Supply side economics, Reaganomics, and trickle-down economics are all synonyms. He’s credited with pushing that policy, it’s one of his most enduring legacies… So, I don’t understand how that couldn’t be relevant.
Propaganda comes to mind. There is still nothing more important to many on the left than spreading the bullshit that the Reagan economic package was unsuccessful. I recently wrote a rather long paper on it.
The fact is that Reagan never lowered “taxes”, if you define “taxes” as what people pay to the government each year. He lowered RATES, but tinkered with enough elements in the tax code so as to offset the effect of the lower rates.
Sure. But my entire point here is that the Reagan packages represented a FLATTENING of the tax code…
Anecdotally, I remember this well; my first professional job began in the middle of 1980, in a big-city sales office of…
People tend to forget that the late 70’s early 80’s were just as shitty as 2008–2009. Something needed to be done, and fast. You cannot run a nation for long with a 10% unemployment rate, negative GDP, and interest rates at 15%. My first house was bought in 1980 with a 15.75% ARM mortgage, and I felt lucky to get it.
Further, many of the negative trends in our economy were well established and in place well prior to Reagan’s election. Income inequality has been rising at about the same rate it is today since the mid-60’s, and mean hourly wage in the US topped out in 1974.
Here’s a word to the wise. Whenever you see an article paper on economics that STARTS their analysis in 1980, you know there is a high probability you’re about to be fed a line of bullshit.
In the short term, it was considered a success, but it in effect just kicked the can down the road and left the problem to later generations. The deficit rose from $74 billion to $200 billion.
Yes, it did. But as you can see from my article, tax receipts rose more under Reagan than any other president. When a deficit gets created, there are always two possible culprits: low tax receipts or high spending levels. In Reagan’s case, it wasn’t low tax receipts; it was the latter, clearly.
High end income taxes were reduced with the theory that this wold somehow incentivize them into giving more of their money away and letting it “trickle-down,” rather than simply having more money. In reality, the rich got richer, the poor stayed poor and the “middle class” shrunk.
That’s not how it worked:
- Marginal rates were markedly reduced, but the tax shelters used to lower taxable income were done away with. This left most upper end taxpayers paying the same, sometimes a bit more, than they had under Carter.
- HOWEVER, under Carter, they used to have to give attorneys thousands of dollars to get into various schemes that lowered their taxable incomes by tens of thousands of dollars. After Reagan, they no longer had to do that; that money went searching for something else to do.
- What that money did was go into real estate, the stock market (which took off), and into venture capital (this was the “first generation” of tech ventures, Sun Microsystems, Silicon Graphics, Pyramid Technology, Informix, etc).
- SO, yes, the rich ended up with more money to do things with, but it wasn’t because they were paying less in taxes; they were paying less in attorney’s fees. :-)
- As far as “rich got richer”, yes, they did, but the slope of income inequality did not change during this period. They rich got richer at the same rate they did during the 70’s and the 90’s as they did in the 80’s. And, yes, the middle class shrunk, but THAT trend was established prior to Reagan as well. Charts for both below:
Income Gini Ratio for Households by Race of Householder, All Races
Graph and download economic data from 1967 to 2016 about gini, households, income, and USA.
You can see from this chart that income inequality, which was dropping during the 50’s and the first part of the 60’s (tax rates were cut in the beginning of the 60’s, it should be noted) changed direction in the mid to late 60’s and has been heading up ever since.
And ever since, the libs have been trying to pin this problem on low tax rates. Well, you’ll notice that that inequality slope just keeps-a-going up, doesn’t really matter what happens with tax policy. The increase in inequality actually LEVELED OUT during the second Reagan term…..and when did it explode upwards again? When Bush-then-Clinton RAISED taxes on the rich.
Odd, eh? You raise taxes on the rich, inequality goes up…….maybe…something more to the story, eh?
Lots of graphs show the median wage crapping out….this one’s pretty good:
So, blue line. There’s a peak in median wage under Carter early in his term, which immediately starts to drop off and drops for three years until Reagan takes over. It recovers during Reagan’s second term (when taxes were being lowered), then drops off again during the Bush term (when taxes are being raised. Then it goes UP under Clinton (who raised taxes then lowered them, basically stays the same under Bush (who lowered taxes) then drops under Obama (who raised them).
There’s no correlation there between tax policy and middle class wage. Just isn’t.
Large multi-national companies are beholden to their shareholders first and foremost, not to the people who work for them.
Yes, and that’s a feature, not a bug, and if the left would realize that it’s a feature not a bug, we’d probably be able to pay for universal health care. Can you tell me why?