Thirty years ago, a newly elected Ronald Reagan made a fateful judgment: “Government is not the solution to our problem. Government is the problem.†Taxes for the rich were slashed, as were outlays on public services and investments as a share of national income. Only the military and a few big transfer programs like Social Security, Medicare, Medicaid and veterans’ benefits were exempted from the squeeze.
Reagan’s was a fateful misdiagnosis. He completely overlooked the real issue — the rise of global competition in the information age — and fought a bogeyman, the government. Decades on, America pays the price of that misdiagnosis, with a nation singularly unprepared to face the global economic, energy and environmental challenges of our time.
Washington still channels Reaganomics. The federal budget for nonsecurity discretionary outlays — categories like highways and rail, education, job training, research and development, the judiciary, NASA, environmental protection, energy, the I.R.S. and more — was cut from more than 5 percent of gross domestic product at the end of the 1970s to around half of that today. With the budget caps enacted in the August agreement, domestic discretionary spending would decline to less than 2 percent of G.D.P. by the end of the decade, according to the White House. Government would die by fiscal asphyxiation.
Both parties have joined in crippling the government in response to the demands of their wealthy campaign contributors, who above all else insist on keeping low tax rates on capital gains, top incomes, estates and corporate profits. Corporate taxes as a share of national income are at the lowest levels in recent history. Rich households take home the greatest share of income since the Great Depression. Twice before in American history, powerful corporate interests dominated Washington and brought America to a state of unacceptable inequality, instability and corruption. Both times a social and political movement arose to restore democracy and shared prosperity.
The author, Jeffrey Sachs, believes we are at the dawn of a new progressive age. I certainly hope so.
I wouldn’t get my hopes up… These conservatives are like cockroaches in their ability to adapt and survive. It gets harder with each successive attempt to eradicate them.
So true, Swami.
I’m hopeful, but I’m not holding my breath…
And if you look at a little noticed result, and people laughed at me back in the early 80’s when I told them this would happen – our local, county, and state taxes all went up to make up the difference.
I wish I had a dollar for every person who told me, “No, ALL of our taxes would go down!” Idiots…
The wealthy and corporations used to pay for a lot of our education, roads, airports, etc. Not anymore. YOU DO! LOCALLY, since the Federal rate is way down for the rich and the companies. To the point where now, in NY State, the sales tax is between 7 to 8.75%, depending on the county – and more, I believe in NY City. That is a tax paid for on pretty much EVERY purchase you make outside of certain food items. And that tax burden falls heaviest in the ones at the bottom rungs. And that’s not counting your local property, school, road, water, etc., taxes.
Thirty years of propaganda have done their job. Almost two generations later, despite the evidence in front of most people noses, trickle down economics rules. And families get to pass on that wealth, due to lower, or non-existent, Estate Taxes, creating an aristocratic class. And we tax people who move money around at a much lower rate than we tax people who move goods – truckdrivers, or who teach our children, protect our property, and put out fires.
But, in a nation of total idiots, the half-wit’s rule.
Btw – I’M IN THE MONEY!!!
I got my unemployment, maha, so I’ll be sending a little bit your way today! 🙂
I wish it could be more, but…
Alexander Hamilton!
I’ve been studying Hamilton’s Report on Public Credit. I’m kind of amazed that this isn’t better known. I didn’t know about it myself until I made it a point a few months back to start exploring our nation’s history.
And I guess it does seem pretty esoteric, but I don’t think it’s a stretch to say that this report, along with a couple others of his (I haven’t gotten to the National Bank yet), are the founding documents of our economy just as much as the Declaration of Independence and the Constitution are the founding documents of our nation and of our government.
And what you find, of course, is that the government built American capitalism. And the Report on Public Credit is what created the initial pool of capital that made it work. It seems utterly bizarre today, but in the 1790s it made perfect sense for Hamilton to be the apostle of big government and the apostle of big business at the same time.
I only wish I’d read this passage before the debt ceiling fiasco last summer: