Tuesday, February 23, 2010

Reality check on economic history

The election of Ronald Reagan in 1981 revitalized America Inc.—the merged assets of corporate, political and personal greed—that had been somewhat dormant since the 1930s. At the same time, a credible survey of University seniors, revealed in anonymous responses that large numbers of our potential future leaders were cheats. Significantly, the champion cheaters were business majors with 86% of them admitting they cheated.

President Reagan’s embrace of the 1930's trickle-down economics and his simpleton mantra of “government is the problem”not the “solution”struck a responsive chord in the hearts of millions of American voters. They loved his cue-card homilies, his welfare bashing and his de-regulation fear mongering.

I mattered not that Reagan led us to abandon our progressive tax structure so as to enrich the wealthiest among us. It mattered not that Reaganomics increased our national debt from 2.5 % of the national economy when he took office—to 5% by the time he left. (The interest payments on the that debt went from $69 billion in 1981 to $169 billion at the end of his administration.)

It also mattered not that two years into Reagan’s first term, we experienced the worst recession since the great depression with an unemployment high of
10.8 %. In short, the Reagan presidency started American Inc. on the road to our present destination.

We look back and see a path of unbridled greed, littered with corporate carcasses like Enron, Tyco, and Author Anderson--- that were once guided by corporate felons.

The zenith of de-regulation and the facilitation of corporate-political greed came under the aegis of George W. Bush, his evangelical right wing base and the Republican party. Texas Senator Phil Gramm led the charge.

After the 1929 stock market crash, Congress passed the Glass-Steagall Act that would separate commercial banks from investment banks (which deal with speculative trading and mergers) and thus encourage market stability.

In 1999 Senator Gramm shepherded a bill through Congress that gutted the Glass-Steagall Act allowing commercial banks, investment banks and insurers to merge—think Citibank, Travelers Group, Smith-Barney, etc. Then after George W. Bush’s election, Gramm slipped an amendment into an omnibus appropriations bill titled Commodity Futures Modernization Act. It deregulated derivatives trading and exempted energy trading from regulatory oversight----think the current economic disaster and the Enron debacle.

Meanwhile Un-curious George inherited a $236.2 billion surplus, spent more than $500 billion in Iraq and walked away leaving a $1.3 trillion deficit. The Republican hypocrisy is palpable!