Why Reaganomics doesn't work anymore

House Minority Leader, John Boehner spoke with CNN's Wolf Blitzer on Late Edition last Saturday to discuss a variety of issues including the economy. After watching Barack Obama's criticism of the proposed McCain tax-cuts, which Obama claims will be "twice as expensive as the original Bush plan," Boehner defended his fellow Republican, noting that Republicans since Ronald Reagan "have been cutting taxes for the last 27 years by and large."

He goes on, "And what's happened? We've allowed the American people to keep more of their own money, to invest in our economy, to expand the jobs in our economy, and Guess what? We've got more people working, a healthier economy, more people paying taxes, and more revenue coming to the federal government."

Boehner got the first part right. Republicans have a record on cutting taxes, but a healthier economy? Maybe 20 years ago. Boehner uses the same argument many Republicans use when defending tax cuts for the rich, 'Hey, we cut taxes for Americans. Now they can invest that money back into the American economy.' (Keep in mind, "invest" doesn't necessarily mean Wall Street; it can just as easily be buying a Chevy or another pair of jeans.)

It works on paper, but what worked 27 years ago doesn't work today. Back when Reagan was President, Reaganomics worked -- cut taxes at the top, and the benefits will trickle down: business owners add more workers, and more people have jobs. Those people go out and buy another pair of jeans.

The problem is that current government policies have allowed the wealthy to go elsewhere for workers. Americans are just too expensive. So instead of investing in the American economy, it is more profitable to invest in someone else's. The trickle-down effect trickles-out. For example: When was the last time you called customer support and got someone who, shall we say, spoke English as a first language?

Boehner's defense is problematic because these tax cuts would, or at least, should work if the government didn't pass laws that encouraged the companies to leave town. More Americans would have jobs. Instead, that money leaves the country and never comes back. It goes to more Chinese coal plants and roads in India. Meanwhile, the wealthy are sitting on a nice, fat tax break while Republicans, like John Boehner, say they are "allowing Americans to invest in their own future."


Watch the Boehner interview here:
http://www.cnn.com/video/#/video/politics/2008/06/16/le.rep.battle.cnn?iref=videosearch