Reply #11: The economy was a mess [View All]

During the 1970s, OPEC had jacked up oil prices and the resulting inflation had been over 10% for much of the decade. There had been high unemployment in the mid 1970s, but that was starting to ease. The progressive tax code had been tied to specific dollar amounts, so as wages started to climb to almost match the inflation rate, people saw their taxes skyrocket. Carter had allowed the Federal Reserve to hike interest rates to extreme levels by late 1978 as a method of slowing inflation. That is what finally cost him the election.

Reagan came to office promising tax relief. His across the board tax cuts gave workers pennies and rich men millions. He then promised a tax system so simple we could put it on a postcard. He set high rates on working people into stone, while again lowering the rates on the rich. When that caused extreme deficits without actually doing anything for the economy, he sold a social security tax increase to the US public as a way of shoring up that program, raised the taxes six times, and robbed 50% of the revenues to fudge his books on the deficit. Since those taxes are only on the poorest workers, it amounted to a massive shift of wealth away from labor and toward capital. This system continues, which is why we are saddled with such massive wealth disparity in this country.

I know this is a bit windy, but this is what happened. Reagan was scum if you have to work for a living, a god if you inherited great wealth.