Problem or Opportunity

“Government is the problem, not the solution” was the words of Ronald Reagan. Unfortunately, those words marked the beginning of the economic problems we face today. This was the introduction of supply side or trickle down economic theory that maintained that by increasing income and wealth for the most wealthy in an economy, those in the middle and bottom would significantly benefit. It should be obvious by now that while sounding good in theory, once put into practice, this would not work as planned. In the years since the Reagan Presidency, the top 10% of Americans have enjoyed considerable increases in both income and wealth. At the same time, everyone else has seen, at best, their income fail to grow and their wealth decline. The numbers of unemployed have significantly increased as has the numbers of those living in poverty. What we should learn from this economic experiment is government is not the problem unless government is incompetent. To paraphrase Reagan, incompetent government is the problem and the solution is competency. When the private sector fails to bring about economic growth for any reason it will be up to government and the public sector to step in. The economy of the United States is dependent upon a strong, growing middle class. The experienced decline in middle class earnings, wealth, and numbers cannot be reversed by continuing the supply side policies of incompetent government. The so-called “job creators” have failed to create jobs in spite of years of preferential tax treatment. Wealth has not “trickled” down but remained at the top. There is absolutely no evidence that favorable tax treatment of unearned income such as capital gains, dividends, interest carry forward, and other income taxed less than wages, tips, and salaries has led to increased economic benefits for anyone other than the recipients of favorable tax treatment. Both personal and corporate income receipts as a percentage of GDP are at historic lows and the result of declining government revenue is increasing deficits at the federal level and massive layoffs of state and local employees at other levels of government. To an extent, Reagan was correct. Government is the problem when government is bad. Government is the problem when government is incompetent. However, the solution is not less government. Just say no has not worked in stopping drugs and just say no has not worked in fixing the deficit. Both Republicans and Democrats were sent to Washing to legislate not filibuster. Both need to identify problems and find ways to solve these problems rather than trying to make political points. The solution to today’s economic problems is good government that competently assesses and meets the needs of the citizenry rather than one or the other political party that works to defeat the other political party.