How 'Reaganomics' led to income inequality breaking the American middle class
February 27, 2014
Across the country, nearly fifteen million Americans live under the poverty line as men, women and children are going to bed hungry every night. When asked how to stop this epidemic you will get a variety of answers from politicians coast to coast. The answers that are most alarming, however, come from those in the Republican party.
Whether it's candidates running for president or small town mayors, the same rhetoric is being said. Shouts of "less regulation" and "lower taxes" are the two main ingredients in the Republican plan to get Americans back to work and put money into their pockets. The problem with this rhetoric is that not only will it not work, it hasn't worked in the past and was the driving force of the wealth gap we currently have in our country.
The income gap in the United States has widened over the last three decades do to failed economic polices primary placed by Republican presidents.
It started in 1980 when Ronald Reagan cut the top tax rate from 70% down to 28% by the time he left office after the 1988 election. The idea of supply side economics, otherwise known as "trickle down" or "Reaganomics," is that by giving the wealthy tax breaks, the money at the top will "trickle down" to the workers at the bottom. After three decades of this ideology, it has been proven false time and time again.
According to research done by the non-partisan CBO (Congressional Budget Office), income inequality has widened at a record pace since Reagan took office in 1980.
275 percent for the top 1 percent of households,
65 percent for the next 19 percent,
Just under 40 percent for the next 60 percent, and
18 percent for the bottom 20 percent.
The percent of income that went to higher-income households rose, while the share going to lower-income households fell dramatically.
The top fifth of the population saw a 10-percentage-point increase in their share of after-tax income. Most of that growth went to the top 1 percent of the population. All other groups saw their shares decline by 2 to 3 percentage points.
After eight years in office, from January of 1993 to January of 2001, President Clinton was able to stabilize the U.S. economy and hand over a budget surplus to his predecessor George W. Bush.
Following his inauguration, Bush took the United States into two wars that were not paid for, gave his surplus away in the form of tax breaks that benefited the wealthiest Americans and created a Medicare Part D plan that was also unfunded.
President Obama came into office in January of 2009, just months after the biggest economic collapse since the Great Depression of the 1930s. Obama has attempted to push through public works projects, as detailed in his American Jobs Act, but the Republican controlled House of Representatives, overwhelming held hostage by their radical Tea Party caucus, have blocked much of the legislation backed by the Democrats.
Much of what President Obama has been able to push through has been heavily watered down. Just to name two, a health care reform without a public option, but a mandate to buy private insurance from companies that have been demonized for years and a stimulus package that plugged the hole but didn't fix the economic problems thee country had because it was too small.
What can we do as Americans that could help reverse the course of economic collapse? Until Americans demand real transparency and corporate influence is removed from Washington, the gap between the haves and the have nots will only continue to widen. Americans need to push the envelope, make their voices heard and stay vigilant.