Vail Daily columnist Jack Van Ens: Do voodoo economics still hex Republicans?
Vying for the Republican Party’s nomination in the 1980 presidential campaign, George H.W. Bush dismissed Ronald Reagan’s fiscal plan as “voodoo economics.” Bush scorned “Reaganomics,” judging it fanciful, like superstitious Haitian folk religions.
He graduated from Yale University with a proven academic record in business and economics. Starting in 1929, Reagan attended Eureka College in Illinois. He, too, majored in economics and sociology but didn’t like to study graphs and forecasts. Broader, simpler themes — rather than statistics — appealed to him.
What were the legs of Reagan’s political stool?
After making movies in Hollywood, he worked as a spokesman for General Electric Co. He refined a stump speech but refused to edit it. Its credo: Acting like a master over servants, government makes people dependent. Lowering taxes reduces government and increases citizens’ personal liberties. Government regulations limit business growth. Growing the government is our nation’s No. 1 problem.
Using homespun wisdom, Reagan told a white lie about his identity. “I am not a politician,” he declared in speeches before running for office. “I am an ordinary citizen with deep-seated belief that much of what troubles us has been brought about by politicians, and it’s about high time that more ordinary citizens brought the fresh air of common sense thinking to hear on these problems.”
Well-spoken. Clear. And wrong.
Reagan hooked this political credo to an economic theory that has produced havoc in U.S. markets under two Republican administrations — his in the 1980s and George W. Bush’s in 2008.
Even economists like Reagan’s budget director, David Stockman, thought Reaganomics was loopy. He was ordered to cook the books by adjusting budget statistics to match Reagan’s rosy fiscal predictions. The national debt surged. In fact, the Reagan administration added more to the national debt than all previous presidencies combined.
Biographer Lou Cannon shook his head in disbelief about this fiscal pie in the sky, writing, “Reaganomics was forged in a political crucible, in this case the 1980 political campaign. While its claims were conflicting and its figures never susceptible to normal arithmetic, it was a thoroughly appropriate advocacy for Reagan, the one-time optimistic New Dealer who had become the most optimistic of conservative presidents” (Reagan, p. 323). A pundit quipped that “Reagan thinks like Barry Goldwater but sounds like FDR,” who he always greatly admired and voted for the four times Roosevelt ran for the presidency.
Reaganomics received a veneer of academic respectability from economist Arthur Laffer and writer Jude Wanniski, who promoted it in Wall Street Journal editorials during the mid-1970s. Readers learned reduced taxes automatically brought business expansion. Such growth produced an additional supply of goods for all citizens; hence, “supply side.”
Herbert Stein, chairman of the Council of Economic Advisers in the Nixon-Ford administrations coined the phrase “supply-side economics.” His verdict: this fiscal theory was ludicrous and disastrous to the U.S. economy, with the exception of the rich who benefited enormously from it.
Republicans still assure us that if the top 1 percent is allowed to prosper, they’ll invest earnings in booming businesses. These businesses will hire those from lower classes, who will be bumped up on the social ladder. Reaganomics promises a society of the “haves” and the “will haves.”
During the 1980s under Reaganomics, the U.S. economy tremendously expanded for the president and his multi-millionaire friends. To pay federal bills, Reagan slashed social services for the poor. Wealthy people stockpiled cash instead of letting it trickle down to folks who couldn’t spare a nickel. Then the savings-and-loan scandal broke. Wall Street, not bound by government safeguards, built a house of illegal deals that defaulted.
Under Bush II, Republicans gambled again with Reaganomics. It led to the Great Recession. As before, the wealthy kept their millions, the middle class shrunk, and children doomed to poverty multiplied at a robust rate.
To save our nation from utter financial peril, Uncle Sam in 2008 and 2009 had to lend billions to banks, the housing market and auto companies. Without these cash infusions, the world market would have melted down, lending would have ceased, and economic activity would have frozen.
What’s Reaganomics’ most dire weakness? It makes the rich richer on the backs of the poor. It promises those with much will trickle down their wealth to those with less.
What did Jesus vividly picture as the prime responsibility of those in power who are blessed? Don’t reject the poor. The measure of a just society is how it cares for those can’t care for themselves. “For I was hungry and you gave me no food. I was thirsty and you gave me no drink. I was a stranger, and you didn’t welcome me. Naked, and you did not clothe me. Sick and in prison, and you did not visit me” (Matthew 25: 42-43).
Like barkers at a country fair, Republicans sell an updated version of Reaganomics in 2012. John B. Anderson, who ran as a Republican candidate against Reagan in 1980, was asked how he sized up Reaganomics. How could Reagan accomplish what he fiscally promised?
“It’s very simple. You do it with mirrors,” Anderson replied. The kind of circus mirrors that grotesquely distort body shapes. Similarly, Reaganomics creates a misshapen society of the very rich and the poor.
The Rev. Jack R. Van Ens is a Presbyterian minister who heads the nonprofit, tax-exempt Creative Growth (www.thelivinghistory.com), which enhances Christian worship through storytelling and dramatic presentations aimed to make God’s history come alive. Van Ens’ book, “How Jefferson Made the Best of Bad Messes,” is available in local bookstores for $7.95.