Reaganomics at War

A. Scott Piraino

In 1981, when Ronald Reagan was sworn in, the country faced the worst economic downturn since the Great Depression. President Reagan proposed a novel solution, lowering tax rates on the wealthiest Americans so they could spend and invest more money. His administration argued that only this increased economic activity could lift the country out of recession.

Quasi-economic terms like “supply side” and “trickle down” were used to give Reagan’s proposal an academic veneer. In fact Reaganomics was nothing more than intellectual camouflage for cutting tax rates on the rich. And if these tax cuts were unfair and would create the largest national debt in history, well so what.

Twenty years later our national debt has climbed to seven trillion dollars. Yearly interest payments on that debt have ballooned to 300 billion dollars. The poorest Americans have seen their living standards decline over the last twenty years, while incomes for our wealthiest citizens have soared.

But these facts did not deter President Bush. His administration used the recession of 2001 to justify a 1.35 trillion dollar tax cut package. Like Reagan, President Bush sold his plan as a tax break for all Americans, knowing these reductions would favor the wealthy.

While reducing income taxes for everyone, his administration quietly increased payroll taxes on working Americans. Social Security and Medicare are flat taxes on all wage income. That means there are no write-offs or deductions, and all payroll income is taxed at the same flat rate.

Of course the wealthiest Americans don’t worry about payroll taxes because they don’t have jobs. They own capital, invested money that makes more money. Capital gains taxes have been steadily reduced, to fifteen percent today. Since this is not payroll income, the owners of capital do not contribute to Social Security and Medicare.

Payroll taxes account for over one third of federal revenue, and nearly all the budget surpluses up to 2001. Yet President Bush did not suggest reducing these taxes, or making them fair. Instead the Bush administration continues the fiction that workers are contributing to a “trust fund”, while spending the surpluses from payroll taxes as general revenue.

This would have been just another craven transfer of wealth to the rich if not for the tragic events of September 11th. After the terrorist attacks, the recession of 2001 suddenly looked like an economic crisis. The surpluses of the previous four years disappeared, spent on military operations, emergency relief, and a bailout for the airlines.

The Bush administration announced an emergency budget increase, and a return to deficit spending. This year’s budget deficit will climb to over 400 billion by year’s end, a new record high. This does not include an additional 87 billion dollars for the war in Iraq, which President Bush requested last week.

With US forces occupying Iraq and Afghanistan, the Bush administration had the audacity to suggest another round of tax cuts for the wealthy. President Bush signed legislation last spring further reducing taxes by 350 billion dollars. Included in this new package are more tax cuts for corporations, and further reductions on capital gains taxes.

The War in Iraq is costing over four billion dollars a month, three million Americans have lost their jobs in the last three years, our trade and budget deficits are soaring, and this President doesn’t care. It’s not that he believes in Reaganomics, George Bush doesn’t believe in anything. Recession and war are not reasons for more tax cuts, they are an excuse.

In 1981 the wealthiest Americans received the biggest tax cut in US history. Make no mistake, Reaganomics has done exactly what it was supposed to do. It has made the richest Americans much wealthier, while transferring more of the tax burden to the middle class and working poor.

President Bush shares Reagan’s agenda. Our wealthiest citizens have received more tax cuts, while the rest of us pay for the war on terror, and pay down the debt created by Reaganomics. It’s a disgrace.

Published on January 31, 2006 at 11:56 pm  Comments (2)  

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  1. Wow dude, you sound like you got your PHD at the University at Moscow in the old U.S.S.R. Scott. First of all Reagan is not responsible for the deficit and neither is capitalism. What he inherited in 1980 (as all Republican presidents inherit) was the Democratic party’s legacy of big government and socialism. This country was already One Trillion in the Red when he took office and going up because of a ideology that has nothing to due with the foundation of this country. It’s that John Maynard Keynes-Karl Marx economic system of which recorded history, not you and not me, says is the worst economic system in history. You see when the Democrats (starting with FDR, then LBJ and now Hussein Obama) introduced all of the social programs to the American people which is based on socialism that Marx talks about in the communist manifesto is that they have COLAs attached to everyone of them which guarantees increases of which depending on where inflation can go – way up or down no matter who becomes president. Unfortunately when they go up in massive increases is when inflation is skyrocketing upwards like it did by time when Reagan took office in 1981. Inflation was at 13.5% and with no LIne-Item Veto he could not cut the massive increases in those social programs unless he had cooperation with the left-wing socialist democratic party of America. Unemployment was also at 10.5% and Interest rates were at 20.5% – that is if you had good credit. You see what you fail to understand about socialism is that it creates deficits and mass poverty on a grand scale whereas Capitalism creates wealth not just for the rich but anyone who has ambitions to become wealthy no matter what class he comes from. By the way those tax cuts you said that were strictly for the rich under Reagan is flat out left-wing bullshit. I was a middle class worker driving a truck on a fixed income when Ronnie baby was president and saw my purchasing power increase with less taxation while at the same time getting pay raises during Reagan’s tax cut policy. Every class of worker did. You put Reagan down for our military spending which was 2.5 Trillion dollars over 8 years yet you failed to mention that before Reagan we had spent over 10 Trillion dollars on military spending along with two wars and no end to the Cold War in sight. In the Soviet archives they give credit to Ronald Reagan for ending the Cold War which started from the idiotic alliance that FDR made with the greatest political serial killer in the history of mankind and no doubt one of your political idols – JOE STALIN. Every country in the world that Ronald Reagan was not president of who has a socialist agenda like ours that was created by the Democrats are all in debt and will eventually implode on themselves just like the old Soviet Union and their satellites did. The only smart Marxist country of the bunch was Red China due to the fact that they have to many people they could not afford to have social programs like we have here with social security, medical, Medicaid, welfare benefits, benefits for illegal aliens etc etc . That is why they have real surpluses and we don’t. How ironic. We paid so much attention to ending the Cold War externally but forgot internally we have the same deadly political cancer that now has us at 18 Trillion in the Red and growing.

  2. Combat deaths in American wars

    Civil War combat deaths (1861–1865):
    Battle deaths (Union) 140,414, Battle deaths (Democrats) 74,524,
    Total: 214,938 deaths.

    World War II combat deaths (1941-1945)
    All branches: 291,557 deaths

    World War I combat deaths (1918)
    All branches: 53,402 deaths

    Vietnam War combat deaths (1964-1975)
    All branches: 47,434 deaths

    Korean War combat deaths (1950-1953)
    All branches: 33,739 deaths

    George W. Bush’s War combat deaths (2001-2008)
    All branches: 5,078 deaths

    In comparison “W” did a lot better job in his foreign policy in keeping the number of grieving families down than the foreign war policies of the Democratic Party which have been nothing according to recorded history but massive failures and a waste of American lives.

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