Susmit Kumar, Ph.D.

Reaganomics is the biggest fraud created in the history of the United States. Not only did it create large debts, it also transferred money from the middle class to the richest 2 percent. Without the 1944 Bretton Woods Agreement, which made the US dollar the global currency, Reaganomics would have died in its infancy. Reaganomics was paid for initially by Japan during the 1980s to the early 1990s, and thereafter mainly by China, which is a potential enemy of the United States. In a similar situation, when the Soviets needed money for their “glasnost” (freedom of speech, transparency in government) and “perestroika” (reconstruction of the economy, economic reforms) campaigns during the late 1980s, German banks stopped giving loans and instead started demanding repayments, causing the Soviet economy to collapse.

Reagan was a great “socialist,” who transferred money to the rich from the middle-class people. Reagan raided the Social Security trust fund to give tax breaks to the rich. Democrats are accused of being a tax-and-spend party (i.e., they are for tax increases so that the government can spend that money on social welfare programs). On the other hand, the Republican Party is pro tax-cut and spend (i.e., they will cut the taxes, but they will increase the spending, mainly by increasing defense spending—remember Bush Jr.’s two unfunded wars and unfunded Medicare B plan). Unlike the Democrats’ tax-and-spend policy, which causes little or no budget deficits while all the money transactions remain inside the country, the Republican cut taxes and spend policy has created large budget deficits, which have now put the country at the mercy of foreign investors such as China, another Soviet-like adversary in the making. The Republicans’ tax-cut and spending policies, therefore, amount to high treason.

President Bush’s tax cuts for the rich transformed the January 2001 projected ten-year $5.6 trillion budget surplus into trillions of dollars of deficit in the early 2000s. When the economy booms, and there is a budget surplus, their administrations give tax cuts to corporations and wealthy people, claiming that the extra money belongs to all Americans. But when the economy is in recession, they again give tax cuts to corporations and wealthy people, claiming that they are needed to jump-start the economy. Similar tax cuts during the 1920s have been cited as some of the main reasons for the 1930s Great Depression.

After the midterm elections in 2002, when Dick Cheney started proposing another round of tax cuts, Treasury Secretary Paul O’Neill told him, “the government is moving towards a fiscal crisis” and explained what rising deficits meant for economic and fiscal soundness. Cheney replied, “Reagan proved deficits don’t matter.” A few weeks later, President Bush asked O’Neill to submit his resignation [1] and found a Treasury secretary who would rubber-stamp his tax cuts. In addition to O’Neill, Bush also got rid of Colin Powell, as both of them were against the invasion of Iraq. It is worth noting that O’Neill, a lifelong Republican, successfully ran Alcoa, the world’s largest aluminum producer, for twelve years as its CEO and chairman.

It was Reaganomics that created the recession in the late 1980s. Had there been no advent of information technology, Reaganomics as well as the US economy would have collapsed in the early 1990s.

Banks give credit card loans to an extent that a person can pay only the interest on the loans from his or her monthly paycheck. They are not interested in getting the principal back; rather, they go for the maximum interest payment. Therefore, if the person suffers an economic setback, he or she will have no option but to declare bankruptcy. Reaganomics is based on the same principle. During good times the country accumulated debts to such an extent that now it may have a problem paying even the interests on the accumulating debt without risking a severe economic crisis in the country. An individual can declare bankruptcy and get rid of all loans, but it will be a disaster for the global economy if a country like the United States declares bankruptcy.

Reaganomics has created a deadly cancer in the American economy that has no cure. Within a few years, China will have such a large amount of dollars that it will be in a position to dictate US policy in every sphere, and it seems certain that China is going to take the United States down.

If you tell a lie a hundred times, it becomes a truth for uneducated and gullible people. Commercial media, especially conservative media like Fox News, work on the same principle. They brainwash Americans. Even after several months of the release of his long-form birth certificate, confirming his birth in Hawaii, more than half of Americans still had doubts about President Barack Obama’s birthplace being in the United States [2]. Still, more than half of Americans believe that Saddam Hussein was behind the 9/11 attacks in 2001 and also that he had weapons of mass destruction (WMD) despite numerous reports to the contrary by congressional investigations. Prior to the 2003 Iraq invasion, everyone in the media underscored the tunes of the Bush administration about Saddam Hussein having the weapons of mass destruction. Anyone in the media who was against this misinformation was simply being fired. Phil Donahue, who was trying to have a balanced conversation (both pro and con) in his talk show before the 2003 Iraq war, was fired by MSNBC. Using similar propaganda, conservatives have made the F-grade Ronald Reagan an A-grade president and are claiming Reaganomics, a treacherous and failed theory, to be a success and the force behind the economic boom during the Clinton administration in 1990s. Jimmy Carter was a victim of conservative propaganda too.

By similar massive propaganda, conservatives have brainwashed Americans by claiming that by reducing the size of government, the economy booms when more money goes to people who can spend it more wisely. Had the Bush administration not gone for two wars (Iraq and Afghanistan) and increased the size of government, the American economy would have been in recession throughout the eight years of his administration.

[1] Ron Suskind, The Price of Loyalty (New York: Simon & Schuster, 2004), 291

[2] Josh Voorhees, “More than half of GOP voters still doubt Obama born in U.S.” The Slate.com, May 10, 2001.

 

 

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