The Truth About Reaganomics!
AKA: The trickle down theory!
AKA: The trickle up theory!
Ah yes, Ronald Reagan
the champion of the Republicans. People are still saying to this day what
a great president he was. Let's see, where should I start. There are so
many exaggerated and untrue claims made about the man, I hardly know
where to start. In general Reagan was basically a Robin Hood in reverse.
The man took from the poor and middle class and gave to the rich and corporations.
For the sake of this article, I refer to the poor as families making less
than $10,000.00 a year and the middle class as $10,000.01 up to about $50,000.00
a year. These are general figures and it depends on how big the family
is and what geographic location we are talking about.
Right off the bat,
after Reagan was elected president he pushed through the biggest tax cut
in history. Looking very closely at just who paid less and who paid more
is quite interesting. Yes, I did say," who paid more". It is estimated
that corporations and individuals making over $200,000.00 a year, paid
three trillion dollars less in taxes the 9 years following the tax cut
than they would have paid if the tax cut had not been implemented. (
George Bush finally saw the light, or should I say the red ink and partially
rectified the situation with a tax hike. Remember the "Read my lips, no
more new taxes", Bush said, just before the election.) Lets see if we
can figure out what happened to the three trillion dollars. Did it trickle
up or down? Have you ever played, Follow Three Trillion Dollars?........Families
earning $199,999.99 down to about $75,000.00 a year faired about the same
after Reagan's tax changes were enacted as they would have had the tax
code been left alone. Looking closer though, the families earning on the
high end say $100,000.00 to $199.999.99 a year faired much better than
families earning $75,000.00 a year. Families earning under $75,000.00 a
year generally paid more in taxes than they did before Reagan's tax cut.
Reagan in all his wisdom knew people would see right through his ploy,
or should I say more people would see through his ploy if he hiked
the tax rates on families earning under $75,000.00 a year at the same time
he was giving huge tax cuts to the corporations and high income families.
What happened is, the tax deduction for interest paid on credit cards
was eliminated, income tax on unemployment was implemented, 2% floors were
added to casualty losses and employee expenses, medical care expenses got
a 7.5% floor and numerous other tax changes were implemented. These changes
were targeted right at Middle America, "Yes people, you and me." These
changes hiked the tax bill for millions of families in the lower and middle
income brackets. A few of the higher income people that may have drawn
unemployment or paid more because of one of these changes, were reaping
the benefits of a lower tax rate. For high income people the lower tax
rate in most cases more than offset the higher taxes paid due to the other
changes mentioned. Reagan was so slick a lot of people bought right into
the scheme. Remember Reagan's state of the union address about how we needed
to tighten our belts to get this country on track, or something like that,
and the, "One more for the Old Gipper", remark. My belt was already so
tight it was cutting me in two.
How could Reagan
have done such a sweep without support? He had support, his big claim
was the reduced taxes would cause businesses to hire a bunch of people
and these people would pay so much in income tax that it would offset the
big tax cut. People listen to me, from an economic standpoint this is mathematically
impossible. The reality is, very few jobs were created in the U.S.
that were directly attributable to the tax cut. The 3 trillion dollars
in tax breaks mostly went into foreign investments. The rest went
into the pockets of CEO's of big corporations, high ranking management
personnel of big corporations and to families making more than $200,000.00
a year. Virtually NONE of the money trickled down. The money trickled
up, just like I said, "The trickle up theory."
One of the more ridiculous
claims I recently heard about Reagan was: "He brought down the Berlin
Wall and caused the fall of communism. "
REALITY CHECK - This
is TOTALLY FALSE - Reagan had nothing to do with the fall
of communism, it would have fallen sooner or later on it's own. It is doubtful
Reagan had any effect what so ever on communism. The beginning of the fall
of communism happened way before Reagan was president. He was probably
kissing Jane Wyman when the fall of communism started.
One of the whoppers
I heard lately was: "Reagan set-up the economy so good when he was
in office, we are now starting to reap the benefits, the budget deficit
almost disappearing is because of Reagan."
REALITY CHECK - This
is TOTALLY FALSE - Reagan pushed the tax rates so low no
matter how good the economy was doing and how little congress spent the
revenue would have most likely NEVER caught up with spending. Remember
the mathematically impossible remark earlier, here it is again, the economy
would have needed to grow at something like 20% a year every year to reduce
the deficit to zero by the year 2000, that is impossible. The reason the
deficit has been reduced so much lately is because of several factors.
The Bush tax hike was a start, inflation has been low partly because money
is in short supply and interest rates have been lower saving the government
money on interest payments. Additional tax changes have increased revenue
and the economy has been going strong. NONE of this had the slightest thing
to do with Reagan. The fact is, Reagan screwed up the economy so bad with
his tax cut, if George Bush hadn't gone back on his campaign promise and
raised taxes we would probably be facing budget deficits for many years
to come. We should all thank George
Bush for that one.
Check out this link
for more information: "The
E-Mail: "The Expert"
Expert's Home Page