Letter | Debunking the Reagan economic mythology
02/02/2014 12:00 AM
01/31/2014 3:58 PM
Re: Jan. 8 letter from Don Schenk, “Reagan’s trickle-down economic theory benefitted all economic levels”
Either Mr. Schenk understands the concept of inflation adjustment, but ignores it to make his point, or he does not. Mr. Schenk inflicted 842 words of blather on the readers of The Sun News, and I suspect that it would take more than that to fully rebut his recital of Reaganite mythology.
Just to begin demolishing his claims:
The $517 billion in federal revenue in 1980 would be worth $742 billion in 1988 dollars, for a 22.5 percent increase over Reagan's term, not the 75 percent claimed by Mr. Schenk. That ignores the usual annual growth in GDP due to population and productivity increases, so federal revenues actually fell behind expectations after accounting for inflation and the trend of 3 percent annual growth in the economy during the 1980s.
The $16,542 median 1980 income would be $23,749 in 1988 dollars, so the increase was actually 8.2 percent, not the 55 percent claimed by Mr. Schenk, not even 1percent per year, falling well behind the normal annual 3 percent growth in the economy.
The real (inflation adjusted) hourly wages of production and nonsupervisory workers had started to fall during the “malaise” of the Carter administration. There was a slight rebound coming out of the 1982 recession, but for the remainder of Reagan’s and elder Bush’s terms, real wages fell until 1995 in the Clinton administration.
Not only did federal revenues not increase in real terms during the 12 years of Reagan/Bush, workers’ real hourly wages fell. So much for the phony conservative “theory” that their tax-cut policies will lead to economic growth, which will raise all boats.
Maybe all yachts, but most people these days are up the creek without even a paddle.
The writer lives in Pawleys Island.
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