The Republican party is once again talking about cutting taxes as a means of stimulating the economy. They are beginning to extol the virtues of Ronald Reagan’s trickle down economic theory. This would be good if it had worked. It did not. The growth it produced was fuelled by debt and asset inflation. Deficits grew year by year. In 1979 the deficit for the year was $40 billion in the twilight of the Carter presidency. From the arrival of Reagan, through his two terms and then one term of Bush senior, the annual deficits grew and grew until by 1992 the figure reached a staggering (for then) $290 billion.
That cost Bush senior the top job in the renowned read my lips campaign. Under Clinton, the Democrat, the deficits fell year on year until the budget went into surplus in 1998, where it stayed until the arrival of Bush 2. As soon the Republicans were back with their crazy economics, back came the annual deficits rising to a juicy £377 billion by 2003 and $459 billion by 2008. Obama was then faced with failed banks, a collapsing economy and the real prospect, much nearer than most Americans were willing to face, of complete economic meltdown.
This was the greatest threat to the cohesion of the American state since the outbreak of the Civil War in 1860. Obama took the only option probably open by then and went for massive fiscal stimulus. Already near $ .5 trillion in deficit, the budget plunged to $ 1.4 trillion in the red, before beginning very slowly to recover. The Republican are right to state the obvious that these figures are unsustainable and the nation’s books have to be brought back into balance.
However, the Republicans are wrong not to own up to the fact that this is a mess of their making, prepared during their Presidencies, founded in one very simple truth; you cannot spend what you do not earn. If you want to spend more on defence than any other nation by the biggest margin in history and fulfil the social responsibilities of a civilised and inclusive society, you have to raise the revenue to pay for it. Tax cuts for the rich will not do this. They have not done so in the past and the reason the current financial chaos exists is because some people, Republicans, thought, wrongly, that they would.