Great Supply Side Scam -Exposed

The Great Supply-Side Scam – Exposed

One of my favorite themes in American movies is the elegant con job, where the perpetrators pull off the perfect heist against all odds – with strategy and wit. But clever scams can happen in real life too, and I am going to tell you the story of the greatest con of all time. The con that outconned the best cons in history. The cons we admired. The cons we adored. None of them held a candle to this – The Great Supply-Side Scam. In three parts. Part One. Reaganomics.

The scam began in 1981, when Ronald Reagan introduced Supply Side Economics as the master plan to balance the federal budget and achieve broad-based prosperity for all American workers. Now, all scams need a cover story and this one was no exception. The hook was this: We will cut taxes for job creators (that is, rich people), which will stimulate business investment, which will lead to more jobs with better pay, which will grow the economy. As the money flows downstream, the rising tide will lift all boats, and the federal deficit will just… melt away.

Now, it was important not to tag rich people as the winners in this nefarious scheme, so the scammers were careful to call them “job creators” – the virtuous members of society to whom all workers owe a debt of gratitude. Thus, the scam was born. Reagan and his team got off to a quick start, with massive tax cuts for the rich. Unfortunately, we didn’t have the money to pay any of the job creators, so we borrowed every penny of the tax cuts, which immediately led to a huge loss of federal revenue and a massive increase in the federal deficit. Astonishingly, Reagan tripled 200 years of national debt in just 8 years.

In 1993, Bill Clinton did the unthinkable. He reversed those tax cuts and increased taxes on the wealthy. My, the Republicans howled. Over the next eight years, however, Clinton turned a giant deficit into a substantial surplus, and created 23 million new jobs – an all-time record. With tax increases for the rich.