Has Kansas Found the Cure for the Reaganomics Disease?
Reaganomics is like a bad disease; It just keeps on spreading. Thanks to 34 years of failed Reaganomics, the gap between the wealthy elite in America and everyone else is at an all-time high.
Since 2009 alone, a staggering 95% of all income gains have gone to the top 1%, while everyone else has been left out in the cold. And while conservatives will never admit it, the staggering levels of income inequality that Reaganomics has created are bad for the economy.
As Barry Cynamon and Steven Fazzari point out in a recent paper, inequality hinders overall economic growth, and as a result, is a major reason why America’s recovery from the Great Recession has been so slow. But the record levels of income inequality created by Reaganomics aren’t just hurting on the national level.
They’re hurting on the state level too. A new report released by Standard & Poor’s reveals that while the gap between the wealthiest Americans and everyone else has been increasing, state tax revenues have been decreasing. So why is that?
Well, simply put, while the wealthiest Americans are making more and more money, they’re paying less and less of it in the form of taxes.
First, they’re doing everything in their power to shield their income from taxes, so they can keep more of it. And, the wealthy elite also typically spend less of their wealth proportionally then everyone else, meaning less of their money goes towards sales tax revenue for the states and less stimulus to the economy.
So, as income inequality is rising, states are taking in less and less in tax revenue and finding it harder and harder to fund things like education, transportation, and social programs. It's another classic example of how the disease of Reaganomics is destroying our country.
Fortunately, some people are catching on to just how dangerous Reaganomics is, and are trying to protect themselves from it.
That’s where Kansas comes in. Two years ago, Kansas, under the direction of Republican Governor Sam Brownback, decided to give Reaganomics a try. That state slashed income taxes, as part of the largest tax cut in one year in any state ever.
In 2012, the Kansas legislature slashed individual income taxes by 25 percent. In 2013, that same legislature passed even more tax cuts, with the premise that the cuts would help spur economic growth. Governor Brownback even promised the people of Kansas that, “Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy.”
But as you can imagine, that “pro-growth tax policy” has been more like a shot of poison to the Kansas state economy. Job growth in Kansas trails the nation. That state’s rainy-day fund is dryer than a California desert. And month after month, revenue is coming in consistently lower than even the worst predictions could have imagined.
The situation is so dire that both Moody’s and Standard & Poor’s have downgraded Kansas’ credit rating. But, despite Kansas’ economy being in the tank, Governor Brownback took to the op-ed page of The Wall Street Journal earlier this summer, and said that, “the early results are impressive.”
Unfortunately for Governor Brownback, not everyone agrees with that statement. And that includes Republicans. As The New York Times points out, “Although every statewide elected official in Kansas is a Republican and President Obama lost the state by more than 20 points in the last election, Mr. Brownback’s proudly conservative policies have turned out to be so divisive and his tax cuts have generated such a drop in state revenue that they have caused even many Republicans to revolt.” And it looks like Brownback isn’t the only one in hot water come November.
Incumbent Republican Senator Pat Roberts is facing a very tough competition from an independent candidate. Basically, what’s going on here is that people in Kansas, including Republicans, are realizing that Reaganomics isn’t the answer to America’s economic problems. It’s more like the cause of the problems. The people of Kansas are seeing first-hand how enacting policies that only benefit the wealthy elite can bring an entire economy to its knees.
Make no mistake about it. Reaganomics is a disease, and if we let it continue to spread untreated, like it has for the past 34 years, the results will be dire. It’s time for Americans across the country to stand up, and say enough is enough. No more Reaganomics.