REAGAN, BUSH & CO.
Purveyors of Fine Public Policy for the Gentry Since 1980
Our Motto: "Life is unfair"
It's Jimmy Carter's quote, but Reagan, Bush & Co. owe him a debt of gratitude for setting the right tone in his final years as predecessor proprietor. Thanks, Jimmy.
From 1971 to 1988, the income of the richest 1 percent of all American families increased by 50 percent, while the income of the poorest 10 percent decreased by 15 percent. Incomes declined for all but the top 20 percent of families according to figures compiled by the Urban Institute.
Keeping pace with inflation on the military buildup Carter began would have cost $2 trillion for the decade. Reagan raised the ante by another half trillion.
Some of these costs will be paid through largely regressive taxes, some simply through reduced standards of living. Many future costs are hard to estimate: What is the cost of the government failing to support high technology, such as advanced computer chips, photovoltaics (solar power), or high-definition television, as government-supported foreign competitors seize major industries of the future? What is the cost of our continuing trade deficits and our huge foreign indebtedness considering that the money borrowed did little to raise U.S. productivity?
Leveraged buy-outs of businesses add large amounts of debt to the corporate balance sheet, displacing straightforward ownership or equity. Interest payments on debt are tax-deductible for businesses, while payments on equity (dividends) are not. So the average taxpayer subsidized the 1980s' debt-financed juggling of corporate ownership. Now the burden of paying those fixed interest costs is pulling many businesses down, dragging their employees and, in some cases, debt-holders (like high-flying savings and loans) with them. This will further reduce future tax revenues.
Reagan cut back on already inadequate public works spending, shunting the expense to the future and diminishing the productivity of the economy. Chicago Federal Reserve Bank economist David Aschauer has persuasively argued that investing in needed public works would now raise even private profits more than a comparable investment in private industry.
Public spending on aviation per billion revenue-passenger miles fell from $.80 in 1960 to $.20 in 1985. Now the airports and traffic control system are seriously inadequate.
This is the estimated annual cost through 2000. Total could reach $ 1.4 trillion over 40 years. And just wait until the bail-outs for the banking system, the insurance industry, and the federal pension guarantee program are added to this.
If the United States had continued increasing the efficiency of its energy use after 1985 at the same rate it did from 1973 to 1985, we'd save $20 billion annually. But Reagan, Bush & Co. slashed government investment in efficiency and renewable alternative fuels by roughly 80 percent and weakened other efficiency incentives, such as mileage standards for autos.
Reagan's administration annually built less than one-fourth the number of low-income housing units built by his Republican predecessor, Gerald Ford. The result: low-income renters desperately squeezed, growing numbers of homeless. National Coalition for the Homeless director Cushing Dolbeare says that to solve our low-income housing problem, the government needs to spend on constructing affordale housing what the Treasury indirectly gives middle- and upper-income families annually for their home mortgage deductions: $45 billion a year.
This represents cost health care spending per capita in the United States compared with Canada, which has a national health insurance program (and much more comprehensive coverage). The burden would seem even larger if the comparison were made with Germany, Japan, or Britain, all of which have national health care systems.
If the federal government had promoted comprehensive recycling, cities could be spending 35 to 50 percent less to handle their municipal waste today (saving energy, creating local jobs, conserving resources, and protecting the environment to boot).