Economy

eridani

(51,907 posts) Sun Oct 20, 2013, 04:21 AM Oct 2013

Robert Parry: The Abject Failure of Reaganomics

http://readersupportednews.org/opinion2/277-75/19956-focus-the-abject-failure-of-reaganomics

But this debt crisis did not originate with George W. Bush. It can be traced back primarily to President Reagan, who arrived in the White House in 1981 with fanciful notions about restoring America's economic vitality through massive tax cuts for the wealthy, a strategy called "supply-side" by its admirers and "trickle-down" by its critics.

Reagan's tax cuts brought a rapid ballooning of the federal debt, which was $934 billion in January 1981 when Reagan took office. When he departed in January 1989, the debt had jumped to $2.7 trillion, a three-fold increase. And the consequences of Reagan's reckless tax-cutting continued to build under his successor, George H.W. Bush, who left office in January 1993 with a national debt of $4.2 trillion, more than a four-fold increase since the arrival of Republican-dominated governance in 1981.

During 1993, Clinton's first year in office, the new Democratic administration pushed through tax increases, partially reversing the massive tax cuts implemented under Reagan. Finally, the debt problem began to stabilize, with the total debt at $5.7 trillion and heading downward, when Clinton left office in January 2001.

Indeed, at the time of Clinton's departure, the projected ten-year surplus of $5.6 trillion meant that virtually the entire federal debt would be retired. That was what Fed Chairman Greenspan found worrisome enough to support George W. Bush's new round of tax cuts aimed primarily at the wealthy, another dose of Reagan's "supply-side."

The consequences - especially when combined with Bush's decision to rush into two major wars without paying for them - proved disastrous. The federal debt resumed its upward climb. By August 2008, just before the Wall Street crash, the debt was over $9.6 trillion, nearly a $4 trillion jump since Bush took office.