THE REAGAN REVOLUTION or THE RISE OF THE RICH
A Turning Point
Something happened in 1982. After 32 years (1950 – 1981) of stability in the income share of the top 1% of households, that share began a steep rise. In 32 years of post-war prosperity the income share of the top centile had never strayed outside the band of 9% to 13%[1]. In fact for the 12 years prior to 1982, the band of values was only 9% to 10%. Since 1982 the income share of the top 1% has generally continued upward despite drops in recession years. It has never been below 13% since 1988, below 14% since 1992, below 16% since 1996, or below 18% since 2004. The latest estimate in this series is 22% in 2015. Figure 1 shows the historical climb according to the data of Reference 1 as well as a smaller set of data, including government transfers, calculated by the Congressional Budget Office[2].
FIGURE 1
Although the CBO numbers are all below the Piketty and Saez numbers where they overlap in time, because government transfers (Medicaid, Medicare, and Social Security benefits, as well as antipoverty programs) help lower income households more than the 1%, the CBO numbers also show an almost meteoric rise starting in 1982. What happened in 1982 to cause 34 years of a general rise in the income share of the rich after 32 years of relative stability?
Reagan Revolution
In January 1981 Ronald Reagan was inaugurated as President of the United States. What his administration brought with it was sometimes called the “Reagan Revolution”. The essence of this “revolution” consisted of lower taxes, deregulation of business, hostility toward labor unions, smaller government (indeed, government was labeled “the problem”), and a dedication to supply-side economics. Haynes Johnson described[3] the lavish celebratory festivities of the “haves” who poured into Washington for the inauguration. Obviously the Big Rich thought they were in for some good times; they were not wrong.
What happened in 1982 was that the Reagan administration began to put their theories into action with the Tax Equity and Fiscal Responsibility Act of 1982. This legislation lowered the top marginal individual income tax rate from 70% in 1981 down to 50% in 1982. The lowest marginal rate went down from 14% to 12%. This was a 14.3% cut in the lowest rate, which affected income only up to $5500, but twice as large a cut in the top rate affecting all income over $85,600[4]. The numbers all pertain to current (1982) dollars and “Married, Filing Jointly”. Using the data in Reference 2, we can establish that there were about 900,000 households in the top centile in 1982 and their average before-tax income in current dollars was about $230,000[5]. So we can see that the great majority of the income of the top 1% was subject to a 28.6% cut in tax rate.
In addition, the top marginal, long-term capital gains tax rate went down from 28% in 1980 to 20% in 1982, another 28.6% drop in rates and another advantage for the 1%, who obtain much more of their income (about 23% in 1981) from capital gains than the middle class (0.5% in 1981 for the middle quintile)[6] or the poor. Of course all this was a tremendous boon to the Big Rich, fully justifying their celebrations of January 1981, and only the beginning of their ever-increasing slice of the pie.
Supply-Side Economics
Those who believe in supply-side economics reject the Keynesian view that the economy can be regulated by regulating demand for goods and services: when private demand is not sufficient to keep the economy growing, the government should step in and spend to increase that demand. Supply-siders believe that demand is essentially infinitely elastic and will expand to meet the supply if the latter is there. Therefore they believe the government should lower taxes, particularly for the rich, who will then expand the businesses they run, or start new ones, which will produce more goods and services and more jobs for the lower economic classes[7]. Everyone eventually benefits. We don’t need to worry about increasing government debt by the tax reductions because the growth of GDP will produce the same or more revenue at the lower tax rates, so there will be no additional debt.
Whether most of the Reagan administration actually believed this fairy tale of something for nothing, is doubtful. It is really nothing more than the “trickle-down” theory in sheep’s clothing: make the rich even richer and some of that wealth will trickle down to those whom Leona Helmsley (net wealth over 1 billion dollars in the 1980’s) called the “little people.” Eventually Reagan’s Director of the Office of Management and Budget, David Stockman, admitted[8] that supply-side economics was a “Trojan Horse”. He knew the budget could not be balanced in 3 years as promised with these huge tax cuts, but he thought that if defense spending was increased, then the deficits would be so large that the supply-siders could cut social spending on such programs as Social Security and Medicare, their real goal. Reagan himself may have believed the fairy tale, but he was never attentive to details.
In any case, neither the benefits to the lower economic classes or the increased government revenue materialized. The federal budget deficits ballooned to unprecedented peacetime levels in 1982, 83, 84, 85 and 86, whether measured in constant dollars (adjusted for inflation) or as a percent of GDP[9]. Figures 2 and 3 illustrate[10]. These Reagan deficits were about double those in the previous (Carter) administration.
As for benefits to the “little people”, Reference 1 calculates the real income growth for the bottom 90% of households, from 1980 to 2010, as -5.2%. If we take all but the top centile of households, the bottom 99%, the real income growth over the same period is 6.2%. Compare those numbers to the growth of the top centile income: 136.4%! The rich have certainly gotten richer, but the “trickle-down” seems to be taking an inordinately long time.
FIGURE 2
FIGURE 3
The Middle Class
Of course if the rich have been taking an ever larger share of aggregate income, everybody else must be getting a smaller share. In particular, this applies to the middle class. There are different ways to define “middle class”. Joan C. Williams[11] defines the middle class as those households between the 30th and 80th percentiles in income, and then adds in families with higher incomes but no college graduates, bringing the total to 53% of American households.
Reference 2 gives income share broken down by quintiles, as well as the top 1%, which makes it convenient to define “middle class” as the middle 60% of households; 20% of households have higher income, and 20% have lower. Although Reference 1 does not have income by quintiles, there is another set of data for the years 1967 – 2015 from the Census Bureau[12] which does (these data do not have figures for the top 1% and so were not included in Figure 1). Using my definition of “middle class” their share of income is shown in Figure 4.
FIGURE 4
The Census Bureau numbers in Figure 4, show relative stability from 1967 until 1981, with the middle class share ranging between 51.5% and 53%, most years quite near 52%. Then in 1982 that share starts a downward slide that has never really stopped, ending below 46% in 2015. The CBO data only start in 1979, but also show little change for the years 1979, 1980, and 1981. From 1982 onwards, the CBO numbers show the same sort of downward trend as the Census Bureau numbers. The first three years are right at 49% and the last year (2013) at about 43%. Thus both datasets agree that the middle 60% of households have lost about 6 percentage points of income share.
There is little doubt that most of the people in these households voted for Reagan – twice. Figure 4 shows that such people clearly voted against their own interests.
Jobs
What about all those jobs that were promised by the Reagan administration, and supply siders in general, to be created by the newly richer rich? Did they materialize?
Well, not so much. Among the six postwar administrations that preceded Reagan, job growth in his administration was mediocre. Figure 5 shows the annual job growth rates[13] over those years. Growth rates are figured from total employed in the private sector in December of the preceding year to December of the year in question.
FIGURE 5
The most notable feature in Figure 5 is the large, year-to-year variation in growth rate. Nothing in the Reagan term of office stands out except the very low (negative) growth rate in 1982 and the following rebound into respectable numbers. The first year of the Truman administration actually had a worse negative growth rate than 1982 (followed by a larger rebound), but is not shown in the graph; it is included in the table below.
Because of the great annual variability, it might be more informative to look at average annual values for the whole administration. Table 1 summarizes these numbers by administration.
Table 1 makes it clear that the Reagan administration is right in the middle as far as job growth goes. Three administrations (Truman, Johnson, and Carter) are ahead, and three (Eisenhower, Kennedy, and Nixon-Ford) are behind.
The years 1949-1988 are only part of the story. On a longer time scale it becomes clear that the whole theory of supply-side economics is wrong concerning jobs. I have noticed that conservatives, and Republicans in general, no longer use the word “rich” or even “wealthy.” They have learned to say “job creators” instead, which has a positive rather than pejorative connotation. They assume that if they say it enough, people will really come to believe that the rich are job creators and the richer the more so. However, if that were really true, then there should be a statistically significant, long-term, positive correlation between the income share of the top centile and job growth rate. Using the data from Reference 1 I performed a linear regression analysis between those two variables, and found no such correlation. The slope of the regression line is not significantly different from zero (a value signifying no discernible relationship), and what little correlation (and regression line slope) exists is negative, not positive! Figure 6 shows the scatterplot. Making the rich richer does not create jobs, a statement which is not opinion, but history and mathematics.
FIGURE 6
Taxes
The Reagan administration was not done changing the individual income tax code. The Tax Reform Act of 1986 reduced the top marginal rate still further in two steps: to 38.5% in 1987 and 28% in 1988. The number of income brackets was reduced from 15 in 1986 down to 5 in 1987 and 2 in 1988. The other (lowest) marginal rate was 15%, applying to all income up to $29,750 (current dollars); the 28% rate applied to all income over that.
The 1986 changes are considered a model of simplification with revenue neutrality. This time the reform removed deductions often used by the rich, which perhaps made up for the large reduction in the top rate[14]. As can be seen in Figures 2 and 3, the federal budget deficits were reduced in 1987 and 88, although they were still larger than any in the previous administration.
The nominal rates are only part of the tax story. The distribution of income brackets and the allowed deductions from income make a big difference both in the revenue collected and in the effective or average rates paid by taxpayers. Reference 2 contains tables of average income tax rates calculated by dividing all federal taxes paid by before-tax income, so these rates include payroll taxes and the effect of deductions. Figure 7 shows this rate for the 1% during the Reagan era, along with top marginal tax rates that could affect this group.
FIGURE 7
We can see that the effective rate fell from 1979 to 1982, as both the top marginal individual income and capital gains taxes fell, while the top corporate income tax rate stayed constant, not a surprising result. In 1987 the individual and corporate income tax rates both fell (corporations lost deductions and loopholes also)[15], but the effective tax rate on the 1% went up. It is difficult to tell whether that effective increase, as well as the increase in government revenue, was due to the loss of some deductions, the rise in the capital gains tax rate, or both, or some other factors altogether. We can note that the effective tax rate paid by the Big Rich went down from 1979 to 1989 by more than 5 percentage points. The CBO has not published the values of this metric before 1979.
Of course the Big Rich immediately started lobbying campaigns for loopholes in the tax code beneficial to themselves, and succeeded. In the next 30 years Congress passed more than 30,000 changes in the 1986 tax code[16]. We may be sure that those changes benefited the rich rather than the poor or middle-class. According to studies by Martin Gilens , “Less well-off Americans have little influence over policy outcomes when their preferences diverge from those of the affluent.”[17] And, “Responsiveness to the poor and middle-class appears to be completely absent during nonelection years.”[18]
Reagan and his team of supply-siders delivered neither the benefits to the “little people” nor the balanced budgets they promised during their eight-year run. Even in the long term, we find that lower federal tax rates do not cause better economic growth. If they did, we would expect a negative correlation between GDP growth rate[19] and those tax rates. Instead regression analyses show that the correlations are positive between GDP growth rate and top marginal individual income tax rate, top marginal corporate income tax rate, top marginal long-term capital gains tax rate, and effective tax rate for all households, over more than 60 years of recent history for the first three and 35 years (all the data available at the time of this writing) for the fourth. Figures 8, 9, 10 and 11 illustrate. A further irony is that the positive correlations in the first and last are statistically significant at the 0.05 level.
FIGURE 8
FIGURE 9
FIGURE 10
FIGURE 11
In view of this data we may conclude that anyone who says reducing any of these tax rates will spur economic growth is ignorant or lying.
If the lower taxes demanded by supply-siders don’t help the economy or the deficit or the middle-class, what do they do?
There is always the stealth goal admitted by David Stockman: make the national debt so large that social programs have to be cut. But there is something else that lower tax rates have done in the long run. Both the top marginal corporate income and long-term capital gains taxes affect the rich more than lower income households. We find that there is a statistically significant, negative correlation between those rates and the income share of the 1%. So naturally reducing those rates helps the Big Rich. For corporate income tax the correlation coefficient, r = -0.83, and the coefficient of determination, COD = r2 = 0.68. That means that 68% of the variation in income share could be due to variations in corporate tax rates. In the case of capital gains tax, r = -0.68 and COD = 0.46: no more than 46% of the variation in income share can be due to changes in the capital gains tax rate alone. Figures 12 and 13 illustrate.
FIGURE 12
FIGURE 13
If we take both tax rates together (multiple linear regression) then COD = 0.86, and the two rates seem to make nearly equal contribution. So variation in the two tax rates could possibly be responsible for 86% of the variation in the top 1% income share; when either goes down, the income share goes up. However, just because it is possible that these two tax rates have caused the income share to change, does not mean that they really are the cause. Correlation does not prove causation, and if there is a causal relationship it could go the other way, or both ways: more income share could cause lower tax rates through greater political power. As Robert Reich has written, “Economic dominance feeds political power, and political power further enlarges economic dominance.”[20]
As we shall see, there is another variable that has an even greater correlation with the income share of the top centile.
Unions
President Reagan may not have had the same visceral hatred of labor unions as many other conservatives, but his actions in the air traffic controllers’ strike of August 1981 could not have been more drastic if he did. The strike was illegal and ill-considered, but he could have broken it by using the supervisors and air traffic controllers who crossed the picket line, along with military personnel, as he did, without firing all the strikers, jailing some union leaders, and breaking the union. He had been well-tutored by his conservative, anti-union bosses at GE for whom he worked in the years 1954-1962[21].
Unfortunately union membership had been decaying well before the “Reagan Revolution”, as shown in Figure 14[22], from a high of around 35% of the employed workforce in the 1950’s down to 20% in 1980. Union membership expressed as a percentage of employed workforce is often called “union density”. Figure 14 shows a temporary plateau around 20% to 22% for 1975-1980, but then a steep, monotonic drop during the whole Reagan administration, ending at 12.5% in 1988. To quote Robert Reich, “Ronald Reagan’s notorious firing of the nation’s air traffic controllers for going on strike – something he had every right to do because they had no right to strike – also signaled to the nation’s large employers that America had embarked on a different era of labor relations.”[23]
FIGURE 14
Conservatives don’t like to say “unions” and certainly not “union members”. Instead, like their newspeak for the rich, they prefer to say “union bosses”, hoping to conjure up images of corrupt, cigar-chomping thugs, as if union leaders were chosen in a less democratic manner than corporate leaders. Conservatives, the rich, and Republicans insofar as they work for the rich, have good reason to hate labor unions. Labor unions represent a “countervailing power”[24] that can check the excessive greed of the rich and powerful. This countervailing power consists not just of negotiating better wages for their members, but also, and probably primarily, of their political power when union density is high.
Figure 15 is a scatterplot of top centile income share versus union membership and shows the strong inverse relationship. Most points fall within an easily discernible band with little scatter, but the band is curved, not straight. In fact, an exponential decay function fits the points amazingly well, yielding COD = 0.904; over 90% of the variation in income share can be explained by this one variable. Union membership can account for more of the income share variation than either corporate income tax rate or capital gains tax rate or both of those taxes together. All three variables together, in multiple linear regression, can account for about 93% of the variation. We should keep in mind that any causation can be in both directions. Because union membership has gone down, chronologically we have been traversing the curve in Figure 15 right to left; the first and last years’ data points are marked.
FIGURE 15
Smaller Government
Smaller government and, concomitantly, less government regulation of business, was one of the key principles of Reagan and his supply-siders, and remains a mantra of conservatives to this day. Just get government out of the way and “natural market forces” will fix all problems. The underlying truth is stated by Reich, “As the economic historian Karl Polanyi recognized, those who argue for ‘less government’ are really arguing for a different government – often one that favors them or their patrons.”[25] In any case, The Reagan administration did not really shrink the federal government, at least as far as government employees are concerned. As Figure 16 shows, the federal payroll grew every year of his administration after 1982, reaching numbers by 1988 not seen before or since except for temps hired in the census year 1990[26]. So smaller government was just one more promise on which Reagan and his supply-siders never delivered.
FIGURE 16
Perhaps it is just as well that they didn’t, because, like every other supply-side or conservative idea, it is totally wrongheaded. Reich says it best[27] , “Few ideas have more profoundly poisoned the minds of more people than the notion of a “free market” existing somewhere in the universe, into which government ‘intrudes’.” And[28], “Government doesn’t ‘intrude’ on the ‘free market.’ It creates the market.” It is significant that the earliest known set of written laws, the Code of Hammurabi (~1700 BC), has many laws governing business, including the fixing of some prices.
Conservatives would like us to believe in the mythical “free market” because[29], “Power and influence are hidden inside the processes through which market rules are made, and the resulting economic gains and losses are disguised as the ‘natural’ outcomes of ‘impersonal market forces.’” Whenever government help for the poor or middle-class is proposed, conservatives rail against “wealth redistribution”. However, as Figure 1 shows, any wealth redistribution is upward. Again, Reich puts it most clearly[30], “But this upward redistribution is invisible. The main conduits for it are hidden within the rules of the market – property, monopolization, contract, bankruptcy, and enforcement – rules that have been shaped by those with substantial wealth and political clout.”
Although conservatives hate to admit it, we need government, big government. Hacker and Pierson[31] point out, “There are no rich countries with small governments – governments that spend and regulate little, governments that eschew public investment.” The exceptions are the few Middle East oil-rich kingdoms. It was the federal government that brought penicillin from the laboratory to a publicly available drug. In 1995 an MIT study found that government research had produced 11 of the 14 most medically significant drugs over the prior 25 years[32]. In addition government funding was responsible for semiconductors, integrated circuits, nuclear power, satellite communications, GPS, radar, microwave technology, jet engines, radio, television, and high tech materials. Conservatives want small government for one reason: it won’t then prevent the rich from doing what they have always done - privatizing the profits and socializing the costs. In Hacker and Pierson’s words[33], “Weak government doesn’t mean efficient government. It means government that gives away the store to the rent seekers.”
These authors have compiled a list of things that the “natural market forces” don’t do well, or at all, and that government can do.[34]
· Provide key collective goods that markets won’t (education, infrastructure, courts, basic scientific research);
· Reduce negative spillover costs that parties to market exchanges don’t bear fully, such as pollution;
· Encourage positive spillover benefits that such parties don’t take fully into account, such as valuable shared knowledge;
· Regulate the market to protect consumers and investors – both from corporate predation (collusion, fraud, harm) and from individuals’ own myopic behavior (smoking, failing to save, underestimating economic risks);
· Provide or require certain insurance protections, notably, against the costs of health care and inadequate retirement income;
· Soften the business cycle and reduce the risk of financial crisis.
Although it is difficult to discern any way in which the Reagan administration made the federal government smaller, it was not without effect on government. Economist Jeffrey Sachs[35] has written, “The main effect of the Reagan Revolution, however, was not the specific policies but a new antipathy to the role of government, a new disdain for the poor who depended on government for income support, and a new invitation to the rich to shed their moral responsibilities to the rest of society.”
Class Warfare
Anyone who points out the extreme and growing income and wealth inequality, illustrated by Figure 1, is accused by the rich of fomenting “class warfare” or promoting the “politics of envy.” More truthfully, one uncommonly perspicacious billionaire, Warren Buffet, said, “There’s class warfare all right. But it’s my class, the rich class that’s making war, and we’re winning.”[36] This war of the rich against the rest of us did not start with the Reagan election of 1980; that was just its first major victory. The beginning of the war can be traced back at least to the Goldwater presidential candidacy of 1964, and perhaps as far back as the founding of The John Birch Society in 1958; the father of the notorious Koch Brothers, Fred Koch, was one of the original 11 members of that group.[37] The brothers, Charles and David Koch, beginning in the 1970’s “subsidized networks of seemingly unconnected think tanks and academic programs and spawned advocacy groups to make their arguments in national political debate.”[38] Sometimes those advocacy groups were phony “grass-roots” groups with misleading names.
Another early warrior for the wealthy was Lewis Powell, then a corporate lawyer but soon to be appointed to the Supreme Court, who in 1971 wrote for the U.S. Chamber of Commerce what amounted to an attack plan for the oppressed rich to take back control of the country[39]. By the mid-70’s this rise of the rich had become, to borrow Paul Simon’s words, “A loose affiliation of millionaires and billionaires”[40] all outraged that government tried to tell them that they couldn’t pollute, evade taxes, pass off shoddy products, profit from insider information, etc. They fervently believed that they had the right to do whatever their fabulous wealth allowed them to do. “They said they were driven by principle, but their positions dovetailed seamlessly with their personal financial interests.”[41] Politics of envy, meet politics of greed.
The Koch Brothers did not support Reagan in the 1980 election because he was not far enough right. In fact, they finagled to get David on the Libertarian ticket; since he was a candidate, he could spend as much as he wanted on the campaign. However, even troglodyte conservatives soon came to realize that Reagan was a candidate who, due to his affability and face and name recognition, could win elections and advance their agenda.
The war of the Big Rich against the rest of society continues to this day, through think tanks like the Cato Institute or the Heritage Foundation, or political groups like Americans for Prosperity (AFP). These organizations are filled with True Believers, every bit as doctrinaire and devious as any Soviet commissar, and just as willing to sacrifice the welfare of ordinary citizens in their quest for ideological purity[42]. These groups often base their arguments on the sacred principle of “liberty”, but as Isaiah Berlin has said, “Total liberty for wolves is death to the lambs.”[43]
President Reagan
By all accounts Ronald Reagan was a genuinely nice guy. It seems unlikely that he consciously wished to take from the poor to give to the rich. It’s just that he came to actually believe the fabulous nonsense spewed by conservatives and supply-siders, even when they didn’t and were just cynically feathering their own nests. Because he was himself a true believer, and likable, he could give great speeches full of falsehoods, and still be believed by the American public. “The assertion that big government had destabilized the economy was doubtful on its face, but Reagan uttered his ideas with such conviction and charm that an unhappy public was ready to vote him into office.”[44]
He regularly told inspirational stories, which were totally false, to make his points. One was about a mysterious stranger at Independence Hall as the Declaration of Independence was being debated, whose inspiring speech pushed the delegates to all rush to sign; then he disappeared without a trace and no one ever knew who he was[45]. Of course, no such events ever took place. His favorite was about a crippled B-17 bomber in World War II going down and all the crew bailing out, except the ball turret gunner could not extricate himself, so the co-pilot stayed with him saying, “Never mind son, we’ll ride it down together.” Supposedly the co-pilot received a posthumous Congressional Medal of Honor, but no Medal of Honor was ever awarded for any feat in the war remotely resembling this story. Yet he regularly teared up when telling this fable.[46] He told these stories convincingly because, in his fatuousness, he believed them. Like so many conservatives, he lived in a make-believe world in which business leaders were good and government was bad because it interfered with their heroic activities. George Babbitt transformed by puerile fantasy into John Galt.
It is possible, in his old age (he was one month shy of 70 when he was inaugurated in 1981), that he confused the many movie scripts he’d read with reality. The B-17 story sounds just like a story line of a typical Hollywood World War II movie. He spent the war making war movies for Jack Warner who was doing his part to please Hap Arnold, the commander of the Amy Air Force. Reagan helped with production, did voiceovers, and played some parts in these movies glorifying the Air Force.[47]
It is also possible that the serious bullet wound from the assassination attempt, just 9 weeks after his inauguration, brought on the very first symptoms of the Alzheimer’s disease that was ultimately to consume him; traumatic injuries can do that. Representative John Dingell (D – MI) told a rather alarming story[48] of a meeting later in 1981 in the Roosevelt Room of the White House, at which Dingell was present. President Reagan began to read a speech from his 3X5 cards that had nothing to do with the purpose of the meeting, until an aide came into the room and replaced the cards with a new set. Reagan continued on from the new cards with a speech appropriate to the subject of the meeting, apparently never noticing anything amiss.
It is certain that the Reagan Revolution set the nation on the road toward government of the people, by the rich, for the rich. As Sachs says of Reagan, “He not only curbed the government’s steering of the economy but also, wittingly or not, turned the levers of power over to the highest bidder.”[49] Subsequent administrations did little to slow, and often much to accelerate, progress toward pure plutocracy. The top marginal corporate income tax rate has never again been as high (46%) as it was when Reagan took office and the top marginal individual income tax rate has never again been even as high (50%) as it was after the first Reagan tax cut. The top marginal long-term capital gains tax rate has been below 20% for much of this century, and with recent increases has still remained below the 28% rate in effect when Reagan took office. Sachs puts it most succinctly, “Washington’s obeisance to the rich while squeezing the poor has so far proved to be bipartisan and durable.”[50]
Renowned Supreme Court justice (1916-1939) Louis Brandeis long ago wrote, “We must make our choice. We may have democracy or we may have wealth concentrated in the hands of a few, but we can’t have both.” [51] As of 2010 the top 1% of households had more wealth than the bottom 90%[52].
Gary Waldman
October 2017
Bibliography
1. Brands, H.W. – Reagan, The Life – Anchor Books, New York (2016)
2. Draper, Robert – When the Tea Party Came to Town (originally published as Do Not Ask What Good We Do) – Free Press, New York (2012)
3. Gilens, Martin – Affluence and Influence, Economic Inequality and Political Power in America – Princeton University Press, Princeton NJ (2012)
4. Hacker, Jacob & Pierson, Paul – American Amnesia, How the War on Government Led Us to Forget What Made America Prosper – Simon & Shuster, New York (2017)
5. Hogler, Raymond L. – The End of American Labor Unions, The Right-to-Work Movement and the Erosion of Collective Bargaining – Praeger, Santa Barbara CA (2015)
6. Johnson, Haynes – Sleepwalking Through History, America in the Reagan Years – Norton and Company, New York (2003)
7. Johnston, David Cay – Perfectly Legal, the Secret Campaign to Rig Our Tax System to Benefit the Super Rich and Cheat Everybody Else – Penguin Group, New York (2003)
8. Klein, Naomi – The Shock Doctrine, The Rise of Disaster Capitalism – Henry Holt & Co, New York (2007)
9. Mayer, Jane – Dark Money, The Hidden History of the Billionaires Behind the Rise of the Radical Right – Doubleday, New York (2016)
10. Piketty, Thomas – Capital in the Twenty-First Century – The Belknap Press of Harvard University Press, Cambridge MA (2014)
11. Quiggin, John – Zombie Economics, How Dead Ideas Still Walk Among Us - Princeton University Press, Princeton NJ (2010)
12. Reich, Robert B. – Saving Capitalism, For the Many Not the Few – Alfred A. Knopf, New York (2015)
13. Sachs, Jeffrey D. – The Price of Civilization, Reawakening American Virtue and Prosperity – Random House, New York (2011)
14. Smith, Hedrick – Who Stole the American Dream? – Random House, New York (2012)
15. Stiglitz, Joseph E. – The Price of Inequality, How Today’s Divided Society Endangers Our Future – W.W. Norton & Co., New York (2012)
16. Vogel, Kenneth P. – Big Money, 2.5 Billion Dollars, One Suspicious Vehicle, and a Pimp – On the Trail of the Ultra-Rich Hijacking American Politics – Public Affairs, New York (2014)
17. Williams, Joan C. – White Working Class, Overcoming Class Cluelessness in America – Harvard Business Review Press, Boston MA (2017)
[1] Data from Piketty & Saez – www.eml.berkeley.edu~saez/TabFig2015prel.xls. Income includes capital gains but not government transfers. This is sometimes called “market income”.
[2] Congressional Budget Office, “The Distribution of Household Income and Federal Taxes, 2013,” June 2016. www.cbo.gov/publication/51361. Open “Supplemental Data” located near the end of the article.
[3] Haynes Johnson – Sleepwalking Through History – W. W. Norton & Co., New York (1991), pps. 19-23
[4] The Tax Foundation – www.taxfoundation.org – You can download an Excel file containing all individual income tax rates and brackets from 1913 to the present.
[5] I used the inflation calculator of the Bureau of Labor Statistics website, www.bls.gov, to convert 2013$ of reference 2 to 1982$.
[6] Reference 2
[7] H.W. Brands – Reagan, the Life – Anchor Books, New York (2016), p. 260. Or Reference 3, pps. 98-99
[8] Reference 3, p. 110
[9] Data from the Office of Management and Budget, www.whitehouse.gov/omb, Click on “Budget” on the left side of the page, then go to “Historical Tables.” Table 1.3.
[10] The first year of each administration is marked by a vertical line.
[11] Joan C. Williams – White Working Class – Harvard Business School Publishing, Boston (2017), p.16
[12] www.census.gov/topics/income-poverty/income.html. You can find “A Guide to Statistics on Historical Trends in Income Inequality” on the Center for Budget and Policy Priorities website www.cbpp.org which explains the different methods used by References 1, 2, and 12.
[13] Data from the Bureau of Labor Statistics, www.bls.gov, Series Report CES0500000001 (all private sector jobs)
[14] T. R. Reid – A Fine Mess – Penguin Press, New York (2017), p. 69
[15] Ibid, p. 70
[16] Ibid, p. 71
[17] Martin Gilens – Affluence and Influence – Princeton University Press, New York (2012), p. 91
[18] Ibid, p.155
[19] Data from Bureau of Economic Analysis, www.bea.gov
[20] Robert Reich – Saving Capitalism – Alfred A. Knopf, New York (2015), p. 98
[21] Reference 7, pps. 122-125, or Reference 3, pps. 56-58
[22] Data (1950-1982) from a B. Hirsch article in Journal of Economic Perspectives, Winter 2008 available at www.unionstats.com. Also data (1983-2016) from the U.S. Bureau of Labor Statistics www.bls.gov: use “Data Tools” button and choose Series Report LUU0204906600
[23] Reference 20, p 143
[24] Jacob Hacker & Paul Pierson – American Amnesia – Simon & Shuster, New York (2017), p. 106
[25] Reference 20, p.22
[26] Data from Bureau of Labor Statistics, www.bls.gov, Series Report CES9091000001
[27] Reference 20, p. 19
[28] Ibid, p. 21
[29] Ibid, p. 28
[30] Ibid, p. 167
[31] Reference 24, p. 78
[32] Ibid, p. 62
[33] Ibid, p. 350
[34] Ibid, p. 9
[35] Jeffrey Sachs – The Price of Civilization – Random House, New York (2011), p. 26
[36] Quoted in Jane Mayer – Dark Money – Doubleday, New York (2016), p. 298
[37] Ibid, p. 47
[38] Ibid, p 11
[39] Ibid, pps. 85-88
[40] A line in Paul Simon’s song “The Boy in the Bubble” from the Graceland album (1986)
[41] Reference 36, p. 12
[42] Naomi Klein – The Shock Doctrine – Henry Holt & Co., New York (2007), pps. 26-28
[43] Quoted in Reference 36, p. 177
[44] Reference 35, p. 46
[45] Reference 3, p.59
[46] Ibid, p. 60
[47] Reference 7, pps. 56-57
[48] Recounted in Robert Draper – When the Tea Party came to Town (originally published as Do Not Ask What Good We Do) – Free Press, New York (2012), p. 128
[49] Reference 35, p. 41
[50] Ibid, p. 41
[51] Quoted in Hedrick Smith – Who Stole the American Dream – Random House, New York (2012), p. 9; also Reference 24, p. 9 and Reference 36, p. 346
[52] Reference 35, p. 20
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