Drowning in Trickle-Down

Ronald Reagan took office in 1981 after a decade that shattered American confidence and self-image. The Vietnam War left the country doubting its military power and moral authority. The Iranian hostage crisis left us feeling helpless. Watergate cast suspicions on the motives of our elected leaders. And years of inflation combined with slow economic growth cast a general pall over our collective psyche.Reagan promised to restore America to greatness. He backed up tough foreign policy rhetoric by invading Grenada, sending troops to Lebanon and fueling an arms race with the Soviet Union. Economically, he threw off what he considered the shackles on the free market by lowering taxes, deregulating industries and smashing unions. After a deep recession, the economy jumped back to life and Reagan and the supply-siders credited his tax policy.Reagan’s embrace of free market economics and rugged individualism transformed the perception that Americans held about themselves and their obligations to society. Instead of Kennedy’s “Ask not what your country can do for you; ask what you can do for your country” the Reagan ideal was “Ask not what your country can do for you; ask what you can do for yourself.” Greed was good, taxes were bad and government spending was fiscally irresponsible.The economic turn-around, however, was due more to then-Fed Chair Paul Volcker’s strangling of inflation than tax cuts and deregulation. Reagan helped by giving the economy a huge boost with dramatically increased military spending—the same government spending that he demonized.Nevertheless, Republican spinmeisters created a mythology about the power of supply-side economics. For almost 30 years, we ignored our services and infrastructure to keep taxes low. We ran huge deficits to fund the tax breaks, mortgaging our future in the interest of the rich. Even in times of war, we cut taxes while asking our military families to sacrifice.Unfortunately for us, that theory of trickle-down economics failed. The tax cuts never generated the investment that the theorists promised. Instead, the wealthiest 20 percent of the population saw their incomes soar, the gap between rich and poor widened. Corporate CEOs went from earning 25 times as much as their hourly employees to, by 2005, over 400 times as much.While unemployment may have stayed low, wages did too. Families worked longer hours to maintain the same standard of living and the middle class shrunk. Outdated levies burst and bridges fell into the Mississippi River. All for the sake of lower taxes.As we move forward to fix the financial mess, it’s time to recognize that our zeal to cut taxes for the wealthy has left us with a diminished middle class, an outdated infrastructure and insufficient services. Those who worry that Barack Obama is mortgaging our future need to understand that we have been living on borrowed money and borrowed time for almost 30 years. Now, the bill is due.Thomas Mills is President of Thomas Mills Communications, a Democratic consulting firm that specializes in direct mail, new media and strategic communications. The firm has offices in Washington, DC, and Carrboro, NC. You can reach him by email at thomas@tmccampaigns.com.