Is Obama overturning a hidden foundation of the Reagan "revolt of the haves"? Did Limbaugh "spill

[ProgressiveEconomist]

the beans" inadvertently on the evil genius of Greenspan and Stockman--once you look past his far-right "spin" on his tax-burden analysis ("buying votes" rather restoring a semblance of tax fairness after a generation of Reaganism)?

Why do tax cuts for the poor seem to be anathema to Republicans, even though targeting tax cuts disproportionately toward the poor surely would provide the greatest stimulus to the economy?

An idea crystallized in my mind last night after years of thinking about the evil political genius of Ronald Reagan, Alan Greenspan, and David Stockman. The idea is this: much of the Republican political hold on poor working people since Reagan may have come from the very payroll taxes Reagan shifted onto them massively (see below the line in this post), while cutting marginal income tax rates for the wealthiest by two thirds. After Reagan and company shifted the tax burden from the vast incomes of rich people to the meager pay of the poor, the poor would become much more susceptible to Republican anti-tax, anti-government propaganda. But, unlike the rich, the poor never would get relief from their hefty tax increases. This cynical political ploy may have been part of what Stockman called his "SHIFT AND SHAFT" fiscal strategy.

Look carefully at the Republican tax cut plan John Mcain ran on, and that Boehner has adopted (broad details at http://republicanleader.house.gov/News/DocumentSingle.aspx?DocumentID=109659 ). They would change the current 15 percent rate to 10 percent, and cut the current 10 percent rate to 5 percent. Those currently in the 15 percent and 10 percent brackets would get something back, but only those currently above the 15 percent bracket could get the maximum amount ($3400 a year for a married couple filing jointly). The poorest filers of income tax returns--those who currently get the maximum Earned Income Tax Credit--would get NOTHING.

Compare the Obama refundable $1000 tax credit for working families in the bill going through Congress. A flat $1000 credit is the highest percentage of income for the poorest, who cannot afford to save much and would spend most of what they'd get immediately. Obama's plan is targeted on the people most likely to stimulate the economy with spending, while the Republican plan would give the most to those who'd likely spend the least. IMO the Republican economic wrong-headedness on stimulating the economiy may stem mainly from their fear that tax relief for the poor would make them less susceptible to Republican anti-tax, anti-government propaganda.

Compare my analysis with part of what Rush Limbaugh said last month, according to http://mediamatters.org/items/200901280001 :

"Media Matters for America Wed, Jan 28, 2009 8:34am ET

Number One voice for conservatism" Rush Limbaugh wastes no time leading assault on Obama

... Limbaugh attacks Obama economic recovery package as effort to 'buy votes for the Democratic Party'

Following Obama's reported comments to Republican leaders that '(y)ou can't just listen to Rush Limbaugh and get things done,' National Review White House correspondent Byron York asked Limbaugh for his response. According to York, Limbaugh responded:

Obama's plan would buy votes for the Democrat Party, in the same way FDR's New Deal established majority power for 50 years of Democrat rule. ...

From the January 26 edition of The Rush Limbaugh Show:

LIMBAUGH: 'Now, to make the argument about me, folks, instead of his plan makes sense from his perspective. His plan, I think, is pretty much what FDR was trying to do back in the New Deal era. This is about establishing majority power for 50 years of Democrat rule. And it would also simultaneously damage any hope of future tax cuts. If Obama's version of the stimulus plan goes in, you can forget tax cuts. The deficits are going to be so huge and so numerous and so frequent that the argument for tax cuts in the standard manner can never be won.

His plan would also see to it that a majority of American voters would not pay income taxes, and therefore, a minority of people who would vote for tax cuts will always lose. ...'"

IMO, Limbaugh may inadvertently have helped reveal a deep but hidden-in-plain-sight fact about Reaganism and the evil genius of Alan Greenspan and David Stockman.

***** WHAT'S YOUR OPINION? *****

---------------------------------------------------------------------------------------

More on the steal-in-plain-sight Reagan tax burden shift from rich to poor: IIRC from an old book called "The Education of David Stockman", Alan Greenspan, who was a Reagan campaign economic adviser in 1980, was concerned that the poor did not pay their fair share of taxes! This kind of extremist right-wing fantasyland evidently is where Ayn Rand Objectivist philosphy can lead.

Stockman, who was Reagan's budget director, realized that drastic income-tax cuts for the wealthy would create a huge deficit "hole" in the long-term budget. Under the ruse of concern for the soundness of Social Security when baby-boomers would start retiring 25 years into the future, Stockman and Reagan put Greenspan in charge of a Social Security Commission. This Commission recommended huge increases in payroll taxes that those above the "income cap" would be spared. However, Greenspan saw to it that, unlike pension deductions for workers in individual States, Social Security payroll tax revenues would not go into pension funds whose sole purpose was payouts to old people. Instead, they would serve to hide budget deficits from absurdly large tax cuts for the rich, and they would be spent just like income tax revenues, for wars, defense waste, and future "tax cuts" for the rich.

Stockman realized that the poor would not like having their tax burden increased. But, and this is the genius part, he may have figured out that such resentment among the poor would make them more susceptible to the GOP's anti-tax message. Unlike the rich, however, the poor would get no tax relief from Republicans. Add in spurious "social issues" trotted out at every election--but seldom leading to any legislation--that would make many of the poor lean even more toward the Republicans, and the rest is history. Reagan won 49 States in the re-election of 1984, changing the Presidential voting patterns of white workers who'd supported progressive Democrats for 50 years.

And now the Republicans claim Social Security is "going broke"? Very few are even asking what happened to the TRILLIONS FICA took from them over 25 years ostensibly just to prevent the current baby-boomer retirement "crisis". Reagan, Greenspan, and Stockman concocted such a brilliant scam that most of the "suckers"--poor and middle-class people who voted Republican against their own economic interests for a generation--still don't even realize they've been had.

[ProgressiveEconomist]

1. Anonymous recommenderes--thanks for the quick 4 votes

[Phoebe Loosinhouse]

2. Excellent! 2 questions

Did Stockman really call this strategy "Shift and Shaft"?

Didn't Stockman later recant just about all his Reagan philosophies? I feel like I heard this somewhere and will have to run off and look.

[ProgressiveEconomist]

6. Excellent questions. (1) Maybe. I'm sure I remember correctly

that Stockman strongly recommended "devolution" of responsibility for social spending to states and municipalities. He would SHIFT the responsibility to lower levels of government, and then SHAFT them by not providing adequate funding. This was the opposite of Nixon's strategy of "revenue sharing".

Now if "shafting" was successful, inevitable consequence would be less support for government in general from the poor, who would benefit less from social spending, and less support for federal taxes in particular. As the Federal government stripped itself of responsibility for social programs, the poor would look to state and local tax increases for government help. From their perspective, higher federal payroll taxes (a far greater burden on the poor than federal income taxation) would gain them nothing.

I'm not sure whether Stockman said this explicitly, but IIRC it may mave been implicit. I'm not sure that Stockman was smart enough to realized the evil political genius of shifting the federal tax burden on the poor, making them prey to Republican anti-tax, antigovernment propaganda.

Google "shift and shaft" (at http://www.google.com/search?hl=en&q=%22shift+and+shaft%22 ) and you'll get more than 2600 "hits".

Also, William Greider's book on Stockman stemmed from at least one article in The Atlantic. Incredibly, at least one 1981 article was put online and still is there (google http://www.google.com/search?hl=en&q=stockman+site%3Atheatlantic.com for more than 300 hits, BEFORE you go to the library).

(2) I don't know.

[ProgressiveEconomist]

16. '80s Stockman interview about taxing the poor to make them more Republican

Did you find the book in the library? Here's William Greider's 2001 reprise of what he said there. See especially the end of the last paragraph:

"When FICA taxes were raised in 1983, Reagan at first objected and reminded aides that he was opposed to raising taxes--of any kind. David Stockman reassured him. If the rising payroll-tax burden was imposed on young working people, they would eventually revolt and Social Security would self-destruct of its own weight. The Gipper liked that and gave his OK."

--------------------------------------------------------------------------------

From http://www.thenation.com/doc/20010402/greider :

"Stockman Returneth By William Greider

This article appeared in the April 2, 2001 edition of The Nation.

William Greider:

My private sessions with Stockman stretched over nine months and led to a controversial magazine article, 'The Education of David Stockman,' in which I disclosed the contradictions and internal swordplay behind Reaganomics, but the real sensation was Stockman's own growing doubts and disillusionment with the doctrine. Both of us were excoriated in the aftermath. The Gipper likened me to his would-be assassin John Hinckley. Stockman was roasted for duplicity and cynical manipulations; for concealing the truth about the looming deficits while Congress plunged forward in fateful error. Stockman was guileful, yes, but it was his intellectual honesty that shocked Washington. That brief moment of truth-telling resonates with the current delusions and deceptions. A lot of what he said twenty years ago seems painfully relevant.

'None of us really understands what's going on with all these numbers,' the budget director confided during intense budget-cutting battles in the spring of 1981. That admission should be engraved over the door at the Treasury, the Capitol and the White House. Projections of fabulous budget surpluses that provide the premise for this year's political action are no less airy-fairy. Nonetheless, official fantasy becomes the operating truth, so long as everyone bows to it. Stockman's wishful forecasts on economic growth were nicknamed Rosy Scenario by his colleagues. ...

Stockman's boldest accounting gimmick--reporting $40 billion in budget cuts but declining to identify them--was dubbed by insiders 'the magic asterisk.' ...

Another of Stockman's vivid metaphors is the centerpiece for 2001--the 'Trojan horse' approach to rewarding the rich. Giving everyone the same percentage rate cut sounds fair, but actually delivers most of the money to the very wealthy, who pay the top rate. Supply-side doctrine 'was always a Trojan horse to bring down the top rate,' Stockman revealed. 'It's kind of hard to sell trickle-down economics, so the supply-side formula was the only way to get a tax policy that was really trickle down.' ...

What Republicans learned from the revolution is this: Deficit spending doesn't really count for that much in politics--not among average voters--and a party will not be punished for creating fiscal disorder as long as other good things seem to happen. Democrats used to understand this as a visceral matter but have forgotten the street-smarts their party knew in olden days. On fiscal discipline, the two have swapped positions. Republicans, once the scolds, are now the reckless feel-good party, willing to risk big deficits in order to deliver goodies to main constituencies. Democrats, perhaps wishing for respectability, have become the party of rectitude, preaching forbearance of pleasure. Republicans want voters to have a little fun. Democrats sound like nervous bookkeepers.

Leaving aside economic consequences, Democrats have dealt themselves a very weak position, even though they're largely right about the budget accounting. Most Americans are not fiscal experts and cannot be expected to absorb all the fine-print arguments about cause and effect. Think of the old Far Side cartoon with a dog listening to his master. All the dog hears is: 'Fido, blah, blah, blah, Fido, blah, blah, blah.' What voters hear from Republicans is: 'Want to cut your taxes, blah, blah, blah, want to cut your taxes, blah, blah, blah.' What voters hear from Democrats is: 'Must pay down the debt first, blah, blah, blah, must pay down the debt first, blah, blah, blah.' For skeptical voters with already low expectations of government, this is not a tough choice.

The great accomplishment of Reagan and the supply-siders was to persuade the old-guard Republican Party that its root- canal approach to fiscal policy was a loser--and that recklessness can be a win-win proposition for their side. If the Trojan horse approach succeeds in winning regressive tax-cuts, the GOP delivers huge rewards to its favorite clients. If this also creates a big hole in the federal budget, that's OK too, since runaway deficits will throw another collar around the size of the federal government and provide yet another reason to slash the liberals' social spending. With clever marketing, the GOP may even persuade voters it was spendthrift Democrats who created the red ink. Even recession is OK if the timing is as lucky as the Gipper's. When this recession ends, Bush will credit his tax cuts for the recovery and claim vindication in time for re-election.

Democrats, meanwhile, are the 'responsibles,' telling the people to save their allowance for a rainy day. ...

The awkward fact neither party brings up is that federal financing has depended crucially on collecting more money than it needs from working people since 1983, when both parties collaborated in a great crime of bait and switch. After Reagan cut taxes for the wealthy and business in 1981, he turned around two years later and raised Social Security payroll taxes dramatically on workers (earnings above $76,000 are exempted from Social Security taxes). Ever since, workers have been paying in extra money toward their future retirement--trillions more than needed now by Social Security--and the government simply borrows the surplus revenue to spend on other things: upper-income tax cuts or paying off Treasury bonds or reducing the fiscal damage from deficits in the operating budget.

Taxing one class of citizens--the broad ranks of working people--so government can devote the money to other people and purposes is not only wrong but profoundly deceptive, bait and switch on a grand scale. Government still owes workers the money, of course, and someday will have to find the borrowed trillions somewhere, either by raising taxes or borrowing the money or possibly by cutting Social Security benefits. When FICA taxes were raised in 1983, Reagan at first objected and reminded aides that he was opposed to raising taxes--of any kind. David Stockman reassured him. If the rising payroll-tax burden was imposed on young working people, they would eventually revolt and Social Security would self-destruct of its own weight. The Gipper liked that and gave his OK."

[ProgressiveEconomist]

22. Phoebe, have you seen this? Thanks for spurring me to dig it out. It really

completes my thought in the OP.

[Mithreal]

25. Worth reading. K&R. nt

[ProgressiveEconomist]

66. (2) Yes. Evidently devastated by the worst kind of press after Greider's

article depicting him as Mephistopheles, Stockman wrote a book painting Team Reagan as a "failure". The ostensible reason? Reagan had failed to insist on spending cuts to match his massive tax cuts. I'd forgotten I picked up a copy on the $1 cart outside my favorite bookstore years ago, but there it was in my bookcase today.. Here's its library card:

DATABASE: Library of Congress Online Catalog
LC Control No.: 85045541
LCCN Permalink: http://lccn.loc.gov/85045541
Personal Name: Stockman, David Alan, 1946-
Main Title: The triumph of politics : how the Reagan revolution failed / David A. Stockman.
Published/Created: New York : Harper & Row, c1986.
Description: x, 422 p., <16> p. of plates : ill. ; 24 cm.
ISBN: 0060155604 : $21.95
Notes: Includes index.
Subjects: Government spending policy --United States. Budget --United States. United States --Economic policy --1981-1993. United States --Politics and government --1981-1989.
LC Classification: HC106.8.S75 1986
Dewey Class No.: 338.973 19
Geographic Area Code: n-us---
CALL NUMBER: HC106.8 .S75 1986

[cyborg1966]

3. I wouldn't give Reagan that much credit

Ronald Reagan was basically a smiling face who could spin a good tale, like from his "Death Valley Days."

The real power behind the throne was Stockman and Weinberger.

What alarms me is how many people actually listen to Limbaugh and take his opinions as gospel truth.

Like my dear old dad used to say: opinions are like assholes, everybody's got one and they all stink!

[4lbs]

4. I laugh when the Repukes say Social Security is going broke. If so, the solution is very simple.

Eliminate the cap on Social Security taxes. Right now it's at what, $100K ?

For example, a person making $100K per year and one making $250K per year pay the same amount into Social Security, because the person making $250K only has his/her first $100K taxed wrt SS. Eliminate the cap so that the entire $250K is taxed for Social Security.

Think of the extra amount for Social Security when these corporate execs making millions of dollars per year have their entire millions taxed for SS, instead of just the first $100K.

That will bring in billions extra per year.

[LiberalEsto]

28. AND cut those who earn beyond the cap

from being allowed to collect Social Security when they retire. They don't need it.

[ekwhite]

39. I agree with raising the cap, but...

I disagree with eliminating Social Security for those who have made over the cap. That would essentially turn Social Security into a means tested program. One of the reason that Social Security is the third rail of politics is that it is a universal program. Eliminating universality makes it more vulnerable, politically.

[crimsonblue]

67. Umm...

what?

[loudsue]

5. Not so much annonymous recommendations...as taking time to

think before replying. What you've posted is what we have all known intuitively, but now that it's written down plainly, it's huge.

:kick:

[ProgressiveEconomist]

19. "What you've posted is what we have all known intuitively, but now that it's written down plainly,

it's huge."

Thanks for the phrase "written down plainly". I know my writing tends to be overly complex, and I strive for plainspokenness.

[Jackpine Radical]

35. True wit is nature to advantage dressed--

What oft was thought, but ne'er so well expressed.

[ProgressiveEconomist]

48. Thank you. Not just poetry, but a closed couplet, no less

I feel unworthy of such complimentary largesse.

[Jackpine Radical]

49. Alexander Pope.

Essay on Criticism.

[ProgressiveEconomist]

23. IIRC my previous recs, this post has gotten me onto the Greatest Threads homepage

list for the very first time. Thanks for getting the ball rolling.

[indepat]

7. For years, I have bemoaned the brilliant scam Reagan, Greenspan, and Stockman

concocted on the poor and middle class suckers of America on this board with hardly ever eliciting even a yawn, even when all the mechanics of how the scam was being perpetrated were included. I even most often concluded with: Greenspan, a name that will live in infamy. :P

[ProgressiveEconomist]

10. Same here. Have you seen Will Bunch's new book, "Tear Down This Myth"?

Rachel Maddow had him on her MSNBC cable show February 5th. I have not.

The only books I've seen that touch on the issue of the Greenspan Social Security scam haven't been very good. The best of the bad IMO is SMU econ prof Ravi Batra's (see http://www.amazon.com/review/product/1403968594 ).

Maybe Bunch's new book will be an improvement.

[indepat]

13. Have not yet, but will soon do so

:D

[randr]

8. "Tax Cuts" is code for "We won't give government money to

"those people". This mantra started when Nixon pulled the dixiecrates away from the Democratic Party following the civil rights movements.
It was never intended to give tax relief to middle or poor income families. It merely inflamed the hatred poor white America felt about entitlement programs for minorities.
Reagan introduced actual tax cuts to the uberweathly with his nonsensical "trickle down" bullshit.
Since then the repugs have kept the poor white folk in lock step by opposing any incentive programs that could benefit anyone while doling out riches to their friends and contributors.
It is now obvious who ended up with all the stolen money yet these poor people, who have been fooled all along, are still blaming "those people" for all their problems.

[ProgressiveEconomist]

12. Be careful here. IMO the tax burden on the poor clearly is more

of a class issue than a racial issue, though a disproportionate percentage of the poor are African-Americans. A mantra I remember about the late 70s and early 80s--when Reagan's "revolt of the haves" took place--is that "30 percent of Blacks are poor, while 70 percent of the poor are White." But don't quote me on this without taking a look at historical statistics on poverty. I might not be remembering the exact figure right.

I'd imagine that many of Rush Limbaugh's poor white listeners still would be shocked to learn about the Earned Income Tax Credit, and about the TENS OF THOUSANDS in tax refunds they've missed. Amended tax returns can be filed only for the past three years.

[randr]

20. I agree

It is a class struggle. The larger proportion of poor white people are the ones that have consistently voted against their interests as a result of the Repug strategy.

[Enthusiast]

26. My guess would be that

Limbaugh's audience is composed MOSTLY of low income blue collar white men.

[infidel dog]

17. Ah, Ronald Reagan, smiling pied piper...and better in front of the camera than Nixon!

Ronnie, you evil old bastard. You somehow managed to capture the portion of the white middle/working-class electorate that owed its very existence to liberal economic policy and organized labor. And wouldn't ya know it, many of the poorer, right-to-slave descendants of those people still vote against their economic interests for the sake of Republican Jeezus. Ahhh, what a mess. I wonder if the caretakers of Ronnies' tomb yank bushels of skunk cabbage growing from his sepulchre in the springtime....

[LiberalEsto]

29. Damned smiling villain, that Reagan

As always, Shakespeare nailed it:

"O villain, villain, smiling, damned villain!"
Hamlet (I, v, 106)

[anonymous171]

24. They were right. "Those people" are the cause of all their problems.

"Those people" being the wealthy corporations and their enablers in the government.

[uponit7771]

9. YES!!! A black man tears down the ideals of one of the most racist president in my lifetime the

...Irony.

[pansypoo53219]

11. basic game plan.

divide and conquer. class warfare, while decrying it.

[nichomachus]

14. It's a plan -- it's a process -- and it's been talked about for a long time

Greg Palast covers it quite extensively in The Best Democracy Money Can Buy. Charles Reich talked about it in his book Opposing the System, which died on the vine because it was the mid-90s and everyone was going to be an Internet billionaire by the end of next week.

None of what is happening is an accident -- this was all planned and the plan is working perfectly.

[backscatter712]

15. Their house of cards is falling apart.

People are figuring out that horse-and-sparrow economics isn't helpful, they're starting to realize that they're being shafted by the rich, and holy fuck, are they pissed!

Geithner's getting pushback from Wall Street because he had thought his sequel to TARP out well enough, and he's getting even more pushback from Main Street because it doesn't put the Wall Street thieving fucks on a short leash.

The Rethugs are now waking up to the fact that their old scamming techniques aren't working anymore, and people aren't buying what they're selling. And that scares the holy hell out of them!

[ProgressiveEconomist]

61. "Horse and sparrow economics". Great phrase, but, as an image, EEEEEW!

[Bread and Circus]

18. Part of what you are hitting on is how Republicans like to pit working class rural whites vs...

"everyone" (blacks, latinos, latte sippers, etc) who is not them and milk them for votes.

If Obama is successful, which is exactly what Republicans fear, then it will totally fuck their ability to have a stranglehold on this block. They will then either have to transform or take a back seat for a good 20+ years, if not permanently.

In 30 to 50 years whites will be the largest minority, but no longer a majority.

[crazylikafox]

21. Brilliant analysis.

I never thought of it that way before... Tax the poor to make them republicans. And the bastards wrecked Social Security in order to do it.

[ProgressiveEconomist]

32. Nicely phrased summary: "Tax the poor to make them Republicans. And wreck Social Security

to do it".

there's one thing I'd change in the OP, it would be to add part of the candid David Stockman interview recap from post #16.

[Hubert Flottz]

27. K&R

I think you are exactly right...

[geckosfeet]

30. I don't think that it took a fat rush boy to reveal "the plan", but I agree.

Clearly, the republics way of doing things is to get the net flow of tax money, resources, labor etc. flowing upward to support their rich and corporate clients. Their "view" is that their rich and corporate clients provide jobs for the little people and the little people should be grateful to do their part. This is the underpinning of republic economic policy.

[nradisic]

31. Very well put...

Great post....and I believe you are right on. Sir Ronnie is dead and so are all of his policies.

[myrna minx]

33. K&R n/t

[certainot]

34. talk radio monopoly is essential for selling their scams and frauds

that coordinated UNCONTESTED repetition was essential for the reagan BS and still is for obstructing remedies.

[ProgressiveEconomist]

36. Great point. People can't stay in fantasyland if both sides of issues must be presented

Part of overturning Reaganism has to be restoration of the Fairness Doctrine, IMO.

Did you see Jay Rosen (NYU prof with blog at http://journalism.nyu.edu/pubzone/weblogs/pressthink ) and Glenn Greenwald ( salon.com) on Bill Moyers Friday?

Rosen asked why the "Christian Broadcasting Network" gets invited to be on "Meet the Press" while Amy Goodman ( http://www.democracynow.org ) NEVER does. His answer was that she would disrupt the show and outrage thousands of viewers who never before would have heard many of the facts she would marshal against mainstream conceptions and framings of policy.

[nxylas]

37. K&R

I'm a complete economic illiterate, so anyone who can write about economic issues in a manner that even I can understand without sacrificing depth gets a big thumbs-up from me.

[ekwhite]

38. Ever hear of Jude Wanninski?

Wanninski came up with the "two Santa Claus theory," that combining tax cuts and "supply side economics" would put the Republicans in power for decades? Here is a link to the Thom Hartmann website that explains the theory.

[Locrian]

40. two santas

Good reference. Another DU member "professorplum" has a blog that is good reading as well:

http://professorplum2.blogspot.com/

There are links to the Two Santas thers as well.

[ProgressiveEconomist]

41. And he did so six years before Reagan ran for President. I had

thought about posting the Hartmann "2 Santas" link right after the Greider Stockman interview link in my reply #16, but I'm glad I waited for you to do it for me. Thank you.

[ProgressiveEconomist]

64. Here are a ffew paragraphs from Hartmann's "Two Santas"

From http://www.ucimc.org/content/two-santa-clauses-or-how-republican-party-has-conned-america-thirty-years :

"Two Santa Clauses, or How The Republican Party Has Conned America for Thirty Years
by Thom Hartmann

When Barry Goldwater went down to ignominious defeat in 1964, most Republicans felt doomed (among them the then-28-year-old Wanniski). Goldwater himself, although uncomfortable with the rising religious right within his own party and the calls for more intrusion in people's bedrooms, was a diehard fan of Herbert Hoover's economic worldview. ... Hoover enthusiastically followed the advice of his Treasury Secretary, multimillionaire Andrew Mellon, who said in 1931: 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down... enterprising people will pick up the wrecks from less competent people.' Thus, the Republican mantra was: 'Lower taxes, reduce the size of government, and balance the budget.' The only problem with this ideology from the Hooverite perspective was that the Democrats always seemed like the bestowers of gifts, while the Republicans were seen by the American people as the stingy Scrooges, bent on making the lives of working people harder all the while making richer the very richest. This, Republican strategists since 1930 knew, was no way to win elections. ...

By 1974, Jude Wanniski had had enough. The Democrats got to play Santa Claus when they passed out Social Security and Unemployment checks – both programs of the New Deal – as well as when their 'big government' projects like roads, bridges, and highways were built giving a healthy union paycheck to construction workers. They kept raising taxes on businesses and rich people to pay for things, which didn't seem to have much effect at all on working people (wages were steadily going up, in fact), and that made them seem like a party of Robin Hoods, taking from the rich to fund programs for the poor and the working class. Americans loved it. And every time Republicans railed against these programs, they lost elections. ...

Wanniski decided to turn the classical world of economics ... on its head. In 1974 he invented a new phrase – 'supply side economics' – and suggested that the reason economies grew wasn't because people had money and wanted to buy things with it but, instead, because things were available for sale, thus tantalizing people to part with their money. The more things there were, the faster the economy would grow. At the same time, Arthur Laffer was taking that equation a step further. Not only was supply-side a rational concept, Laffer suggested, but as taxes went down, revenue to the government would go up! Neither concept made any sense – and time has proven both to be colossal idiocies – but together they offered the Republican Party a way out of the wilderness. ...

In 1976, he rolled out to the hard-right insiders in the Republican Party his 'Two Santa Clauses' theory, which would enable the Republicans to take power in America for the next thirty years. Democrats, he said, had been able to be 'Santa Clauses' by giving people things from the largesse of the federal government. Republicans could do that, too – spending could actually increase. Plus, Republicans could be double Santa Clauses by cutting people's taxes! For working people it would only be a small token – a few hundred dollars a year on average – but would be heavily marketed. And for the rich it would amount to hundreds of billions of dollars in tax cuts. The rich, in turn, would use that money to import or build more stuff to market, thus increasing supply and stimulating the economy. And that growth in the economy would mean that the people still paying taxes would pay more because they were earning more. There was no way, Wanniski said, that the Democrats could ever win again. They'd have to be anti-Santas by raising taxes, or anti-Santas by cutting spending. Either one would lose them elections. ...

Reagan, Greenspan, Winniski, and Laffer took the federal budget deficit from under a trillion dollars in 1980 to almost three trillion by 1988, and back then a dollar could buy far more than it buys today. They and George HW Bush ran up more debt in eight years than every president in history, from George Washington to Jimmy Carter, combined. Surely this would both starve the beast and force the Democrats to make the politically suicidal move of becoming deficit hawks. And that's just how it turned out. Bill Clinton, who had run on an FDR-like platform of a 'new covenant' with the American people that would strengthen the institutions of the New Deal, strengthen labor, and institute a national health care system, found himself in a box. A few weeks before his inauguration, Alan Greenspan and Robert Rubin sat him down and told him the facts of life: he was going to have to raise taxes and cut the size of government. Clinton took their advice to heart, raised taxes, balanced the budget, and cut numerous programs, declaring an 'end to welfare as we know it' and, in his second inaugural address, an 'end to the era of big government.' He was the anti-Santa Claus, and the result was an explosion of Republican wins across the country as Republican politicians campaigned on a platform of supply-side tax cuts and pork-rich spending increases.

Looking at the wreckage of the Democratic Party all around Clinton by 1999, Winniski wrote a gloating memo that said, in part: 'We of course should be indebted to Art Laffer for all time for his Curve... But as the primary political theoretician of the supply-side camp, I began arguing for the 'Two Santa Claus Theory' in 1974. If the Democrats are going to play Santa Claus by promoting more spending, the Republicans can never beat them by promoting less spending. They have to promise tax cuts...'

Thom Hartmann (thom at thomhartmann.com) is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program on the Air America Radio Network."

[Festivito]

42. Excellent. I'll suggest it was the think tanks behind them,

rather than them.

Reagan was used. His anger at communists for saying he was TOO DUMB TO JOIN THEM made him a near perfect stooge for the think tank owners. They helped him with what few small ideas he had, and they helped him fight communism with tax boons like star wars. He never realized the big picture. (ironically in both his movie life and in his real life) The Alzheimer's iced the cake.

Greenspan was used as well. A nerd wanting to impress his mama. A trophy wife. Pats on the back. And he worded the way of the smart and wealthy as deservedly well born. The underclasses would just have to lift themselves up as did he, himself. The sad thing for him, is that he is starting to see it.

These two were in the public light. Stockman seems superfluous to me, although I'm sure he was handled if he needed to be.

[ProgressiveEconomist]

45. "Stockman seems superfluous". Not to me. Did you read Greider's 1981 article

in The Atlantic? It's online at http://www.theatlantic.com/doc/198112/david-stockman . IMO "The Education of David Stockman" is THE definitive reference for understanding how Team Reagan pushed their outrageous two-thirds marginal taxrate cut for the wealthiest and their all-time-record-breaking deficit budget through Congress. Stockman, according to Greider, was the master tactician most responsible for their success.

See also Greider's 2001 recap of his 9 months of interviews with Stockman, posted in part in my Reply #16 above.

[GeorgeGist]

43. There is no hidden foundation ...

and Obama has no intention of overturning it. Theft-by-profit is alive and well because Obama is now in charge of saving the rich from extinction; as always, at labor and consumer expense.

Slavery had better benefits.

1. Life-time job security.
2. Free food.
3. Free clothing.
4. Free shelter.
5. Free healthcare
6 Freedom from debt.

[Bette Noir]

46. Hogwash. No apologies for slavery.

[Name removed]

47. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Bette Noir]

44. That sounds exactly right.

The rich have been waging economic war on the poor for decades.

I used to be in a club with a very rich man, heir to one of the big oil dynasties. Once, when a bunch of us were comparing benefits at various jobs we had, he became enraged that I once, as a State employee, had received paid sick time and vacation. "Why should I pay taxes, so you can enjoy a vacation!" he raged, and stormed out of the room. I had been making 3-freaking dollars an hour, that's why. No one would have ever done the work, if the bennies hadn't been there.

[stubtoe]

50. Posts like this are why I read DU.

Excellent post, excellent discussion thread.

[ProgressiveEconomist]

55. "Excellent discussion thread". I agree. Almost without exception, posts here

have been well-informed and on-topic. There are many good URLs for followup research, and a range of related ideas for overturning a generation of fiscally irresponsible and deeply deceptive shift-and-shaft Reaganism.

Plus, there have been so many recommendations that for the first time a post of mine has risen to five stars on the Greatest Page and number two on the DU homepage.

Thank you so much.

[rucognizant]

51. K & R!

Oh I DO REALIZE IT! Have been trying to spread the word for 2 decades!
In the late 70's I painted a $1,600. mural in the home of a husband/wife bartending team.
In today's economy, I'm guessing few bartenders could even own their home much less pay to decorate it. And the IRS now TAXES TIPS!
I know because I had to become a bartender, after the wealth shift stole away my clients!
The reagan TAX REFORM, destroyed small business.!
I'm curious...how many who regularly post here run a small business?
Those who work for others, get a totally different slant on the political situation.

[november3rd]

52. The True Genius

After all these years and "punditocracy," editorializing and bloviating talking heads and think tank ruminations, somebody finally got to the bottom of it. You are the true genius, ProgressiveEconomist.

Now all we need to do is convert to soundbyte and repeat ad infinitum over internet, Pacifica and public access tv.

As if their plan isn't cynical enough, the fact that they did it on the sly and deliberately deceived the American people for a generation is just too slimy to keep from the public.

TAKE BACK COMMERCIAL MEDIA, OUR GOVERNMENT AND OUR FUTURE!

[ProgressiveEconomist]

60. "You are the true genius, ProgressiveEconomist". Can't disagree with you on that. :-)

[relayerbob]

53. Reagan's ripoff never seemed that "hidden" to me ...

And I'll never understand why low income "conservatives" bought into it.

"Sure,I know you've broken into my house, but since you say you are going to leave me with my guns and an extra nickel a week, sure, you can have all my cash and all my credit cards. I just love your old movies."

[Nebulous Abstraction]

54. K&R

And bookmarked!

[trthnd4jstc]

56. The Philosophy of the New America: Honor, Integrity, Kindness, Fair Trade.

We can become a great people by working our way out of this cycle. I like your name Progressive Economist, please e-mail me.

[galloglas]

57. " ***** WHAT'S YOUR OPINION? ***** " MINE??

Invade Richistan !! Nationalize the entire disembodied cancerous growth!! If we can't sell them for slaves to the Chinese, then indenture them here!

[bleever]

58. 99th rec., and counting.

Very well done.

[Mme. Defarge]

59. Outstanding logic!

[Oldtimeralso]

62. With regard to fixing Social Security

First we do away with the cap, and collect the FICA on all compensation. Social Security should be treated like an insurance policy and have an income test and prorate payouts with compensation earned. We all buy auto insurance and hope we never need it but it is there as a safety net. This how we should treat Social Security.

[happygoluckytoyou]

63. PUT ON YOUR PITH HELMET... REAGANOMICS IS TRICKLING DOWN ON YOU...

WAKE UP AMERICA... THIS IS NOTHING MORE.... AND NOTHING LESS.... THAN C L A S S W A R F A R E ..... BETTER FIGURE OUT WHICH SIDE YOU ARE ON !!!

[ClassWarrior]

69. Is that a trickle of pith?

:rofl:

NGU.

[truedelphi]

65. Got error message of:

You can only recommend topics started in last 24 hours.

Sorry couldn't reccomend. I think you really nailed it.

[ProSense]

68. Eaxctly. After raising taxes on the poor using Social Security fear mongering as an impetus,

anti-taxes became a campaign opportunity for Reagan and his Party. It created a vicious cycle, allowing them to decry tax increases while advocating tax cuts that disproportionately benefitted the wealthy and raiding the SS trust fund.

Socialism for the Rich, Naked Capitalism for Everyone Else:

Ronald Reagan is often looked upon as the Republicans' Franklin Roosevelt. But Reagan sold the nation a bag of goods. We can finally see clearly the failed results of this three-decade experiment in laissez faire capitalism. It has nearly destroyed the middle class in this country, greatly widened the gap between the super rich and everybody else, destabilized vital sectors of our society, and made the United States a laughing stock abroad.