We've heard this story many times before, and it rarely seems to end well. You know the line: If only we put more money into the hands of corporations and individuals -- particularly those who are already swimming in it -- and loosen the regulations stifling free enterprise, unfettered capitalism will handle the rest. The wealthy will spend, corporations will invest and hire, and profits generated as a result will trickle down for all to enjoy.
If only it worked out that way in reality. This was the mantra embraced by Republicans as far back as the 1920s -- when they controlled the levers of government as they do today -- and what did Americans get as a result? An unprecedented economic collapse and the Great Depression.
Fifty years later, Ronald Reagan came along and promised much of the same. He got his big tax cuts early in his administration, and sure enough, the long-slumping economy soon enough turned around. Vindication, right? Not quite. For one thing, the economic ills of the 1970s and early 1980s largely boiled down to the unique problem of stagflation -- a stagnant economy and runaway inflation -- rather than tax rates. Most economists credit the Federal Reserve's high interest rate policy -- not Reagan's tax cuts -- that finally snuffed out inflation and lit a fire under the economy. As for the tax cuts, far from trickling down to the masses, they helped lead to the massive income inequality we see today, never came close to paying for themselves, and ultimately blew a hole in the deficit that forced both Reagan and George H.W. Bush to enact tax increases.
Of course, the flip side of the Republican argument that tax cuts for those at the top unleash economic growth is that tax hikes on those at the top stunt growth and deter investment. At least, that's what they promised would happen after Bill Clinton hiked taxes in the early 1990s to address the growing deficit. The result? One of the greatest economic booms of the 20th century. Go figure.
But the clear evidence that the Republican tax mantra was not supported by any real evidence didn't stop George W. Bush from clinging to it yet again when he took office in 2001. With the economy finally slowing after years of stunning growth, Bush and the Republicans turned to -- you guessed it --- tax cuts as the answer. Those cuts were coupled with trillions of dollars spent on wars in Afghanistan and Iraq (after all, it's soldiers, not taxpayers, who should have to sacrifice in time of war), again blowing a hole in the deficit, and a general attitude toward letting Wall Street and the financial industry do whatever they want (because, after all, that thirst for profit will ultimately trickle down to the rest of us; as the 1980s taught us, "Greed is good."). With Republicans again in total control of government for much of the early 2000s (as they were in the 1920s), they stuck to the old playbook of low taxes, loose money and little regulation. We also know how that story ended, much as it did the first time around. We got the Great Recession, which easily could have been another depression if not for Barack Obama's shrewd stewardship of the crisis, for which he got unbelievably little credit as Republicans and voters assailed him for not fixing things quickly enough. For Obama, it was a little like stopping the car from plunging off the cliff, only to be relentlessly criticized for leaving it with some scratches.
And as we saw with their votes on the tax bill in the dark of night Friday (complete with scribbled pages of last-minute changes), Republicans are intent sticking with that dust-covered 1920s playbook that should have been tossed into the ash heap of history long ago. When your favorite plays keep ending in disaster for your team, most coaches know that it's time to change things up. But that's a lesson apparently lost on politicians, who rarely have to pay the price for their misadventures in the name of ideological purity.
Will the Republicans and their backers finally show some accountability if their latest foray into tax cuts once again fails to deliver on their promises? That would be a first. The more likely outcome is that the harmful effects of the policy won't be felt for years, by which time the architects of it will be long gone and already pointing fingers and placing blame on those who have the misfortune of being tasked with cleaning up a mess they didn't create, as happened in the late 2000s. That's the way it usually happens in a world where voters place their trust in the hands of politicians who tell them what they want to hear, rather than taking the time to learn what history has taught us all time and again.
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