February 6, 2016, is the 105th anniversary of the birth of President Ronald Reagan. That means it is the perfect time to take a look back at the man who is regarded by many conservatives as the greatest president of all time. When you peel away the layers of myth and misstatements of fact you find that the conservative hero wasn’t always conservative, nor was he always what current Republicans would consider a hero.
There are some things that Reagan deserves credit for. For starters, he wasn’t afraid to talk to America’s enemies. This is something that today’s Republicans think is dreadful: witness the GOP tantrum over the Iran nuclear deal, for example. During his presidency, Reagan established a respectful working relationship with Soviet leader Mikael Gorbachev. Today’s Republicans would call that relationship “appeasement.”
In October 1983, over 200 U.S. service personnel, most of them Marines, were killed when their barracks were bombed in Beirut, Lebanon. Reagan had sent the troops there in 1982 on a peacekeeping mission. In February 1984, he ordered the troops to be withdrawn. That was a sensible decision given the situation at the time in Lebanon. Today’s GOP has another term for it, though: they would call it “cut and run.”
There’s no denying that Reagan was a transformational president. But in many ways, especially in regard to matters of domestic policy, he presided over a transformation for the worse, not for the better.
The worst part of Reagan’s legacy, as it pertains to average Americans, is the change he brought to the American economy known as “supply-side economics.” The theory was that giving the people at the top large tax breaks would cause them to invest their windfall in new businesses and the expansion of old ones, thereby creating new jobs. When Reagan largely stopped enforcing the Sherman Antitrust Act, the country saw an unprecedented number of business mergers, acquisitions and leveraged buyouts. Small businesses suffered as already large companies became behemoths. So instead of creating new businesses or expanded capacity, businesses simply bought up other existing businesses. As Thom Hartmann describes it:
[A]ll across the country, local businesses were being put out of business, as large corporations took over and dominated industry after industry. Giant megastores like Walmart and Target replaced local convenience and hardware stores. The local malt shop and burger joint was replaced by A&W and McDonalds. Large companies got even larger, and Main Street USA began thirty-year disintegration.
Reagan is renowned as a “tax cutter.” But, under his supply-side theory, the people who saw the biggest cuts in taxes were those at the top. The further down the income ladder you were, the smaller your tax cut. The richest Americans saw their top rate drop from 70 percent to 50 percent after passage of the 1981 Economic Recovery Tax Act. In 1986, that rate was further reduced to 28 percent. Thanks to the multi-layered system of income tax in the U.S., the top income earners also received the smaller cuts that were given to people in the lower brackets. That produced a windfall for the already rich, who stashed their money away and didn’t use it for the things the supply-siders said they would.
The result was disastrous for the treasury. Just one year after the 1981 tax reductions, Reagan approved what was at the time the largest tax increase in American history. In all, he raised taxes every year he was in office, save for the first and last. The rich made out very well, but when the total tax burden was calculated, middle-class families were paying more in taxes when Reagan left office than they were when he came in. Reagan increased the gas tax, the payroll or FICA tax that funds Social Security, the telephone excise tax, and other regressive taxes that have little if any impact on the well off, but have a huge impact on working families. But at the time, those things weren’t considered “taxes” at all. No, the one thing that Republicans are actually good at is doublespeak. And under the Republican doublespeak of the 1980s, those taxes were known as “user fees.”
Through supply-side economics, Ronald Reagan set the wheels in motion for the destruction of the greatest middle class the world has ever seen. That destruction continues to this day, thanks to the fact that America has never disavowed the supply side theory, even though it repeatedly proves to be a failure (see Kansas and Governor Sam Brownback).
Former MSNBC host Ed Schultz calls the chart below the “Vulture Chart.” Take note of where the difference in income between the top one percent and everyone else really begins to separate. Right around 1982, just as the economic policies of the Reagan administration were starting to take hold.
Reagan doesn’t get the blame for the entire chart, obviously, but it is plain who set the ever-widening gap between the super-rich and the rest of the country in motion.
So happy birthday Ronald Reagan. You “transformed” the country. Now you’re gone, and the rest of us are still trying to deal with the issues your transformation has left behind.
Featured image via Wikipedia