall Street, Wars and Militarism

It is time that we took a step back from the precipice that is the current American political atmosphere and try to understand how we got here.

It all started with Ronald Reagan. For several years from the mid-1970s on, the Republican Party had been fending off a bunch of radical, Right Wing kooks, who wanted to cut Social Security, dare the Russians to go to war with us, give tax breaks to billionaires and take the country into debt. Of course, they said that they merely wanted to balance the budget by reducing taxes, which would, they said, create growth, and actually produce more revenues. And by cutting government (they didn’t say how; just that there was abundant government “waste”) they would balance the budget and give everyone more money to spend.

War hero and establishment-raised , oil-industry wealthy George H.W. Bush, called these ideas “voodoo economics.” (In fact, when he became President, with half-a-trillion-dollar deficits staring him in the face, he actually raised taxes ever so slightly and lost the support of the by then Right Wing Republican Party.) He was right. In 12 years the Republicans took the national debt from $800 billion dollars to a whopping $4 trillion dollars.

Ronald Reagan came to office on a wide ranging coalition of religious fanatics, Southern Segregationists, old-line Republicans and the remnants of both the Gerald Ford conservatives and the Barry Goldwater conservatives. In addition, he took many of the undecided who were not completely sold on the laid-back scientific approach of Jimmy Carter. Jimmy Carter, it turned out, was simply too sophisticated for the bumpkin American public who were ready to take a chance on a movie star President.

What a great guy! Everybody liked him. Tip O’Neill, Speaker of the House, joined him for drinks after work. He won the election by a huge margin for a candidate running against a sitting President. And things got even better.

Advised by his brilliant economist, Arthur Laffer, whose “trickle-down” economics was sure to enrich the rich so much that much of it would actually spill over onto the public at large, Reagan cut the top marginal tax rate (every dollar over $88,000 in those days) from 70% down to 50% and then…what the hell, why not…down to 28%.

Laffer’s ideas were supported by that other brilliant—theoretical—economist, Nobel Laureate, Miton Friedman. How could you lose with a brilliant, popular and Nobel-winning economist saying you were right? Well….ask David Stockman. His job was to pay the bills, to create a budget. His job was to cut government to the point that the costs of running it matched up with the roughly 50% reduction in revenues. The government began to lose money big time.

Stockman has not begun to decry the problems of Reaganomics only recently, after a stint making millions on Wall Street. He began complaining the day that he started to look at the economy and tell the politicians that he could not make the numbers work. And as soon as he left office and as soon as the Reagan Administration, with which, like most Republicans, he was completely aligned for jobs and advancement left town, he wrote a book outlining the complete story on the failure of Reaganomics.

Reagan increased military spending by about $125 billion a year. He cut revenues by more than that. The result was that an economy that had been in deficit by about $60 billion, suddenly went into deficit by something in the range of $220 billion…per year. By 1989, when Bush the First took office, the debt had not only gone from 800 billion to 2.14 trillion but it was now structurally set up to lose as much as $500 billion a year!

This was Reaganomics. But why didn’t we do anything to stop it? Well…folks….why aren’t you doing anything to stop it now? Don’t want to cut services? Don’t want to lose Medicare? Don’t want to spend rational amounts (about half of what we currently spend) on the military? Then you will eventually either have to raise those taxes on the top income earners or make the corporations actually pay taxes instead of just showing tax rates on a chart.

This is not rocket science or neurosurgery. This is plain and simple accounting…simple arithmetic. Bill Clinton said that in 2012 and he proved it in 1993. He raised taxes from a 35% top rate to a 39.6% top rate, and he raised everyone else’s taxes slightly too, as part of it. So…a basic 5% tax increase.

The Conservative Republicans went into sticker shock. They literally said that this was the biggest tax increase in the history of the world, and the country would go into Depression. Instead, the country not only balanced its budget by 1997…it took that long to get the thing turned around…but we experienced…again, literally, not figuratively, the longest sustained period of economic growth in this country’s history…even better than the post war period of the late 1940s and early 1950s.

The secret wasn’t tax increases alone. What the tax increase did was to spur the reluctant investment community. Ross Perot had scared them. They are no smarter than you are. They can be scared by bullshit, too. But Perot was right. We needed to get a grip on the Reagan-Bush I debt. And when Clinton forced that to happen, they started to relax and the dot-com revolution started to happen. (EBay, Google, Oracle, Microsoft and dozens of others started to take off.)

But the Republicans had seen the opportunity already. In 1993 and 1994, the Republicans realized how much campaign money there was in the health care lobby, the tobacco industry, and the disbursement among all Congressional districts of the military spending.

And they began their program of attacking the Democratic Administration during the Clinton Administration, with Republican propaganda, starting with Rush Limbaugh daily on 1600 radio stations, attacking Clinton under the new radio rules. While the economy was booming, the Republicans were attacking the idea of health care, literally accusing the Clintons of murder and corruption.

Under the old Fairness Doctrine, cancelled by Reagan, it was necessary to tell the truth. After 1987, anyone could say anything on the radio about the current administration with impunity. The endless barrage of Right Wing radio commentators was the only reason that the Republicans could get away with impeaching Clinton. Without them, popular support, knowing the facts, would have run them all out of office.

The lack of any fairness doctrine is the only reason Rush Limbaugh is still on the radio today. Over 90% of what he says is a lie. Books have been written simply outlining his lies and correcting the record.

In 1982, Reagan signed the Tax Equity and Fiscal Responsibility Act of 1982 which put back some of the revenues lost with his initial tax cut. In addition, Reagan raised taxes 11 more times, including the Social Security payroll deduction and the gas tax.
After Bush II came into office he cut taxes from the top Clinton rate of 39.6% down to 35% at the top rate and then cut taxes again in 2003, while running two unpaid for wars. But more important than these items, perhaps, was the deregulation under Bush. It was the deregulation and the inattention to detail under Bush that caused the Housing Bubble, the Stock Market Crash…and worse perhaps than either of those…the attacks on the World Trade Towers in September of 2001, killing 3,000 Americans.

Back to Reagan, numerous things that the current Neo-Fascists have taken to the limits of democratic possibilities…just on the edge of tyranny…were actually begun under Reagan. For example, the attack on unions. Reagan made his anti-union stance known, backing anti-union and union-busting legislation while all the time claiming his credibility for doing so from his tenure as head of the Actors union.

That was of course a lie. Reagan traveled the country prior to his presidency working and speaking for General Electric, talking about the need for changes in union membership that would, in reality, only be good for giant corporations like GE.

All the downside risks that people spoke of in reply to Reagan’s sunny commentaries have come true. Wages and jobs are down. It is all Reagan’s philosophy come to fruition. Union busting, under the more favorable Republican legislation concerning the establishment of unions, has become a multi-billion dollar business. More unions fail because of union busting actions, legal under current law, than fail because men and women do not want more pay and better conditions.

Not only were union jobs eliminated and non-union jobs sent to states where right-to-work laws made it virtually impossible for the individual worker to complain or organize, but corporations took the Reagan principles even further. Under Bush and Cheney, corporations were encouraged and incentivized to send jobs abroad. Under Bush II, over five million jobs went to Asia and fifty thousand U.S. manufacturing businesses closed and facilities replaced by Asia factories.

The result of giving billionaires more money to spend is that they spent it to keep down the rast of society. After all, if a billionaire can prevent of man from making $60,000 a year, up from $50,000 a year…the billionaire’s relative wealth increases. That is how they look at it. Because if a lot of people suddenly start making $10,000 a year more, that billionaire’s relative wealth goes down.

It is a sad thing to see that kind of thinking among people who often don’t really know how much money they actually have. Some billionaires have not the faintest idea of how much they are worth. Yet they continue the practice of trying to separate themselves from the Middle Class.

As the top 1 percent have earned their incomes from the backs of the Middle Class, sending jobs abroad, manufacturing products abroad and then bringing them here to sell to increasingly less affluent American consumers…it has been a race to the bottom.

The result of Reaganomics on the government is that we are 38th in health care, (although number 1 in spending on health care), 16th in literacy, 51st. in life expectancy, but number one in both military spending and incarceration of our citizens.

In the all important genie index…how many rich are there compared to how many poor…the United States ranks 4th in the world in income inequality.

It is not difficult to understand what has happened. We gave all the income that they made to the Billionaires in order to be fair and help things grow. What happened was that they spent the money organizing groups to work against the Middle Class.

Now, the ALEC organization has control of about 30 states. The Tea Party organizations, organized and funded by the Koch Brothers and other like-minded billionaires now controls the U.S. House of Representatives and does whatever the billionaires want, whenever and wherever they want it.

We can’t stop gun violence and we can’t get Congress to keep government running and paying its bills and we can’t get revenues to balance the budget or free women from Medieval attitudes on sex and men from wanting to go to war at the drop of a handkerchief. It is all the Reagan legacy.

Before Reagan we helped African-Americans get jobs, helped workers get better wages, helped good students get to college, helped veterans get skills training and help with buying homes. Life in the United States was good before Reagan. Now it is great for some and miserable for others.

When Ronald Reagan said that we should give the rich more money to spend, he changed this country from a commonwealth of proud fellow citizens to a country of individual, what’s-in-it-for-me, bigoted, greedy, warlike individuals. If that isn’t you, then, statistically, it is the people next door, because you may not be what you eat, but you are how you vote.

There you have it folks, the top one percent of Americans literally own this country, own your job, own the mortgage on your home, own the loan papers on your car and own the Republican Party of Ronald Reagan…lock, stock and barrel.

Good luck with all that.

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