Reaganomics is what happened to our economy

[Scuba]

[Smarmie Doofus]

1. Rec. Great Graphic........

.... but what's the source: "CBPP"?

[Wilms]

2. Center on Budget and Policy Priorities

http://en.wikipedia.org/wiki/Center_on_Budget_and_Policy_Priorities

[Smarmie Doofus]

4. +1. n/t

[FreakinDJ]

3. Been saying that for 30 yrs

[freedom fighter jh]

5. I wonder why they chose 1973 as a starting point and what would happen if they chose a different

year?

In 1973, the three curves meet at 100%. That's because of the way the graph is set up -- all data is in reference to that year. But the trend does not start there. Notice that in the years 1967 to 1973, blue is losing and red is gaining, just like in 1973 and after. So if data were in reference to 1967 instead of 1973, you would still see the same trend, but the fanning out would start sooner. It's not that people at all levels gained equally in 1947 through 1963, it's that their incomes were in the same proportion during those years as they were in 1973.

In other words, the graph's appearance depends heavily on the year that is chosen as a reference point.

So I wonder why 1973 is chosen as a reference point.

[FreakinDJ]

7. 1974 Housing Bubble

[eShirl]

8. pre- and post- oil embargo?

http://en.wikipedia.org/wiki/1973_oil_crisis
(The 1973 "oil price shock", along with the 1973–1974 stock market crash, have been regarded as the first event since the Great Depression to have a persistent economic effect.[5])

I was 9 years old at the time, and from that perspective the world subjectively seemed to change irrevocably.

[hfojvt]

47. blue loses after 1968

because in 1968 the minimum wage was raised to $1.60, the highest point ever, historically. In terms of 2011 dollars, that wage was $10.17 an hour.

But then Nixon was elected. And the minimum wage was NOT increased again until 1974.

In 2011 dollars, it looks like this

1968 - $10.17
1970 - $9.13 (for some reason, I do not have 1969 in my spreadsheet)
1971 - $8.75
1972 - $8.48
1973 - $7.97
1974 - $8.98

The income of the bottom 20% probably depends heavily on the minimum wage. Hence the drop after the peak in 1968.

But I don't think the reference point changes anything substantial. A year has to be picked, and they chose that one. And they did more or less gain equally. If 1947 was 60% for the bottom 20% and for the median and for the 95th percentile and they all generally saw their income grow by 40% up to 1973.

Again, you pick a baseline for inflation and changing that baseline does not change the rates. For example http://data.bls.gov/cgi-bin/cpicalc.pl

Baseline 1975 = 100

1975 - 100
1980 - 153.16
1985 - 200 (okay that was weird)

inflation rate 1975-1980 = 53.16%
inflation rate 1975-1985 = 100%
inflation rate 1980-1985 = 30.58%

Baseline 1980 = 100
1975 = 65.29
1980 = 100
1985 = 130.58

inflation rate 1975-1980 = 53.16 (100-65.29)/65.29
inflation rate 1975-1985 = 100% (130.58-65.29)/65.29
inflation rate 1980-1985 = 30.58%

baseline 1960 = 100
1975 = 181.76
1980 = 278.38
1985 = 363.51

inflation rate 1975-1980 = 53.16 (278.38-181.76)/181.76

But what do I know. I am not very good at math.

[Sirveri]

48. I agree, the true bend point is 1969

This becomes a bit more obvious the more the data is studied. I'm not 100% sure what happened that year to cause the bottom 95% wages to flatline, but flatline they did, and that's the year it started.

[hfojvt]

51. it's income though - not wages

although they don't say if it is pre-tax or post-tax.

I think the bend point is in 1980, as shown here http://www.democraticunderground.com/10023937994

income share of the top 1%
1960 - 10.03
1980 - 10.02 flat for twenty years
2010 - 19.86

income share of the top 4%
1960 - 12.54
1980 - 13.15 a slight gain
2010 - 15.99 a much bigger gain

logically, if the top 1% gets $2 trillion worth of tax cuts from 1986-2006 then that money adds to their wealth, and since their money "works for them" they use that extra wealth to make even more income.

[mother earth]

6. K & R for the collosal failure & expecting the backlash to turn LEFT in a huge way, can you

feel it? I can. We've never taken this country left, and now before us, we go left or die, it's that simple. It is about surviving and then thriving in a way not yet travelled.

[Dustlawyer]

9. Think how good we would be doing if we were following the pre-Reagan graph right now!

Those greedy bastards can kiss my ass! Reagan will be a joke in history!

[Historic NY]

10. I remember old Bushy calling it VOODOO economics....

he denied it several times but, that darn invention TEE-VEE tripped him up.

It’s commonly believed that back in the Republican Primaries of 1980 candidate George Bush referred to Ronald Reagan’s economic plans as “voodoo economics.” Last night Vice President Bush was asked about that and corrected the record.
Vice President GEORGE H.W. BUSH: Well what I said back then it’s very hard to find—well actually let me start over, one, I didn’t say it. Nobody, every network’s looked for it and none can find it, it was never said, and I challenge anybody to find it.
BODE: Challenge accepted, lets go back to Carnegie Mellon University, Pittsburgh April 10th 1980, George Bush.
Vice Pres. BUSH: So what I’m saying is that it’s, it just isn’t gonna work and its very interesting that the man who invested this type of what I call a voodoo economic policy

http://archives.nbclearn.com/portal/site/k-12/flatview?cuecard=33292

http://capitalgainsandgames.com/files/Bush-Voodoo.pdf

[MannyGoldstein]

11. Instead of naming an airport after Reagan,

we should name the national debt after him.

[ReRe]

12. Reagan's Debt!

That's a great name for this economic nightmare, Manny.
I make a motion we refer to the economic mess as Reagan's Debt. Do I hear a second?

[pangaia]

19. I think the REAGAN DEBT is better than Reagan's Debt.

You see, for repubs, Reagan's Debt is blaming Reagan. So by giving it a NAME, as in the REAGAN DEBT, it is much more likely to slide right by them than if we ACCUSE Reagan by calling it HIS debt.
Do you get my somewhat nonsensical drift-- the only drift repubs have a chance of understanding?

If we play our cards right, we might actually be able to get THEM to start calling it the REAGAN DEBT, without even knowing what they are saying...

[ReRe]

32. Yes....

The "Reagan Debt" it is! Did you see that video clip "Who Stole the American Dream" here on DU a couple days ago? Hedrick Smith? He explains our whole demise since just before Reagan came in, from around 1978. I'll come back and edit the url for it in a minute here... back in a minute!

Edit: here is the link to the clip: http://www.democraticunderground.com/1017163425

[hootinholler]

40. BTW just to note

Respectfully, an hour and 20 minutes doesn't fit what I think of when someone says a clip.

[ReRe]

46. Sorry I didn't describe it accurately...

... but did you take the time to listen to it? Knowledge is a good thing, you know. I highly recommend the video.

[pangaia]

44. Priceless.....

I missed the post from a few days ago.
Thanks for the link.
Stunning........

I think I read The Russians many, many years ago....

The more I learn, the more I realize that all my gut instincts since..well 1967 in grad school, have all been correct..In fact, the facts are worse than the gut feelings.

[ReRe]

45. Hedrick Smith reminds me of...

... the late Chalmers Johnson. He has the ability to explain a subject/topic precisely in laymans terms. I imagine it might be difficult for folks who didn't live through these things to understand it all. But Hedrick does a pretty good job of it.

[Lasher]

13. Hey, Rupert Murdoch's billionaire donors paid for that privilege fair and square.

Well I guess it wasn't fair to rename an airport that had already been named after George Washington. Shady stink tanks used begabucks from secret donors to invent a president who never was, so it wasn't square either. I never knew anything above Cs.

[jwirr]

14. The idea was not new. Government joined with corporations is fascism. And if the isn't good enough

then we can call it Disaster Capitalism which we and the corporations have practiced all around the world.

[Laelth]

15. k&r for the truth, however depressing it may be. n/t

-Laelth

[Gary 50]

16. A great successs...

Reaganomics or trickle down economics has been a great success. It has done EXACTLY what it was designed to do. It has squeezed the middle class and poor while greatly enriching the super wealthy. Mission accomplished! The trick was getting the middle class to fall for their lies about how it would benefit them. Thanks to all the "Reagan Democrats" for slitting your own throats, suckers! Shrub took the policy to new heights, Reaganomics on steroids. Thanks to the idiots who almost elected him twice!

[sendero]

30. Exact..

....imundo.

Sometimes I have to say that people are getting what they asked for, they voted for this shit over and over and over again.

I think many are starting to wake up to the butthurt.

[liberal N proud]

17. I can't recommend this enough times

Reagan is the worst thing that happened to this country since the great depression.


CBS Sunday Morning showed a list of the most influential people of the 20th century listing several great ones and Reagan then they showed Hitler and Mow, Regan should have been shown between the former.

[pangaia]

20. Who's Mow?

[Gary 50]

21. Who's...

No, Who's on first.

[pangaia]

23. What's on second.

Wen's on third.

[econoclast]

18. Actually started decade before RR

.html




It seems clear from this presentation by Piketty/Saez ( hat tip to krispos42 ) that there are three discrete turning points.

(1.) The income growth of the 99% peaked around 1972/73 After that it declined until around 1982

(2.) when the decline stopped and a very slow increase began.

(3.) The 1% 's dramatic increase also began around 1982.

The real impact on income increases for the 99% then seems to stem from the decade prior to 1982. Care to propose what caused this clear trend change in 1972/73 Oil shock? End of Bretton Woods?

We can rail against RR all we want, but the data clearly indicate that something else happened in the decade prior.

[Scuba]

24. Your graphic shows the 1% also suffered a decline beginning in ~ 1973 ...

... although not as steep a decline as everyone else. Then Reagan came along and the 1% soared , while everyone else fought over the crumbs they left.

[econoclast]

25. The decline for the 1%

In the 70's was VERY slight

The 1972 departure from the 1947-1972 trend for the 99% was DRAMATIC

Unless we can honestly assess and diagnose what happened to the 99% here, how on earth can we FIX it?

[Scuba]

26. What happened in the early '70's was gas prices skyrocketing. What happened in 1982 was Reagan.

If not for Reaganomics, we could anticipate the '47 - '73 trends for both classes to eventually recover. That's not what happened. Instead of the 99% graining faster than the 1%, that was reversed and then some. That's Reaganomics.

[econoclast]

41. Respectfully disagree

Great article from the Atlantic. 1983

Says there is more going on than Reaganomics:


http://m.theatlantic.com/past/politics/ecbig/declkutt.htm

July 1983

The Declining Middle

With most jobs being created at the top and the bottom of the ladder, America may have difficulty remaining a middle-class society

by Bob Kuttner

Says in part:

"One might fault the Reagan Administration for cutting taxes at the top and social programs at the bottom, but the widening polarization of the labor force remains a phenomenon distinct from these policies and largely ignored in the national debate. Long after the Reagan Administration ends, this problem will plague the American economy."

Lengthy read but well worth the effort!

[badtoworse]

55. The Economic Recovery Act of 1981 was an across the board cut.

That is a fact. Top rate dropped from 70% to 50% and the bottom rate dropped from 14% to 11%. While the rich got a reduction in tax rates, their share of the total tax load went up because the lower tax brackets did better on a percentage basis.

From the Wiki article: As a result of ERTA and other tax acts in the 1980s, the top 10% were paying 57.2% of total income taxes by 1988 - up from 48% in 1981[3] - while the bottom 50% of earners share dropped from 7.5% to 5.7% in the same period. The total share borne by middle income earners of the 50th to 95th percentile decreased from 57.5% to 48.7% between 1981 and 1988.["

http://en.wikipedia.org/wiki/Economic_Recovery_Tax_Act_of_1981

The Atlantic piece is too long for me to read now. I'll read it later.

[HelenWheels]

22. Reaganomics was the beginning of the end for the middle class nt

[CountAllVotes]

27. 1981

Last edited Tue Dec 10, 2013, 12:36 PM - Edit history (1)

I remember this year very well. I was working for the Federal government at that time and was told that I should open an account called an "IRA". I was shown these big fancy charts showing how I'd be a millionaire by the time I was ready to retire being I'd be getting 10% interest on this new thing called an "IRA".

Today, I am close to being old enough to draw on said IRA but the problem is that it is not $1,000,000.00 as promised!

What fools we were to believe for one second that Raygun had our best interests in mind.

[gopiscrap]

28. Exactly

[stevenleser]

29. K&R Agree. nt

[KansDem]

31. They lied all the way to the bank.

When we were told "trickle down" will create jobs, we didn't know they meant jobs in India and China and not the US.

[badtoworse]

33. IMO, what began happening to our economy around 1980 was inevitable

From the end of WWII until about 1970 or so, manufacturers had few options as to where to locate plants. Europe and Japan were being rebuilt and the countries we now call the Developing World did not have the infrastucture needed to support significant manufacturing. As a practical matter, the United States was the only game in town. After 1970, manufacturing capability in foreign countries was ramping up steadily and US manufacturers had options as to were they manufactured goods. (The awful cars that Detroit was selling in the 70's and 80's did not help matters.) Fast forward to the 90's and free trade agreements, starting with NAFTA, made it easier for foreign manufactured goods to compete with US made products. The net result was that US workers were competing with workers in foreign countries to provide manufacturing labor. Robots on assemby lines were reducing the number of workers needed, so that all workers were competing for pieces of a smaller pie. In effect, the supply of labor increased substantially and the demand for it went down. Economics 101: In that situation, the price for labor should go down and it did.

People at the higher end of the income scale were not and are not exposed to the same competitive pressures in providing their services. Their incomes also tend to be more closely tied to the performance of their companies (bonuses, stock options, etc.). The macroeconomic forces that worked to the detriment of labor favored management as business boomed and profitability increased.

It's easy to say that Reaganomics was responsible for the economic situation we are in today, but I don't see that. The forces that drove the world economy were already happening when Reagan was elected and would have continued even if Reagan lost. Had Carter won the 1980 election, what could he have done to change things? At best, he might have slowed things down for a few years. Could he have shielded the US labor market from foreign competition? For a few years, possibly, but no way he or anyone else could have done so indefinitely.

[Scuba]

34. If the international labor market was the only consideration your theory would have more credence.

You're ignoring tax policy entirely. Reagan, then Bush, drastically reduced taxes on the wealthiest, shifting that liability to the middle class in the form of more regressive taxation coupled with reduced spending on public services, infrastructure, etc.

The rich got richer, by a lot, while everyone else paid more.

To suggest that something besides 30+ years of Reagan's economic policy is what leaves us where we are economically is rather ludicrous.

[badtoworse]

35. Decades of high taxes and massive public spending would have preserved the economy?

No way - that would have been unsustainable. It would have killed the private sector and left the government with a greatly reduced tax base. The jobs would probably have moved offshore even faster.

[Scuba]

36. Yes, a progressive tax system and public investment have benefited the economy ....

.... look at our boom periods, and you'll see high taxes on the wealthy and lots of spending on public projects.

Your "unsustainable" argument has been argued by many economists, all of whom have been proven wrong.

[badtoworse]

37. Look at the attached graph from the St Louis Fed

It shows growth in per capita GDP from 1960 to present. It does not support your premise. Reagan's presidency had strong growth in per capita GDP (he cut taxes). It lagged or fell during Bush I (it's worth noting that he raised taxes), but was again strong during during Clinton presidency and he raised taxes too. Per capita growth in GDP was strong during Bush II and he cut taxes. I don't see how you can infer any correlation with tax policy from this graph.

http://research.stlouisfed.org/fred2/graph/?s[1][id]=USARGDPC

ETA: The link I gave you takes you to a blank screen. Go to Google and search on "Real GDP per Capita in the United States (USARGDPC)" The first link should take you there.

[progressoid]

49. Sure he cut taxes...for the top income earners. And then he raised taxes. Again and again and again

Let’s start by noting that if you recall Reagan as tax cutter, your memory is good. Reagan campaigned in 1980 on reducing taxes. During his administration, the top income tax rate decreased from 70 percent in 1981 to 28 percent in 1986.

But to combat a rising deficit and debt burden, Reagan also approved increased taxes.

http://www.politifact.com/virginia/statements/2012/jun/25/gerry-connolly/rep-gerry-connolly-says-reagan-raised-taxes-during/



He cut taxes for the wealthy and raised them for the rest of us.

[badtoworse]

52. If I recall correctly, income tax rates were cut across the board, not just on the wealthy

If you look at the graph and consider the tax policies of Reagan, Bush I, Clinton, Bush II and Obama, it's hard to find a correlation between tax policy and per capita GDP.

BTW, no president can raise taxes by executive order. Reagan may have signed the legislation, but it was passed by Congress.

[progressoid]

54. Yes, the initial cuts were across the board.

But, in 1986 the top tax rate was lowered from 50% to 28% while the bottom rate was raised from 11% to 15%. Plus the other taxes that regressively affected the lower income earners more than the wealthy.


Of course no one is saying that a president can raise taxes by ex order. By default, we assign these to the president in office at the time (unless he vetoes the bill). Just as you did when saying that Reagan cut taxes & Bush I raised taxes.

[moondust]

38. Globalization

In the late 19th century and early 20th century, the connectedness of the world's economies and cultures grew very quickly. This slowed down from the 1910s onward due to the World Wars and the Cold War [29] but has picked up again since neoliberal policies began in the 1980s and perestroika and the Chinese economic reforms of Deng Xiaoping opened the old Eastern Bloc to western capitalism.

https://en.wikipedia.org/wiki/Globalization#History

Demonize and deregulate government, attack and weaken labor, stroll off with all the loot.

[colsohlibgal]

39. Revenue

The top marginal individual income tax rate was, post WWII, from over 90% under Ike to 60-75% or something like that pre B Actor president. Ronnie cut it about in half and here we are - why raise taxes on the ultra wealthy when you can cut food stamps from the poor.

Now a lot of us are not voting enthusiastically for most candidates, we vote for who can do the least harm. That's sad and has to change. We have to go to public funding of elections and eventually IRV and rock solid secure verifiable voting.

[indepat]

42. All hail to Saint Ronnie, the gipper, whose deification is on the fast track. Glory be to

Saint Ronnie in the highest, our deity among us mere mortals.

[kentuck]

43. Yep

truth.

[cantbeserious]

50. Who Stole The American Dream - Video - Book

http://www.democraticunderground.com/1017163425

[ChiciB1]

53. I've Been Saying This For More Years Than

I like to remember. I was very much an activist back then as I am now! Unfortunate how so many don't know the REAL truth!!

One reason why I'm appalled by how much worse things have gotten even worse today! Once DEREGULATION began we started down a path that has screwed too many Americans! Not a Democracy I can relate to. I remember "Happy Days" but after so many Democrats voted for Ronnie RayGuns I started fearing what was to come! LOOK WHERE WE ARE TODAY!

For the most part it's been the Congressional Black Caucus that has shown most of the fight on he Democratic side. And I'm white! But, over & over they make their voices heard. It would be nice is the "weak, spineless Democrats" who lean to the right to start acting like what I always thought Democrats were all about!