Roosevelt's-New Deal Compared to Reagan's Reaganomics

By: Dan Reed, American Citizen

For thirty-years Americans have received a repetitive drumbeat of anti-tax and anti-government rhetoric designed to convince the American people that our U.S. Government can’t do anything well, and each dollar of taxes is always a dollar wasted! These same groups keep telling Americans “Washington doesn’t have a revenue problem, it has a spending problem.” So I asked myself “Compared to what”?

Over the past seventy-five years, the American economy has shifted between two different economic philosophies: Roosevelt's-New Deal, and Reagan's-Reaganomics. So I devoted some time researching the impact these two philosophies have had on the U.S. Economy.

Roosevelt’s-New Deal, Keynesian Economics, and Progressive Taxation:

Franklin D. Roosevelt's (FDR) 1935 New Deal Programs were created in response to the 1929 Wall Street Crash, and 1930's great depression. FDR's-New Deal expanded government's role in the depression ravaged economy, and enacted laws that regulated Wall Street business practices. FDR's-New Deal was generally credited with beginning America's climb out of the great depression

FDR’s-New Deal embraced an economic philosophy that believed in capitalism, but understood that “Free Market Capitalism could not be trusted to run itself”! Keynesian economists believed government should play an active role in the economy! Keynesian economics greatly influenced America’s economic system from 1935 until 1980. 

A third factor in FDR’s-New Deal was the progressive tax structure that had been in place since 1913. Progressive taxation was based on a very simple concept: the more income earned, the higher the tax rate! The progressive tax structure included 15 income tax brackets, which gradually increased tax rates (like a ladder) from a low rate of 14% to a top rate of 70%. This method produced a “blended rate”, not a fixed rate, or a flat rate!

American history indisputably documents the U.S. Governments Exceptional Achievements from 1935 through 1980: Building Schools, Roads, Bridges, Hoover and other major Dams, and creating the Tennessee Valley Authority. America and its allies defeated the German Nazi’s in Europe, and the Japanese Empire in Asia. American taxes paid down most of the WWII national debt. American Schools were the best in the world! American Cities were clean, and modern. Many businesses were started with long-term low interest SBA Loans. American banks were the most stable in the world! American Corporations became the richest in recorded world history! The American “middle class” became the richest in the world! America built an interstate highway system unmatched in the world. America’s military became the most powerful in the world. NASA Astronauts traveled to the moon, NASA invented the shuttle spacecraft, and NASA launched a satellite system that created instant global communications. The American economic system defeated Soviet Communism! The CIA created the Internet. “These Exceptional American Achievements were totally funded by the Progressive Tax System”!

Reagan’s-Reaganomics, Laissez-Faire Capitalism, and Limited Government:

Ronald Reagan’s 1980 election ushered in a new American economic philosophy. Reagan’s conservative principles were incompatible with FDR’s-New Deal, Keynesian Economics, and Progressive Taxation! Reagan referred to FDR’s-New Deal as “Big Government-Tax and Spend”. Reagan won election on a conservative platform, promising: small limited government, low taxes, and unregulated business. Reagan strongly believed the American people, and American businesses were taxed too much! Reagan, and his conservative allies pledged to “Starve the Big Government Beast”! This pledge became known as “The Reagan Revolution”!

Reagan’s-Reaganomics embraced an economic philosophy, which believed that “Free Market-Laissez-Faire Capitalism” should regulate the economy, and government involvement in the economy is unnecessary and harmful! Reagan and his conservative allies strongly believed that cutting taxes would stimulate American business investment and economic growth in the USA! Reagan explained this economic growth would increase government revenues, and “trickle down” to middle income people in the form of higher wages and more jobs. Reaganomics has greatly influenced the U.S. Economy from 1981 to the present.

Reagan and his conservative allies achieved enormous success with their pledge to “Starve The Big Government Beast”:

In 1981, Reagan cut taxes 23%, and lowered the top tax rate from 70% to 50%. In 1986, Reagan eliminated eleven of the top fifteen upper income tax brackets, which gutted Americas progressive tax structure. Reagan then cut the remaining four brackets from a top rate of 50% to 28%. These two laws lowered tax rates on higher incomes by more than 50%! Progressive taxation was replaced with 61,000 pages of tax deductions and loopholes, “expertly crafted to redistribute America’s enormous wealth”, to; Wall Street Bankers, Multinational Corporations, and Aristocrat heirs.” Reagan’s tax structure has been in place for thirty consecutive years!

Reagan promised his tax cuts would increase U.S. Government revenues through increased economic growth. However, over the past thirty years, the U.S. National Debt increased 1500% from $900 billion in 1980, to $14 trillion today! Furthermore, trillions of dollars were borrowed from the FICA-Trust Fund to offset huge annual deficits and avoid raising taxes! Boomers are beginning to retire, and the FICA-Trust Fund IOU's are coming due. So conservatives want to cut Social Security benefits, to avoid the tax increases required to pay "Social Security Obligations"!

Reagan’s promised “Trickle down” never occurred. Instead, Multinational Corporations, Wall Street Bankers, and Wealthy Aristocrat heirs gained astounding growth in personnel wealth. Meanwhile, the other 97% of Americans experienced stagnant wages and massive unemployment. 

Reagan’s tax cuts stimulated business investment and economic growth “Elsewhere”. Trusted Capitalists invested their huge tax cut windfalls outside the U.S., which stimulated economic growth in non-union, low wage: China, India, Brazil, Asia, and former Soviet countries. Meanwhile, America’s infrastructure slowly crumbled from a lack of investment and maintenance.

Reagan’s Laissez Faire Capitalism and Limited Government Achieved: Huge Corporate mergers that consolidated wealth, U.S. Corporations became “No-Allegiance Multinationals”, U.S. Savings and Loan Institutions collapsed, the dot com bubble bust, Enron frauds, the housing bubble bust, off shored manufacturing, outsourced jobs, imported low wage illegal workers, huge “free trade” deficits, bogus sub prime mortgages, bogus OTC derivatives, bogus credit default swaps, Bernie Madoff frauds, no title home foreclosures, the Wall Street Banks collapsed, taxpayer funded bank bailouts, and poisoned food, etc, etc, etc.

My research clearly shows: FDR’s-New Deal created the most prosperous economy in U.S. history! Reaganomics successfully starved U.S. Government Investments in America. Reaganomics, coupled with a drumbeat of repeated anti-tax, and anti-government rhetoric, ruined the U.S. Economy and produced an American Economic Disaster! In the meantime, Free Market Capitalists invested their THIRTY annual tax cut windfalls “In Foreign Markets”! The American Economy was hijacked!

©This document is property of Dan Reed. Use of this document, titled: Roosevelt’s-New Deal Compared to Reagan’s-Reaganomics, dated 3-29-2011, requires prior approval of the author. Approval may be attained through a request to dancar@en.com.