HOW REAGAN AND SUPPLY SIDE ECONOMICS WRECKED AMERICA'

As we listen to the loud-mouthed pundits on the Right blame Mr. Obama and the Democrats for America's sluggish economy, the deficit, and the debt, we need to arm ourselves with facts.  And the facts point to Reagan's presidency as the beginning of the great increase in our national debt, with a dip in the nation debt as a % of the GDP coming from the Democratic president, Bill Clinton.

We cannot lump the Obama administration in with other past administrations, since he came into office facing a dire economic situation and had to act immediately to staunch the bleeding of jobs as well as stimulate the economy.  We've all seen the chart that shows the improvement in job recovery, but it is more difficult to understand how Mr. Obama's policies averted a national economic catastrophe, since  we can't create a chart on what might have happened, only on what has happened.

Unfortunately, it takes time and attention to read and digest this information, and most voters won't invest in either.  They'd rather listen to charlatans and ignoramuses like Beck and Limbaugh, who contribute nothing to our national discourse, than educate themselves on these important issues:

 

"So how did Reagan, the great debt-slasher, go so far wrong? Partly it was his belief in supply-side 'economics.' This 'theory' claims that when the government cuts taxes, especially taxes on corporations and the rich, it makes them so happy to keep more of their money that they work much harder, get richer, and pay even more taxes than before the tax cut. So the lower the tax rate, the more money the government collects to pay down the debt! Believe that happy talk, and you can run up quite debt.

Of course the rich loved this 'theory' and fed the press many stories about the wonders of the new supply-side 'economics' (cooked up by Laffer, as a graduate student). Money talks, and a lot of people listened. It's time to rethink what radical conservatives have done and are doing to our country. The Reagan-Bushes National Debt now totals $9.2 trillion. That's the lions share of our present debt.

 

The green line in the graph shows what would have happened if Reagan had proposed budgets that let the debt increase in step with inflation and the economy—if he had kept it at a constant fraction of GDP. That's not much to ask of a president who said he'd do far better than those before him, since every previous post-war president had actually reduced the debt as a fraction of GDP.

By the end of the Reagan-Bush 12-year 'revolution,' the extra debt they had piled on the country was costing the country an extra 2.6% of GDP in interest—$300 million a day. Without that interest working against him, Clinton would have paid down the debt a bit faster. That helps the green-line goes down in the Clinton years. That's what would have happened without the Reagan-Bush interest burden.

Now if W. Bush had held the line as all non-supply side presidents had done, the national debt would have been only 21% of GDP, and the country would have been ready to pull itself out of the Great Recession with ease. In fact when W. Bush's last budget year ended we would have had $9 Trillion less in debt.

So how did Reagan, the great debt-slasher, go so far wrong? Partly it was his belief in supply-side 'economics.' This 'theory' claims that when the government cuts taxes, especially taxes on corporations and the rich, it makes them so happy to keep more of their money that they work much harder, get richer, and pay even more taxes than before the tax cut. So the lower the tax rate, the more money the government collects to pay down the debt! Believe that happy talk, and you can run up quite debt.

Of course the rich loved this 'theory' and fed the press many stories about the wonders of the new supply-side 'economics' (cooked up by Laffer, as a graduate student). Money talks, and a lot of people listened. It's time to rethink what radical conservatives have done and are doing to our country. The Reagan-Bushes National Debt now totals $9.2 trillion. That's the lions share of our present debt."

MORE HERE.

Just Say No to Supply‐Side Revolutionaries

The supply siders:

• Lied their way to power in 1981: said debt was “out of control.”
• Spiked the debt 20 out of 20 years.
• Ran up $9.2 Trillion of debt that we’re paying interest on.
• Take care of the rich but not the country.

Now they want to:

• Cut taxes for the rich―that means more debt.
• Block all spending that would benefit future generations.
• Stick future generations with a bigger bill and nothing to show for it.