Robert Mundell, the “architect of Reaganomics,” died on April 4, 2021, after a battle with cancer. He was 88 years old. With his life reaching an end, the time is now for belief in Reaganomics, as well as Reagan’s other policies, to die as well.
In the 1950s and 60’s, Mundell created a controversial economic theory dubbed supply-side economics. Supply-side economics is a theory that states, “tax cuts for the wealthy result in increased savings and investment capacity for them that trickle down to the overall economy,” writes Investopedia’s David R. Harper.
Those ideas were eagerly adopted by Ronald Reagan and soon became his administration’s guiding tax policy, becoming known as ‘Reaganomics’ or ‘trickle-down economics.’
Now that decades have passed, we can see the results of Reaganomics. Like many of the Reagan administration’s celebrated policies, the results have been disastrous and have had lasting consequences.
First, though, it must be said that while Reagan’s administration imposed these awful policies, future Presidents and their administrations kept the policies alive. After handily winning two elections in a row, Reagan’s influence became so severe in conservative circles that there are clear lines between conservatism pre-Reagan and after Reagan.
His landslide wins in his Presidential elections also changed the course for Democrats too.
Before Reagan, Democrats were all-in on the working class after the most popular President of all time was also the nation’s most liberal (FDR). However, by the time Reagan’s tenure ended, his popularity led many Democrats to ditch the working class and mirror Reagan’s policies instead.
These Democrats became the neo-liberals. Today, their Reagan-lite ideology is seen in House Speaker Nancy Pelosi and President Joe Biden, two old-world Democrats “shaped by their traumatic political coming-of-age during the breakup of the New Deal coalition,” writes Washington Post’s Ryan Grim.
One such Reagan-era ideology, borrowed from the Nixon administration, was that a ‘War on Drugs’ would stop drug use. The real reason, however, was to “disrupt” black and left-wing communities by associating “hippies with marijuana and blacks with heroin, and then criminalizing both heavily,” according to Nixon advisor John Erlichman.
Reagan kicked this into overdrive in his response to the crack epidemic by signing bills that instituted mandatory minimums for drug users and other harsh policies. Like Nixon’s administration, Reagan’s drug policies just so happened to impact black communities the most, resulting in an overstuffed prison population full of black men that destroyed the black family unit.
Not to be outdone, the Democrats under President Bill Clinton, especially Joe Biden, followed in Reagan’s footsteps with the 1994 Crime Bill. The bill, as expected, destroyed black communities even more and skyrocketed the prison population. After seeing the failure of the War on Drugs, President Biden still refuses to legalize marijuana despite support hovering at 91% of Americans.
The Reagan administration’s foreign policy decisions have uniquely awful consequences that are felt today too.
First, we have Reagan authorizing the “largest military buildup in US history” while also advocating for intense cuts in domestic programs like healthcare. Following Reagan, every President since has dramatically increased our military budget while giving scraps to institutions that benefit our citizens like education.
More so, Reagan armed foreign fighters in an attempt to defeat communism. He aided the Mujahideen, mostly Afghani and Pakistani freedom fighters, so they could deter Soviet Russia’s invasion of Afghanistan.
After the Soviets retreated, the emboldened group of Jihadist fighters eventually rallied around a man named Osama bin Laden. The American lives lost in the War on Terror take on a whole new meaning when it’s understood that Reagan helped give rise to the Taliban and bin Laden.
Reagan also armed right-wing groups in South America which overthrew socialist governments and slaughtered civilians. In fact, there is a clear link to the immigration crisis we have today, and the right-wing groups Reagan empowered.
The term “the war always comes home” discusses how endless war abroad always leads to the military’s tactics returning to haunt its own citizens. Reagan’s racist policies and ballooning of the military budget has resulted in a country where peaceful protests over police killings are met by an increasingly militarized police force. Our military budget is now so big that there is a “surplus” of military equipment which is just being given to police officers for use on civilians.
While Reagan’s foreign policy contributed to bringing the war back home, Reaganomics contributed to the people back home becoming poor and destitute while the rich became obscenely richer.
With decades of data available between Republican Presidents who gave tax cuts to the wealthy, it is clear that Reaganomics’s guiding principles were dead wrong.
One of the big claims is that tax cuts for corporations and the 1% would result in money trickling down to others. Only a decade after Reagan’s first tax cuts, this was demonstrably proven wrong.
The richest 1% of Americans went from owning 23% of our nation’s wealth to 28%. After President Bush and Trump’s tax cuts, the 1% now own 35% of America’s wealth. At the same time, the middle class has barely grown, and the poorest American families have less now than before Reagan.
Another claim is that tax cuts for the rich result in economic growth. In 2017, one of George W. Bush’s former chief economists decided to find out the truth for himself. His ensuing study revealed that tax cuts for the wealthy resulted in no economic growth at all. Whoopsie. Even in seventeen other nations, a recent study found that tax cuts for the rich did not spur economic growth in any of them.
Republican administrations aren’t all to blame, however. Like previously stated, Reagan’s landslide victories in the Presidential elections influenced the Democrats to leap from the working-class ship and hop on the 1% yacht instead.
It’s not as discussed that Democrats were in control of the House during Reagan’s first tax cut, so they could’ve stopped the bill from entering the Senate. Instead, they tried to out-Reagan Reagan and created their own tax bill that eventually lowered the highest tax rate from 70% to 50%.
Then, in 1986, a Democrat-sponsored tax bill lowered the tax rate from 50% to 28%. It also raised the minimum tax rate from 11% to 15%. This was the first time in U.S. history that the poorest people paid more in taxes while the richest paid less.
While taxes have risen and declined following Reagan’s administration, the highest tax rate when Obama left office was 35%, half of the pre-Reagan days. By the end of Trump’s term in office, the corporate tax rate dropped to 21%.
So, while Republicans continually lower the corporate tax rate in a rush to get that Reagan high, the Democrats follow behind to make sure the tax rate doesn’t get too high.
This lowkey adherence to Reaganomics and Reagan still goes on in the Biden Administration. Turn on the news and you’ll see President Biden, in real time, doing the bidding of Robert Mundell.
Mundell advocated that the highest tax rate should never be over 25%. President Biden has just come out in support of raising the tax rate from 21% to… drumroll please… 25%. If President Biden goes through with that plan, he’s still giving the top 1% of Americans the biggest tax cuts since Ronald Reagan.
This is all to say that with the architect of Reaganomics’ death, it’s only right that Democrats and Republicans finally ditch Reagan’s shadow and give Reaganomics a funeral as well.