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nomics.” His followers called them “Reaganomics.” It unleashed the forces of
private enterprise to new levels, perhaps best demonstrated by the famous line
uttered by investment banker Gordon Gekko in the movie Wall Street, “Greed... is good.”Since his presidency, among conservatives, Ronald Reagan has
gained a special place, as evidenced by the number of times that Republican
candidates made reference to being the “heirs” of Reagan in elections in the
1990s and 2000s. What will probably go unsaid, however, is that Reagan’s
policies, particular his economic views, contributed to the greatest disparity
between wealth and poverty since the Depression, caused huge reductions in
real wages and income for most Americans, accumulated the greatest budget
deficits in U.S. history, and, in “reverse Robin Hood” fashion, redistributed
wealth from working people to the rich. A critical aspect of Reagan’s legacy,
which has become a persistent social problem for the past generation, was
class war... from the top down.
Reagan ran for president promising massive cuts in taxes and social ser-
vices but also increases in military spending, hence the “voodoo” label. As
president, he and his economic team got Congress to pass huge reductions in
taxes, driving the top income tax rate down about 30 percent, from 38.5 to
28 percent, the lowest in the industrialized world. With this loss of revenue,
and new, trillion-dollar Pentagon budgets, Reagan was forced to borrow to
meet government financial obligations. Government debts, much of them for-
eign held, rose into the hundreds of billions by the mid-1980s and hit $1 tril-
lion in the early 1990s. Personal debt, a result in cuts in social services, declin-
ing wages, and a ramped up consumer culture made easier because it became
much easier for virtually anyone to get a credit card, erupted, climbing to
more than $3 trillion, while nonfinancial corporate indebtedness rose to more
than $2 billion. Reagan, who ran as a fiscal conservative and small-govern-
ment advocate, had in fact created the greatest deficit and biggest government
obligations in U.S. history. Such policies, hailed by Reagan’s supporters as an
economic revival in the 1980s, created great wealth for one segment of the
population, the top 20 percent or so, who saw their tax burdens drop and their
incomes rise. The level of tax paid by the top 1 percent decreased from 31
percent to 23 percent between 1981 and 1984, while their income share rose
from 41 percent to 44 percent.
Incomes of the top 5 percent rose more than 27 percent, to about $120,000,
and the highest 20 percent went up about 25 percent, to around $70,000. The