by Nomad
PART ONE- David Stockman
PART TWO- Trickle Down
In this post, we will look at who actually benefited from the con known as Reaganomics. The answer might surprise you.
Between Words and Deeds
If Ronald Reagan hadn’t existed, then the neo-conservatives would have had to invent him. In some respects, that’s exactly what they did. It seems sadly ironic that Reagan is more valuable as a myth to the Republican party than when he was a living president. He has allowed them to hold on to a very useful fantasy.
Moreover, he has been used time and time again to justify inexcusably outrageous tax cuts for the minority of the population that clearly needs them the least. Besides, it would highly be embarrassing to have the real Reagan contradicting his own myth-makers and exposing them as hypocrites and frauds.
The Great Brokaw Excuse
Here’s a case in point. As far as back as 1983, people were beginning to whisper about the fashion sense of Emperor Ronald.
In an interesting interview by Frank Browning of Mother Jones Magazine, NBC reporter Tom Brokaw said with admirable bluntness,
I thought from the outset that his "supply side" theory was just a disaster. I knew of no one who felt that it was going to work, outside of a small collection of zealots in Washington and at USC (The University of Southern California) Arthur Laffer, Jack Kemp.
What I thought was quite outrageous was that the business community which for years had carped and complained that it could never get a president sympathetic to its needs, finally got its champion, Ronald Reagan. Then, to its horror, it discovered that he was actually going to press ahead with supply side- a theory who disastrous consequences business people began to prepare for, but did not publicly warn the rest of the country about. They knew it simply could not work. But what they did was look to their own little life raft and not to anyone else's.
(As we shall see those will be very ironic words for Brokaw.)
Browning asked Brokaw what made Reagan special in terms of his relationship with Big Business. Haven't all presidents in the last 30 years, he asked, been sympathetic to big business? Brokaw responded:
Big Business has more access to him. There's less to offset big business' influence on Ronald Reagan from a political point of view, than there has been on any other president in the past. Even Richard Nixon has a stronger sense of what was politically possible and what was not.
The interviewer then turns the tables on Brokaw.
Browning: As we sit here talking, your comments on Reagan, the Corporate President, are sharp and incisive. Yet when you covered the same territory on television, in the midterm special, it all seem like so much mishmash. The points were diffuse and it felt superficial.
Why didn't he speak so courageously on the air, when it counted? the writer asks.
Brokaw tried to dodge the question by discussing the same point made in a cartoon. (That all-of-us-are-to-blame defense.)
Finally, he lamely admitted, "I suppose your point is well-taken."
Browning: You just criticized members of the business community for keeping their mouth shut even though they knew Reagan's ideas were idiotic.Brokaw: Right.
Browning: Now I suppose you can't say the president is an idiot on national television. But aren't you guilty of the same thing?
Brokaw: You would have been happier if I had just said. "Maybe the business community will finally have the courage to tell this guy to his face that his program is not working."
Browning: That would have been a lot straighter.
Brokaw: But part of what governs our thinking is the whole business of "Is it balanced? Is this a fair and balanced program? The Washington Post said our program was quite tough on the president. I thought it was a fair report on what people are saying."
Basically, this is a rationalization for not informing the public that the president is hoodwinking them. Strange excuse, isn't it? Unbiased reporting was more important than simply telling the truth. Brokaw unconvincingly attempts to hide behind phony insecurities of fairness (using that now-dreadful phrase “fair and balanced”)
This has become the excuse de jour for all mainstream media as if being balanced permits a journalist to hide the truth.
Yet, there’s more than meets the eye in the interview. The thing that Brokaw fell just short of saying, but the point that the interviewer successfully exposed is that when it came to revealing to the American public the truth about Reagan and his economic plan, Tom Brokaw had become just as much of a deceiver as big business. Perhaps his guilt was even greater since it was specifically his job to inform the public- not big business.
What even the Mother Jones interviewer naively failed to note was that Brokaw, as a top reporter for NBC, was little more than a hired shill for the very same corporations he had just hypocritically derided.
One may or may not forgive Brokaw’s past shortcomings but how can one excuse his passing the same Reagan nonsense to a new naive generation?
In February of 2011, now “legendary” Tom Brokaw found himself at the Ronald Reagan Presidential Library, moderating a two-day discussion panel on the legacy of Ronald Reagan before a crowd of more than 500 students, scholars and Reagan admirers.
"A pure product of Main Street, Heartland America. He even looked the part,” he told the audience,”"People were comfortable with him from the very beginning."
Terms like "product" and "looking the part" are hidden messages lost on the adoring crowd. The underlying message is public relations- the bastard son of leadership. Meanwhile, other speakers took up the usual Reagan refrains, slipping into the well-trodden land of Reagan fantasyland. As another speaker said:
"Ronald Reagan was a great president, and he will be remembered in history for one thing, winning the Cold War," exclaimed Reagan biographer Lou Cannon to a standing room only crowd.
The ironies do not stop there. The event was organized by various partnering foundations at the USC- that’s correct, at the University of Southern California- the very spot Brokaw sneered at in 1983 as being a hangout of Reagan zealots.
Proving that truth sometimes spills out even in the most unlikely and unpromising situations, another speaker, Richard Reeves, author of "The Last Campaign: Legacy," an academic paper prepared for the symposium, astutely noted:
"Reagan was not a great president but was great at being president.... He understood that words were often more important than deeds for the leader of a sprawling and diverse nation..”
So much could be read into a statement like that and yet, so few people seem to have the courage (or perhaps the integrity) to come right out and say what the historical evidence clearly proves. Even now, among certain quarters, the truth must be left to cryptic blurbs and subtle remarks.
Columnist Matt Lewis notes, the 6th largest firm in the U.S, as well as the 14th most profitable, General Electric, ran ads honoring the 40th president's legacy --and donated $10 million to the Ronald Reagan Presidential Foundation and Library, along with additional $5 million in scholarships.
Even though they could never admit it, historical research reveals that General Electric owes Ronald Reagan a lot more than that "chicken feed."
Reagan and the General Electric Theater
It should surprise nobody that NBC Nightly News anchor Brokaw would have been a tad reluctant to expose Reagan.
After all, General Electric owned NBC Nightly News. It was also a major defense contractor and an international player on the world market. Brokaw knew what most people who work for large corporations understand without being told: There are things you should and should not do.
Reagan had worked for GE before his political career and for the actor with a fading career, the partnership turned out to be a lucrative relationship. He had worked eight years as host (and part owner) of GE Theater, a popular TV show starting September 26, 1954, and ending May 27, 1962.
He also worked on another project for GE. Wikipedia tells us:
...Reagan estimated he had visited 135 GE research and manufacturing facilities, and met over a quarter-million people. During that time he would also speak at other forums such as Rotary clubs and Moose lodges, presenting views on economic progress that in form and content were often similar to what he said in introductions, segues and closing comments on the show as a spokesman for GE.
Over time, Reagan was becoming increasingly political. According to Reagan biographer Michael Schaller,
Year in and year out, in speeches he wrote himself, Reagan warned audiences about the perils of big government, creeping regulation and communism. Corporate leaders, he argued, defended American freedom, depsite the burden of high taxes, impediments to the free market and other anti-business measure imposed by Democrats.
Eventually, Democrat GE spokesperson Reagan would transform, like a political butterfly, into Republican candidate Ronald Reagan.
The record shows that Reagan seems to have undergone a kind of political grooming -with the kind assistance of GE. According to GE website:
At the time, GE published four publications and all were required reading for the president. These newsletters and magazines covered topics ranging from government and the economy, to company bowling results. Reagan used the material to communicate more effectively when giving speeches and talking informally to thousands of GE factory workers.
Train travel and chauffeured car trips to company plants, allowed him to read the economic texts of writers Henry Hazlitt and Louis Haney and immerse himself in Sun Tzu’s “Art of War” and Friedrich Hayek’s economic and political writing. Both Hazlitt and Haney were especially influential in shaping Reagan’s views on deficit spending. From an article in “The Forum” (A GE defense quarterly) came the seeds for the Strategic Defense Initiative.
And you thought Star Wars was Reagan's idea?
From TV star to Conservative Politician
The love affair between GE and Reagan ended suddenly, according to biography notes. Reagan was dismissed in response to his reference to the TVA as one of the problems of "big government." That's the official story. (Ratings for the show had also been declining.)
Officially GE fired Reagan from his television gig citing- paradoxically enough, his outspoken political views which the corporation had taken great pain to re-shape. But, was the decision to fire Reagan all just a bit of theater on General Electric's part?
President Dwight Eisenhower on January 17, 1961, delivered his famous farewell address to the nation. In it, he warned the American people of the dangers of the unregulated growth of the military industrial complex:
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
Just over a year later, Ronald Reagan's political career began. Once president, Reagan oversaw the largest peacetime military build-up in history, leaving GE millions of dollars richer.
That was just the beginning.
That was just the beginning.
According to a report by Boston-based INFACT, GE's nuclear weapons prime contract awards increased threefold during the Reagan years-- from $2.2 billion in 1980 to $6.8 billion in 1986. GE's 1988 annual report cites aerospace as one of the big growth areas in its operations.
Much of its income in this field derives from government contracts. The report notes that GE revenues for aerospace operations were 22 percent higher in 1987 over 1986, increasing from $4.3 billion to $5.2 billion.
There was also the B-1 bomber program in 1981 represented one of GE's most lucrative contracts, in spite of the fact that the bomber has long been discredited as a viable or necessary weapon.
The controversial B1 bomber program was actually a Rockwell project. Rockwell International was, as one source notes, "a mammoth aerospace firm with more than $1 billion in annual sales, and its ally in the Pentagon, the United States Air Force." It also had a formidable lobbying force in Washington.
And General Electric produced the afterburning turbofan jet engine for the B1 bomber. The contract had been dropped in 1977:
In July 1976 Jimmy Carter, a candidate for the Democratic presidential nomination, announced his opposition to the new bomber, and several months after taking office, canceled its production.
All that changed under Reagan, the B1 was back on the agenda. And General Electric was awarded a contract to further develop the F101-102 engine variant.)
Some have argued that the expanded defense spending led to the collapse of the Soviet economy. That may be true or not. It might be a half-truth. However, there's one thing that few would deny. The effect of increased military spending was to have severe consequences.
* * * *
Economic historian Anthony S. Campagna in his book, The Economy in the Reagan Years: The Economic Consequences of the Reagan Administration writes:
The economy was militarized in the 1980s, as spending on national defense rose from 5.4% of the GNP in 1980 to 6.5% in 1988. In the Reagan years, $1.9 trillion was spent on national defense. In the short run, such huge expenditures helped produce record budget deficits and, no doubt, helped stimulate the economies of many states that rely on defense dollars. Moreover, the national economy was likely a beneficiary of defense spending. Without it, the economy would not have experience even the growth that it did in this period.
The long-run effect of the militarization of the economy is what happens to the economy that becomes so dependent on defense spending? If the defense spending work sas planned and the enemy is vanquished, additional spending becomes difficult to justify. What happens when an empire, built up at a heavy cost of resources, is no longer needed and become superfluous? This is the long-run legacy of the militarization of the economy and the problems created by it may prove intractable in the short-run and formidable in the long run.
Today the blight caused by uncontrolled defense spending continues. America is now spending more on defense than during the Cold War. Following the fall of the Soviet Empire, the much-talked about "peace-dividend" quickly dissolved after 9/11, when the war on terrorism became the newest justification. It has become such a problem even a Bloomberg writer can see the hypocrisy.
The Republican position on federal spending could not be clearer: It doesn’t create jobs. Except when it goes to defense contractors.The Bloomberg Government study listed the 10 states that depend the most on defense dollars. Seven of them voted for the Republican presidential candidate in 2008, and an eighth, Virginia, has usually voted Republican in presidential races. So the party’s interest in keeping defense jobs makes political sense.
Yet the purpose of the defense budget shouldn’t be to subsidize particular people or areas. We don’t buy tanks and train soldiers to keep beauty salons in business. The Republicans resisting big defense cuts generally think that they would jeopardize our national security. That’s a debatable proposition. So debate it. What Republicans should not do is make an economic argument for defense spending that is both untrue and inconsistent with everything else they say about spending and the economy.
Yet, for any careful student of Reaganomics, the lineage of this notion is clear. Even today, Republicans would prefer to cut social safety net programs than to discuss any cuts in military spending.
The Neutron Bombing of the American Economy
There's one more piece to the General Electric puzzle and it is the hardest part to swallow perhaps. It cuts to the heart of the Trickle Down lie.
As Reagan second and final term wound down to a depressing end- plagued with scandal and questions about Reagan's fitness for office- GE Chief Executive Officer, Jack Welch was launching a new direction for the company. That new approach would earn his the nickname "Neutron Jack" because, like the Neutron Bomb, he left factories standing but decimated the workers.
In Jack: Straight From The Gut, Welch states that GE had 411,000 employees at the end of 1980, and 299,000 at the end of 1985.
Writer John Summa gives this excellent account:
As GE's operating profits swelled..., its total workforce in the U.S. was cut by over 100,000, with more layoffs and plant shutdowns to come. GE has a "decidedly consistent policy to drive down labor costs worldwide," according to Peter Gilmore, director of public relations for the United Electrical, Radio and Machine Workers of America (UE), a union representing many of GE's U.S. workers.
In addition to transferring jobs to Third World plants owned by the parent company, Gilmore says GE has been cited by Singapore union officials for shifting production from Singapore to Malaysia. There is evidence of "state, regional and international-level whipsawing" by GE, he says.
Whipsawing refers to the attempt to play one workforce off against another, or others, in order to force greater concessions. Not only is GE shifting production from the U.S. to the Third World, it is also exploiting wage differentials in the Third World itself.
"There has been a tremendous reduction in the U.S. workforce in the last couple of years," says Gilmore, "especially since Welch took over in 1982." The work currently being done at GE's Juarez maquilladora plant in Mexico, he says, used to be done at the Decatur, Indiana plant. Gilmore adds that the Decatur workforce has a reputation for high productivity, flexibility and capability to implement prototypes.
And when Welch retired in 2001 with a net worth estimated at $720 million, one editorial gave this critique of his career at GE:
Welch has left behind communities across the United States suffering from mass layoffs and disinvestment. While it is hard to get a fix on the number of GE layoffs over the last two decades because of the constant churning of its businesses, GE has dismissed well over 100,000 well-paid workers in the United States. It has undermined union power in the United States by shifting operations to non-union subcontractors. It has practically abandoned its once-strong research-and-development infrastructure. It has compiled a shoddy record of repeat violations of workplace safety rules, defense contractor safeguards, and other public interest regulations, with workers’ lives put at risk and taxpayers bilked as result.
That bilking hasn't stopped. Washington Post in May of 2011 reported this:
General Electric Co., reported the New York Times last week, earned $14.2 billion in worldwide profits last year, including $5.1 billion in the United States — and paid exactly zero dollars in federal taxes.
While all of the other news organizations were reporting this news, one media outlet remained conspicuously silent. You guessed it. General Electric-owned NBC. It is all part of a larger pattern, according to media analysts:
Ignoring stories about its parent company’s activities is “part of a troubling pattern” for NBC News, said Peter Hart, a director at Fairness & Accuracy in Reporting (FAIR), a liberal media watchdog group that often documents instances of corporate interference in news. He cited a series of GE-related stories that NBC’s news division has underplayed over the years, from safety issues in GE-designed nuclear power plants to the dumping of hazardous chemicals into New York’s Hudson River by GE-owned plants.
The Legacy Reagan Left Us
This is the true legacy of the Reagan revolution- the destruction of organized labor, movement of manufacturing to cheaper labor markets, the rise of military spending and the corruption of independent news organizations.
In short, it was a beautifully-designed con game, sold to the American people by a former actor and called Reaganomics, supply-side and trickle-down.
David Stockman's much-hailed economic program, supply-side, trickle-down Reaganomics, was a cover for a larger agenda, inspired by a major defense contractor and delivered by Reagan. By believing in the sincerity of Reagan, Stockman was played just as much as the American public.
Furthermore, with the windfall of cash supplied by government contracts, the defense contractors began to shift manufacturing jobs out of the US. General Electric was only the prototype for this approach and soon more and more manufacturing- the backbone of a prosperous middle-class- was abandoning the US.
“U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers… cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million.”
The Wall Street Journal analysis elaborated, “Thirty-five big U.S.-based multinational companies added jobs much faster than other U.S. employers in the past two years, but nearly three-fourths of those jobs were overseas.”
That particular aspect of the Reagan legacy is still very much a part of today's Republican party. As evidence, look at this report from just last month by ABC News:
The Senate has rejected further consideration of a bill Democrats say would have eliminated existing tax breaks for employers who ship their jobs overseas. While Republicans sought to squash it as political theater, Democrats admit quarreling over the “Bring Jobs Home Act” was openly influenced by the 2012 presidential campaign.Under existing law, employers may take tax deductions for the costs associated with moving jobs out of the country. The proposed legislation would have eliminated that, and used the resulting new revenue to fund a 20 percent tax credit for the costs companies run up “insourcing” labor back into the U.S.
Interestingly, during the debates on Wednesday, Candidate Mitt Romney told the president when the subject of tax breaks for outsourcing came up that:
"..you said you get a deduction for getting a plant overseas. Look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant."
Few in news media even seemed to have noticed this major gaffe and if Tom Brokaw serves as an example, then the reason for this omission is crystal-clear. It's called CYA (covering your ass).
Brokaw called Ronald Reagan the "a pure product of Main Street, Heartland America" and yet even today, as Midwest voters wave their flags and vow to vote Republican, few on Main street in the Heartland of America are aware that grandfatherly Reagan was their destroying angel.
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