Correlation Galore: A History Of Republican Tax Cuts And Economic Destruction
The last time democratic socialism was the culture of American politics Franklin Delano Roosevelt was elected an unprecedented four times, and a revolution in economic equality created the strongest middle class in world history.
Meanwhile, the opposite conservative view of laissez-faire tax cuts boils down to the mathematical conundrum that, if the government stops taking money and stops spending money on society, the government will have more money to spend on society.
Being an economic paradox, laissez-faire tax cut eras throughout modern American history have naturally proved that conservatism is a proven failure of an economic theory. There are a host of examples.
Beginning in the 1920s, the laissez-faire gauntlet of three consecutive Republican presidencies—Harding, Coolidge and Hoover—caused and worsened the Great Depression. Massive cuts dropped the top marginal tax rate from just under 80% down to 25%, and the subsequent economic inequality hollowed out a very privatized economy. When the stock market crashed, President Hoover did little to diminish the effects of the Depression, and appropriately named Hooverville shanty towns sprung up across the country tarring his legacy.
This paved the way for FDR’s election, and his administration endeavored to do anything it could to stabilize the economy. This was the birth of modern liberalism, and social initiatives such as Social Security, a minimum wage and large-scale work programs were created to fashion a societal safety net under the New Deal. And since it was not the working poor who crashed the economy, FDR raised the top income bracket’s tax rate to above 90% where it stayed until the 1960s.
That’s right, taxes throughout the 1940s, 50s and early 60s stayed above 90% for the wealthiest Americans. And the super rich today think they have it rough. This high taxation also happened to coincide with the biggest economic boom up to that point in history.
Now the argument is made that FDR’s social programs did little to bring America out of the Depression, and that it was WWII spending that truly jumpstarted the American economy, but this is proof that massive governmental spending works. Massive war expenses are the antithesis of conservatism, and our WWII economic success justifies the practicality of liberal economic policies. (On a side note, back in 2011 economist Paul Krugman entertained the idea that the Great Recession would be over in 18 months if the world pretended that an alien invasion was occurring and that a massive fiscal stimulus was needed to fight it off a la WWII.)
Because America’s wild, post-war economic prosperity happened at a tax rate of 90% for the top bracket, high taxes clearly do not stifle productivity or job creation. In fact, it appears that high taxes do just the opposite, and actually motivate productivity and job creation. If the government takes 90% of greedy people’s money, obviously they are going to have to work extra hard to get as fabulously rich as the want to be.
Now this tax money is hardly wasted like conservatives would have the nation believe, as the money goes back into funding the American society that allowed such excessive profit to be made in the first place. Social programs like FDR’s Civilian Conservation Corps, Tennessee Valley Association and Works Progress Administration, along with Eisenhower’s later Interstate Highway System transformed America’s economy and society. Without these programs’ modernization efforts, America would not be as rich or successful today, and, frankly, these programs cost a lot of money.
The reality is that a government is the only institution capable of getting the ball rolling on expensive projects. Need to get a package from New York to California in under 14 days? Well, no business is going to go to great lengths to build the interstate system or build a network of carefully coordinated airports all across America, so the government had to do it. Everyone in America benefits from these spending plans, and businesses get to piggy back and profit off of big government spending. And the same goes for public services. Every American benefits from public education for all citizens, especially the poorest citizens, but who is going to pay for it? No one but the government.
Donald Trump, or any other Republican presidential candidate, will not be able to make America great again by cutting taxes for rich people and barring the government from investing in the US. Rich people might trickle down a few jobs, but no billionaires are going around rebuilding America’s infrastructure. A public government is the only economic force that will finance massive construction projects, and can easily create millions of American jobs. If the super rich were actually funding societal development, they would certainly deserve tax cuts, but unfortunately they are doing little for American progress. So we should tax their greed and selfishness.
Now the most perplexing evidence of why contemporary conservatism is a big sham is that conservatives are entirely committed to an endlessly bloating military budget. Conservatives love to say that we do not have enough money for welfare, Social Security, food stamps, etc., but then they craft budgets with eternally ballooning defense funds (ironically named because America seems to be on offense a lot). But ignoring domestic problems for military exertions that exacerbate domestic problems in Middle Eastern countries is wasteful spending along the lines of the broken window paradox.
Intuitively it sounds like it would be beneficial for someone to run around town breaking windows so that the window dealer can spur the economy by selling tons of windows, but it is a net loss because it means paying for something that was not needed in the first place. Resources get wasted fixing needlessly broken windows. The same concept can be applied to needless offensive war spending (like the Iraq War). Say America spends a million dollars on a bomb that blows up an Iraqi school: the bomb is a waste because it was a choice against buying something productive for humanity, and it was used to destroy something actually productive. And because we were occupying and nation-building Iraq, now the US has to spend money building a new school when a functioning school already existed in the first place.
Now who knows the offensive circumstances for which the bomb was launched at the school, but certainly terrorism could be better outspent with nation-building rather than bombs and army divisions. Brown University estimates that we spent over $1 trillion in the Iraq War, money spent breaking a lot of windows. Now, Iraq is no longer a country because of a war that a majority of Americans regret.
However, continuing our economic history of America (we left off at FDR), the post-war economic boom, which gave rise to the Baby Boomer generation, lasted through the Truman and Eisenhower Administrations and cemented the New Deal’s place in American society. Liberalism reclaimed the presidency throughout the 1960s, and a new idealistic American era of economic growth coincided with a series of social revolutions beginning with Kennedy’s New Frontier, and culminated legislatively in Johnson’s Great Society.
Eventually, though, social tensions from black and women’s rights movements, Vietnam opposition and general political pendulum swing ended the post-war era of liberalism. In 1968 Nixon was just the second Republican president elected since 1932, but the supply-side economics revolution had not taken over the Republican Party yet, and throughout the 1970’s the top income bracket tax rate stayed at 70%.
Then Reagan was elected, and an era of massive tax cuts ensued, dropping the top tax bracket to under 30%. Laissez-faire and privatization were adapted into a new philosophy of supply-side economics, and once again the economy began to hollow out while economic inequality rose. Because conservative economics is a sham (my theme here), deep deficits were inevitable, and Reagan was eventually forced to raise taxes in order to try and offset the massive debt he was accumulating. By the end of his presidency Reagan had tripled the debt. Quite an accomplishment for fiscal conservative.
Following Reagan, George H.W. Bush raised taxes further, aware that Reagan’s “voodoo economics” had hurt the economy. Unfortunately for Bush, his responsible economic policies cost him reelection, and Bill Clinton’s Administration later managed to raise taxes, increase social spending AND lower the debt with budget surpluses.
When George W. Bush was elected in 2000, he decided to give that surplus money back to the American people and then some through another round of tax cuts. Once again laissez-faire tax cuts led to massive deficits and renewed the privatization of the public government. The American economy was hollowed out once again, leading to the Great Recession.
In response to the Recession, Bush and, later, Obama pushed through massive stimulus packages, and economic bailouts of the banking and automotive industries were orchestrated to turn around a free falling economy. These worked, and today America is stronger economically than the European Union, which committed itself to conservative austerity to fight the Great Recession. There is no opinion in the fact that, by nearly every measurable of economic standard—GDP growth, budget deficits, the stock market, the unemployment rate, the health insurance rate, etc.—the country is better off now than when Obama took office, excluding tax cut-related inequality.
If a Republican president had turned around the economy like Obama has, conservatives would be fangirling endlessly. But the reality is that a Republican president simply could not have turned around the economy like Obama. Republicans’ solutions to the Great Recession were about the same as President Hoover’s solutions, and we might be seeing McCainvilles or Romneyvilles if either had been elected.
Going into 2016, America’s economy is largely recovered from the Great Recession, but economic inequality persists because the greatest tax cuts in proportion of wealth value since the 80s have gone to the super rich. This inequality needs to change, and a new dose of liberal democratic socialism is needed.
Now I am not arguing that tax rates for the top bracket need to return to above 90%, but I do not think it is very socialistic to insist that tax rates do not sink any lower for the super rich. Today’s wealthiest Americans are paying one of the lowest tax rates in modern American history, and, to put profits above America’s welfare even further, some American corporations are taking corporate profits overseas and hiding them within international shell companies outside the reach of American taxes. Other corporations are threatening to follow suit, unless their taxes are cut, and this amounts to public black mail of the government. Unsurprisingly, conservatives’ economic policies aim to reward this unpatriotic corporate greed with tax cuts.
However, if conservatives want to get serious about cutting the debt, ending deficits for good and bringing financial security to the safety net, we have to raise taxes, especially for people who make more money than their descendants could possibly spend. Our American debt is over $18 trillion, and the American people (and both political parties) want it paid off. So the logical thing to do is to put philosophical and ideological fights on hold, and pay it off.
We can fight about what tax rate rich people should have when America is financially stable, but the most simplistic accounting solution to our debt problem—for our own sake, our children and grandchildren’s sake and our nation’s sake—is for people with a lot of money to give back to America. Nothing is more patriotic than giving back to one’s country, and we can push and shove about tax rates and ideological positions after our debt problem, which everyone wants to solve, is solved.
Progressive taxes simply and logically have to go up, but do not believe the alarmists’ propaganda: remember, the biggest economic boom in American history occurred while the tax rate on the richest Americans was an astounding 90%! Republicans tax cuts for people who are already unnecessarily rich will only continue to hollow out our economy, which is why conservatism is a sham.
In analyzing political and economic history, this is not a blanket statement to say. So I’ll say it again: conservatism is a big sham. Leading up to the Great Depression were three consecutive laissez-faire Republican presidencies (Harding, Coolidge and Hoover). The economic recovery and post-war economic boom was overseen by seven Democratic presidential terms out of nine (Roosevelt, Truman, Kennedy and Johnson). Then five Republican terms out of seven (Reagan, H.W. Bush and W. Bush) led to the Great Recession despite Clinton’s attempts at budget sobriety.
Correlation does not imply causation, of course, but this is undeniably a shit ton of correlation. It is time to tax the rich, and history shows that investment in America, rather than wealthy bank accounts, creates prosperity.