Trickle-down economics has been proven a failure
To read Russ Gugino’s Another Voice column, you would think the Ronald Reagan era was the most utopian in history, when all Americans prospered and grew their wealth. Tax cuts allowed productivity and hard work to be rewarded and provided unprecedented nonstop economic expansion. It was the greatest of times. All sweetness and light. How could we have forgotten this? Those of us who lived through it know why – because it never really happened that way.
Forgotten is the recession of 1981-82, which began shortly after Reagan’s first tax cuts – 16 months long, 10.8 percent unemployment and 2.7 percent drop in the GDP. Not to mention the quick creation of record deficits. A very significant recession. Guess what Reagan finally did? He raised taxes and we eventually came out of the recession. Also forgotten is the fact that Reagan raised taxes several more times, mainly to support his defense budget. Not to mention the savings bank crisis, where several banks went into the red with bad loans and endangered account holders with a freeze on accounts, thanks to deregulation – another credo of the Reagan years.
Although eventually there was job growth and the stock market rose, one thing that did not rise accordingly was wages for middle- and lower-class workers. What did start was an obscene rise in corporate executive wages, bonuses and severance packages. This trend has not abated. Trickle down indeed. Gush down for the wealthy.
Interestingly, the two longest stretches of strong economic growth were in the ’90s and the ’60s, both under tax-and-spend Democrats! Deficits became surpluses in both cases, only to turn back into deficits shortly after. Trickle down mostly benefits the rich. Tax cuts mostly benefit the rich. Deregulation benefits the rich and causes depressions and recessions, as we have clearly seen. Greater profits go into stockholder dividends, executive wages and bonuses, and capital improvements, not workers’ wages. And yet advocates persist with these delusions. One thing these advocates don’t recognize is the rule of greed.