Beinhart's Body Politic: August 2011

Where the Stupid is Gathered

by Larry Beinhart, July 27, 2011

Good God, another economics article.

I would so much rather be making juvenile rhymes about penises, porn, and adultery. Skewering the James Bond fantasies of the oxymorons in the intelligence community. Replying to the foam boiling up from my Tea Party friends.

But economics it is, because economics is our current crisis (makes you long for the good old days when we were invading random foreign countries for no good reason but were still securely wealthy). Economics is where the political action is. And most of all, because that’s where the most stupid is gathered.

Stupid is rushing to our economic debate like flies to fresh corpses, like ants to your picnic, and fast-food restaurants to our land of strip malls.

Okay, a quick trip down memory lane. Kids and young adults, anyone under 25, ask your parents, because I know it wasn’t covered in school.

Ronald Reagan came into office in 1981. He cut income taxes, especially income taxes for rich people. He raised Social Security taxes, which have a cap on them, so rich people don’t pay after a certain point, thereby shifting the tax burden from the rich to regular people. It also marks the point where the income of the rich really took off but median income flattened out. He had two recessions, high unemployment at the start of his first term and again at the end of his second. His budgets created massive deficits, the biggest ever until then. Plus there was a fiscal bubble. It imploded in the biggest set of bank failures since the Great Depression. It required a gigantic bank bailout.

That period is known as “Morning in America.” It’s why Reagan has become the official saint of the Republican Party.

George H. W. Bush—that’s Bush the Elder—made a pledge, in earthy, everyman language, during his campaign, “Read my lips: No new taxes!” Fortunately for America, he had a residual streak of sanity and he raised taxes. It reduced the deficits and the recession he inherited from Reagan bottomed out. Unfortunately for him, this was heresy. Republicans abandoned both Bush and his readable lips.