Spoils to the victors?
Cultivate a political will, urged President Barack Obama in a May 5 Ohio State University commencement address. He challenged graduates “to harness the ingenuity of your generation, and encourage and inspire the hard work of dedicated citizens … to repair the middle class, to give more families a fair shake, to reject a country in which only a lucky few prosper.”
Rather than directing profits toward the rich, our president believes national fiscal health prospers when the middle class expands and the poor don’t slip through social safety nets. Sequestration budget cuts crimp government workers’ pocketbooks and pinch wallets of needy and middle class Americans.
Before the Constitution replaced the faulty Articles of Confederation, anti-government leaders sounded like today’s tea party. Patrick Henry strongly opposed central authority because he protected states’ rights.
Historian Harlow Giles Unger details the battle lines over expanding government: “Although (James) Monroe, like Jefferson — and indeed, George Washington — favored stronger central government, Congress and the American people were fiercely divided on this issue. Nationalists such as Washington deemed a strong central government essential for the common defense. Without powers to tax and raise funds for an army and navy, Congress had left Washington’s army constantly undermanned during the war — without adequate arms, food, shelter or clothing” (The Last Founding Father: James Monroe and a Nation’s Call to Greatness, p. 52, 2009).
The Coolidge and Reagan presidencies, like Patrick Henry, tried shrinking government. The Republican Party’s fiscal policy made the rich richer and the poor poorer. Their same destructive results occur in current sequestration cutbacks.
Calvin Coolidge’s presidency (1923-1929) lowered the national debt from $27 billion at the end of World War I to $17.65 billion when he left office. Coolidge slashed taxes, spiked economic growth and stuffed federal revenue coffers. Unregulated Wall Street roared in a bull market, inflated with paper profits. “Silent Cal” let profits for the rich do his talking. The spoils from this super-heated economy belonged to the privileged few. Coolidge’s cheer-leading biographer Amity Shlaes crisply summarizes Republican economic policy in her biography Coolidge. The president’s aim was “to retire debt, not expand it.”
Coolidge and Treasury Secretary Andrew Mellon finessed a tax reform program named the “scientific taxation theory.” Promised lower taxes meant business owners kept more of their profits to reinvest in the company. If consumers got a price break, for instance, they would buy more cars. In turn, this money would propel the economy, generate more tax revenues and make Uncle Sam’s coffers flush with cash. Lower tax rates guaranteed an economic boom for profiteers and government, with Wall Street coming out ahead because of surging investment.
Such an enticing monetary theory didn’t work. It drove the U.S. into the Great Depression. In response, Coolidge had no clue what to do. When the Depression deepened four years after it started, Coolidge confided to his barber “that the big men of the country have got to get together and do something about it. It isn’t going to end by itself. We all hope it will end, but we don’t see it yet.”
Ronald Reagan adapted this “scientific taxation theory.” Cheered on by U.S. Rep. Jack Kemp, Reagan promised the nation the moon with supply-side economics. Its faulty reasoning sounds familiar: The rich get the spoils, the financial prizes.
Historian Gary Wills summarizes what makes supply-side economics sizzle. Reagan Republicans believed that “tax cuts would pay for themselves, since taxes had reached a point where they drained the economy rather than strengthened it. The tax monies released into private circulation would promote savings (to form new capital) and investment (to use that capital) and growth (the product of investment) …The Gulliver of American capitalism, tied down with a thousand strings by Lilliputian bureaucrats, would spring up with boisterous activity” (Reagan’s America: Innocents at Home, p.365, 1987).
Such unchecked financial shenanigans in which the spoils went to the president’s rich friends corrupted the Reagan White House. “Twenty-five high officials were fired, resigned, or had their nominations withdrawn for allegations of financial misconduct or lax standards” (Reagan’s America, p. 304). The savings and loan scandal and America’s skyrocketing national debt occurred as Reagan ignored the plight of the poor.
Last year, Congress approved sequestration. It cuts the Pentagon’s budget and slices financial muscle from Uncle Sam’s social programs, including those that keep America green, feed poor children and provide rent for those otherwise living on the street. Budget cuts nearly decapitated Head Start.
Do you sense the same devious pattern today, which led to misery for the poor in the Coolidge and Reagan presidencies? Spoils stay with the rich.
Some flight controllers were furloughed because of sequestration. When legislators wanted to fly home on time during a recessed Congress, they found money to bring controllers back on the job. The spoils really do go to the rich and powerful.
This past Independence Day, we remembered sacrifices our founders endured to enlarge liberty for more citizens. “Where the spirit of God is, there is freedom,” teaches the Good Book (II Corinthians 3:17).
Such liberty doesn’t flourish and God’s spirit is diminished when the spoils of economic advance go to the wealthy who need them least.
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.