Even Richard Nixon Knew that Trickle Down Economics Was a Scam
Despite its flaws, I read and enjoyed Destiny and Power, Jon Meacham’s new biography of George H.W. Bush. Meacham, who is a brilliant presidential biographer, gives Bush a little too much credit for being a decent man when he should have probed harder into Bush’s inability to be a decent leader. Privately, Bush was smart and reasonable about a number of issues—he seemed to oppose Dick Cheney’s lust for war during George W. Bush’s presidency, for example, and he was a moderate on abortion—but publicly, he failed to lead.
Another example of Bush’s failure to lead? His stance on trickle down economics. During the 1980 presidential campaign, Bush rightfully ridiculed Ronald Reagan’s plan to provide tax breaks for the wealthy as “voodoo economics.” This is a term that caused the Reagan administration a lot of trouble after they brought Bush onboard as vice president:
But even though Bush, as was his style, became an avid public supporter of trickle down economics, he privately understood that it was a scam. This passage from Chapter 31 of Destiny and Power indicates that the most influential members of the Republican Party understood it, too.
On a snowy Saturday in in January 1987, Richard Nixon had come by to see Bush at the vice presidential reside. Nixon loved to talk politics, and he had handicapped the ’88 race for Bush. The most prescient thing the former president had said in the three-and-a-half hour session, though, was about governing, not running. “George, you know you were right about ‘voodoo economics,’ don’t you?” Nixon had asked. “We’ve got to handle the deficit. You know there is going to have to be a tax increase.”
Nixon’s prediction had proven accurate. The month Bush defeated Dukakis, the General Accounting Office projected that tax increases “are probably an unavoidable part of any realistic strategy for reducing the deficit.” Former presidents Ford and Carter also told Bush and Dick Darman that, as they put it, “based on definitive analysis, it would be very difficult to balance the budget without some considerable increase in revenues.”
And so even after candidate Bush promised in 1988 that he would not raise taxes as president—”read my lips,” and all that—President Bush raised them anyway. Because he understood, as most political leaders at the time understood, that trickle down economics was an unsustainable quick-fix solution. But over time, in part through the negative response to Bush’s raising of taxes, it somehow became codified into a law of nature. But—here’s something I never thought I’d write—Richard Nixon was right. Trickle down economics is voodoo economics, and voodoo economics just doesn’t work. It’s led to gross inequality and a stagnant middle class, just as everyone predicted it would in the 1980s. Destiny and Power is a great reminder that there was a time, not so long ago, when those in power understood the scam behind trickle down economics. We’re finally rediscovering the truth that they instinctually understood back then.
