Voodoo Economics

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Ronald Reagan knew one thing above all. Americans don’t like taxes. When Reagan campaigned in 1980 he promised to cut taxes, reduce government deficits, reduce inflation, and build America’s defenses. One republican said it could only be done with mirrors. Another called it “voodoo economics.” That republican was the next vice president, and later the president himself,George Bush. Ronald Reagan got a laugh with that line when he was elected.

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The Reagan coalition pledged to reverse the damage as they saw it to the economic and social policies in place. They brought on political theorists who put a new face on old line anti communism, the so called silent majority. None other than the religious right wing led by Reverend Jerry Falwell, whose solutions included, returning prayer to schools, outlawing abortions, and reducing government’s role in social policy.

The plan appealed to southern conservatives who responded to Reagan’s call for stronger defense and lower taxes, especially the blue collar workers who continued to see more of their pay checks going for taxes. The premise was if taxes were cut, people would produce more goods and spend more money. With deep cuts in wasteful government spending the country would have a balanced budget.

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This was nothing new, president Kennedy and president Carter had proposed tax cuts, smaller government, and tight credit in their presidencies. The name for it back then was “trickle down economics.” The Reagan plan was passed but there was no immediate relief, and America was soon in a full blown recession, bankruptcies, failed businesses, job losses, and farms went on the block. Oil was at the root of the trouble and it was only when oil prices fell that the pressure was relieved. OPEC’s hold on the oil became a glut when oil producers like Mexico, Great Britain, and Norway came into the competition. Suddenly glutted with unsold oil OPEC’s clout tumbled. Ronald Reagan had the glory.

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Employment started to grow and inflation which had that been 12% dropped to 5%. It was a boon for the wealthiest but the poor and middle class would see little to celebrate. Reagan’s budget slashed domestic spending that most effected the poor and middle class. Welfare, job training, housing, and medical treatment fell under the ax as wasteful spending. The deficit ballooned, pledged to cutting the budget Reagan was merely overseeing a huge transfer from the domestic front to the pentagon for the expansion of the defense budget.

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