My Amateur Interpretation of Recent (the Past 125 Years) U. S. Economic Action
October 23, 2013
The following is my amateur interpretation of
recent U. S. economic history>
The year is 1890. It's the Gilded Age, the age of the robber barons, of John D. Rockefeller, and Andrew Carnegie, and of "conspicuous consumption".
"The golf links lie so near the mill,
That almost every day,
The laboring children can look out
And watch the men at play."
Women and children labor in the mills day and night, six days a week. There is no government protection, there are no safety laws, no child labor laws, no labor unions, and open warfare between labor union wanna-be's and factory owners who are supported by federal troops. In this era, the gulf between rich and poor must have been deep and wide.
Teddy Roosevelt and public outrage apparently led to laws that curbed the excesses of America's 400 families through 1920. But the American public voted Republican in 1920, and by 1929, the unequal distribution of wealth apparently reached a level not since until the past few years.
During the Depression, the FDR Administration was able to pass a tax code that gradually redistributed new money to the population as a whole. This sharing of wealth resulted in a doubling of the standard of living of the U. S. population between the end of World War II and the 1970's. This occurred during the Republican Administration of President Dwight Eisenhower (1952-1960), and, maybe, during the Nixon/Ford years from 1968 to 1976.
In 1980, President Reagan was elected. During the Reagan years, (1) taxes on the wealthy dropped to a maximum of 33%, (2) the federal deficit soared as tax receipts fell below federal outlays, (3) the gap between the general public and the ultra-rich began to widen, and last, but not necessarily least, President Reagan inherited the deep 1981-1982 recession from the Democrats who preceded him. (As I recall, the tax cuts weren't instituted until the mid-80's after the 2002-2003 recession had faded in the rear-view mirror.)
From 1980 onward (if not from sometime in the 70's), the U. S. standard of living stagnated, with virtually all of the growth of U. S. GDP accruing to a wealthy upper crust.
When the Democrats were re-elected in 1992, to the best of my knowledge, they didn't significantly raise taxes on the rich.
During this period (1992-2000), falling but still high interest rates on the national debt led to the highest interest cost of servicing the national debt in history. The Republican House of Representatives leaned on (Democratic) President Clinton to rein in the federal deficit until GDP could catch up with the interest payments.
With the restoration of the Republican Party in 2000, the federal deficit began to climb again (1) to finance the wars in Iraq and Afghanistan, and (2) because of further tax cuts on the wealthy enacted by the Bush Administration.
During this 8-year period, U. S. foreign policy was apparently in the hands of the neocons.
Since 2000, ultra-rich sponsors have developed their own media outlets, with Australian mogul Rupert Murdoch buying Fox News, the Wall Street Journal, Marketwatch, and Barrons magazine.
In the fall of 2008, with the U. S. banking system teetering on the edge of collapse and the economy falling into recession, safety net payments (viz., unemployment compensation, Medicaid) ballooned in the face of reduced federal tax revenues, swelling the federal deficit. The incoming Democratic president (President Obama) inherited these outsized deficits
Today, "Obamacare" has become a new flash-point, along with propaganda about the horrendous size of the U. S. federal deficit, blah, blah, blah. In the meantime, attention has been diverted from the ever-expanding gap between the very rich and the rest of the population. Republicans have become sufficiently infected with anti-government zeal that they are ignoring the fact that it's their pockets that are being picked as gains in GDP continue to be scarfed up by the ultra-rich rather than coming to them.. "Guess which shell the little pea is under."
Or at least, that's what I think.