Republicans have been using debt and deficit blackmail as a bargaining strategy since the days of Ronald Reagan.Reagan’s brand of politics was successful at promoting the notion that federal government spending on social programs is mostly wasted on pointless handouts to lazy recipients. He carefully cultivated the impression that “government spending” meant “free money” for people who were nothing more than moochers. Sound familiar?
Ronald Reagan was swept into office on the same Republican fearmongering-propaganda that grips the country today…”spending is out of control, the country is going bankrupt and government is too big.”
There is no denying Reagan inherited an economy that was in a deep recession, but his response to the debt crisis was far different than Republicans would have us believe.
Despite his “small government” rhetoric, Reagan expanded the federal government by 7%, employing a larger federal workforce (those greedy public employees) than any President in history other than Johnson who presided over the Vietnam War.
He did enact a huge tax cut, but then raised taxes eleven times; increased defense spending; ballooned the federal deficit to the largest peacetime deficit in history; raised the debt ceiling 17 times and accumulated a debt burden that equaled the previous 200 years of American history, turning the United States from a creditor nation into a debtor nation. For the first time in the history of the nation, the United States borrowed in order to cover federal budget deficits.
David Stockman, Reagan’s economic wizard and the architect of the trickle-down budgets wrote:
“The Reagan deficits were intentional, designed to cut revenue as a way of pressuring Congress to cut programs Republicans wanted to destroy….The plan… was to have a strategic deficit that would give you an argument for cutting back the programs that weren’t desired….”
The “small government” mantra and “debt and deficit” narrative continued after Reagan left office and another Republican, Bush (41) took the helm.
Daily News 1990: Legislators Say There’s No Money.
During the tenure of these two Republicans, deregulation and imprudent real estate lending contributed to a Savings and Loan crisis and quite possibly the stock market crash. Between 1980 and 1994, more than 1600 banks were closed or received financial assistance from the FDIC. Over 1,000 banks with total assets of over $500 billion failed. The number of savings and loans declined from 3,234 to 1,645.Taxpayers assumed the bill for a $124 billion bailout, while corporate scandals and bankruptcies made matters worse. Enron represented the biggest corporate scandal in history, while Worldcom MCI filed the largest bankruptcy in history.
That was the economy Republicans left for Bill Clinton and they were singing the same song: “spending is out of control and the country is going bankrupt.”
CNN – 1995
Americans blame GOP for budget mess
Then as now, Republicans focused solely on cutting the social safety net and entitlement programs. Remember welfare reform? Republicans take credit for Clinton’s 1993 deficit-cutting package, but the truth is the balanced budget passed without a single GOP vote in either house of Congress. By the time Clinton left office, there was a surplus.Bush/Cheney inherited the Clinton budget surplus and immediately began turning it into a deficit.
Despite their opposition to entitlements, Republicans passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 expanding the program (can’t privatize it, figure other ways for private corporations to extract money from the program). After being debated and negotiated for several months, the bill finally came to a vote on a November morning at 3 am while America slept. Among other things, the bill prohibits the federal government from negotiating discounts with drug companies. Read the curious legislative history.
Bush launched wars with Iraq and Afghanistan and introduced tax-cuts that primarily benefited the rich. None of these expenditures were offset and they all were kept off the books, giving the illusion that the country was in a much stronger fiscal position than it was. Republicans admit under Bush they “spent like drunken sailors”, but when the spending was taking place, not a single Republican rebelled. Remember, running up debt and deficits is a strategy.
Six weeks before President Obama was sworn in, the economy collapsed and the Republicans began their familiar chant…“spending is out of control and the country is going bankrupt.”
Newly installed Governors cut the federal workforce; remember, Reagan ( the man Republicans credit with economic problem-solving) increased the federal workforce to one of the largest in history. They cut employee pay and pensions, while they delivered more tax cuts to the wealthy. They busted unions, destroying employees last firewall between workers and employers. All of these acts redistribute the treasury from the middle class and working poor to the wealthy.
It isn’t ideology that drives the Republican insistence on spending cuts, it’s a strategy. Think about it…the Republicans controlled the House, the Senate and the White House for four consecutive years. They could have fixed Medicare and Social Security, but for some reason, there’s never a problem unless a Democrat is in the White House.Listen to how fervently they defend cuts to defense. Why? Afterall, defense workers are unionized public employees. Because there isn’t a department that shifts more taxpayer money to the private sector than the Defense Department. There is no other federal vehicle that allows the wealthy to extract more money from the treasury, convert more taxpayer revenue to the private sector than the Defense Department.
Throughout history, since 1783, tax cuts for the wealthy and increased defense spending and union busting have increased the gap between the revenues and the expenditures. Shareholders and those on Wall Street have enjoyed inflated returns, while the wages for workers have taken a beating. It’s a 21st century Gilded Age.
In the final analysis, the real targets are Social Security, Medicare, Medicaid; any program that supports the less fortunate. Republicans have a long-standing, deeply-held antipathy for both Social Security and Medicare. Not only did Reagan advocate that Social Security should be privatized, he was at the forefront of a coalition against Medicare with the same arguments we hear today.
How did the public ever buy the idea that Republicans are good stewards of the economy? Studies have been done comparing every phase of economic growth, during Democratic and Republican presidencies and congresses, and they all show stunningly better performance when Democrats are in power.
The trickle down miracle never worked because lower taxes don’t generate more revenue, they generate deficits. It is a fact that is so mathematically basic, it borders on common sense.