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Coronavirus Exposes the Fallacy of 40 Years of Reaganism and “Small-Government”

The pandemic has made painfully clear how inter-connected we are and how the health of the many, even of the wealthiest, depends on the health of all

by Alexander Stille

U.S. President Ronald Reagan and UK Premier Margaret Thatcher at the White House in 1982 (Flickr/Levan Ramishvili)

With all its imperfections, the Roosevelt New Deal saved capitalism from itself and with legislation from Social Security to the Security and Exchange Commission, brought about two generations of diminished poverty, financial stability and increasingly shared prosperity. Ronald Reagan and his successors began systematically dismantling the social welfare state and eventually tore the safety net from under the working class. In the Trump era, the Republican anti-government philosophy has been carried to even greater extremes.

The stock market crash of 1929 and the great depression exposed the inadequacies of unregulated laissez-faire capitalism. The current coronavirus pandemic makes equally clear the bankruptcy of the Republican “the-government-is-the problem” paradigm under which we have been living for the past forty years.

Ronald Reagan ushered in a new era with catch-phrases such as,  “The most terrifying words in the English language are: I’m from the government and I’m here to help.” This facile government-bashing rings hollow and morally indefensible in a world in which 330 million Americans are hoping their government can get it together to begin widespread testing for Covid-19, and wondering why we are the only major democracy without paid sick leave for the tens of millions who will be forced to remain out of work to keep themselves and everyone else safe.

President Roosevelt signing the TVA Act (1933)

With all its imperfections, the Roosevelt New Deal saved capitalism from itself and with legislation from Social Security to the Security and Exchange Commission, brought about two generations of diminished poverty, financial stability and increasingly shared prosperity. The U.S. was still a highly unequal society where the rich remained very rich but the share of the bottom 60 percent actually grew more quickly than the top ten percent.

Reagan and his successors began systematically dismantling the social welfare state: he attacked unions which have gone from 35 to under 12 percent of our work force. (Of course, there were other forces at work – automation, outsourcing due to globalization, but worker protections are far greater in Europe and inequality much lower.) Pensions were replaced by 401k plans. Worker protections, consumer protections, environmental protections were all weakened.

It began what the political scientist Jacob Hacker has termed “The Great Risk Shift,” in which individuals were forced to fend for themselves: if they were lucky enough to have health insurance they were saddled with large deductibles and co-pays that often left them choosing between their health and financial solvency. More than 60 percent of bankruptcies – affecting some 530,000 people per year – related to medical problem through a combination of the high cost of care and lost employment income due to illness. The United States is virtually the only major democracy without paid sick leave, the folly of which has become tragically clear during the pandemic. Workers afraid of losing their jobs or their paychecks could be forced to keep going to work even if they feeling sick, risking spreading the coronavirus to co-workers and customers.

2/22/1987: President Ronald Reagan, First Lady Nancy Reagan, Governor Bill Clinton and Hillary Clinton walking in Cross Hall during a dinner Honoring Nation’s Governors (Photo White House)

Even the Democrats who have governed since 1980 have operated within the Reagan paradigm, settling for modest improvements around the edges of a neo-liberal matrix. President Bill Clinton had to fight for modest increases in the minimum wage and tax increases for the wealthy but failed to pass comprehensive health care reform. Any democratic reform had to be framed almost apologetically as market-friendly. Under Reagan the effective tax rate for the wealthy (the top 0.1 percent) went from 42.9 percent (according to the Congressional Budget Office) in 1980 to only 32.2.  Clinton managed to bring it back up to about 41 percent in his first years in office but it slid back down to the low 30’s under the Republican-dominated Congress of his second term.

There were about 65 million Americans (16 percent of the population) without health insurance when Barack Obama took office in 2009. The cautious partial reform known as Obamacare reduced their number by more than 20 million, a great but insufficient accomplishment, leaving some 87 million either uninsured or under-insured. Unsurprisingly, those numbers have crept up under Trump who, unable to repeal Obamacare, has tried to weaken it in any number of ways.

Sadly, the immorality of this state of affairs has become evident only now that there is a real risk that those without access to health care might infect the rest of the population and cause a general breakdown of society as a whole.

The Reagan paradigm essentially adopted an Ayn Rand philosophy that the richest should be rewarded in every way possible both in terms of wealth and political influence. During the 1950’s, the average CEO earned about 20 times as much as his average worker (in the 1950’s, it was always a “he”) now CEOs earn more than 350 times their employees.

President Trump and covid-19 in USA (Illustration by Antonella Martino)

In the Trump era, the Republican anti-government philosophy has been carried to even greater extremes with the GOP indulging in “deep state” conspiracy theories, rhetoric about “jackbooted government thugs” and a systematic effort to hollow out government agencies. The Trump administration literally diverted money from FEMA emergency preparedness to help ICE pay for immigration raids and detention. The Trump administration eliminated an office in the National Security Council created by Obama precisely designed to deal with global epidemics like Covid-19 and never replaced it. It cut the budget of the Centers for Disease Control and has conducted a war against science generally, cutting, bullying and censoring scientists who say or publish findings that don’t agree with Trump policy. As a result, there was a complete void of leadership, direction and action on the national front when the coronavirus started to spread. Instead, for several weeks we listened to Trump’s musings about how this was no different from a common seasonal flu while he ignored the quiet warnings of actual experts that we were faced with a situation of unprecedented danger.

The extreme distrust of institutions that Reagan inaugurated gradually led us into a post-factual world in which Trump’s or Fox News hosts’ claims that the coronavirus was a “hoax,” a “fraud,” and a liberal “fake media” plot to get rid of Trump have to come to seem as credible to many Americans as statements of the World Health Organization or the National Institute of Health. Reality is taking its vengeance on this fact-free worldview where you can seemingly choose the reality you prefer. (“It could be Russia…or it could someone sitting on their bed that weighs 400 pounds”, Trump famously stated at one point in the past.)

Illustration by Antonella Martino

The current crisis potentially sows the seeds of something better and finally moving beyond the exhausted Reagan paradigm. The epidemic has made painfully clear how inter-connected we are and how the health of the many, even of the wealthiest, depends on the health of all. It can only be defeated by an enormous collective effort made by all of us, not just those on the front lines working in health care and other essential services; those who provide food and transportation, or the police and those who maintain our infrastructure. The enormous cost of this crisis – not just in health care but by businesses and workers who will be wiped out in a general shut down of our economy – will have to be shared by all of us. The fecklessness of the Trump tax cut — $1.9 trillion largely wasted – will make it all that much more painful since we start with a nearly trillion-dollar deficit. But it is an opportunity to leave behind the Trumpian zero-sum world of “makers and takers,” “winners and losers,” to an understanding that unless prosperity and health are widely shared, they can be swept away

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