The Fire Next Time

It’s called betting on the future…betting that the tax cut caused drop in revenues, in government and in business, causing a deficit that can be somehow reduced by increases in sales or production. It’s the trickle down theory on steroids!

Greg Beale
Sep 4, 2018 · 5 min read

This assumes a never ending growth in economies, which is dependent on far more than just money supply.

It also bets that inflation, an inevitable result of more borrowing because the nation or business does not have the funds to pay its bills, doesn’t raise interest rates that only makes the deficit worse. This never happens!

Trump did this with his tax cut (and the Republicans).

They purposefully over stimulated an already recovering economy, with a huge tax cut, that has to be supported by massive government borrowing.

It is a the favorite tool of a despot, become a hero by cutting taxes, enjoy the ride for a few years, then bail out a hero while the economy explodes.

Witness Ronald Reagan…witness George W. Bush….witness Herbert Hoover and the Republicans of the 1920s.

In the 1920 the world had to pay for the Great War. And tax increases on Americans was the only way to do that. Europe was prostrate, and couldn’t pay the taxes. The United States had barely been touched and could.

And it didn’t, and the world plunged into the 20s, spending more and more with higher deficits (they didn’t even keep track of them in those days)..and in 1929 the air came out of the balloon. Republicans then felt, in a different economy than today, that deficits could be overcome with growth. The only problem was the growth was based on rampant speculation on Wall Street. This created a fiscal bubble that burst October 1929!

In 1946, Secretary of State Marshall, and the Truman Administration did not follow this example, and magnanimously passed a huge aid plan, “The Marshall Plan” that used the money of the United States to rebuild Europe and to a smaller extent China and Japan.

The reason was the realization that WWII was a direct result of not helping Europe (Germany) rebuild after WWII, but rather used punishing reparations blaming Germany entirely for the war. Hitler used just that argument against the Allies and took Germany over and the rest is ugly history.

The Marshall Plan did not recoup the billions it spent on recovery for non-Americans in tax increases, but put off the payback into the future, saddling the United States with in effect, an unfounded liability for future generations.

But the Marshall Plan had the added advantage of knowing that the United States was the only country left intact after WWII and would enjoy decades of prosperity because it was the only manufacturing sector left.

And they were right. The 1950s, 60s and part of the 70s saw huge increases GNP in the United States that virtually paid off the Marshall Plan. And taxes were not cut!

But it not quite worked.

Late in the 1970s inflation caught up with the Marshall Plan, plunging the United States into stagflation, a drop in the GDP AND inflation. This happened partly because the rest of the world recovered so fast (thirty years) as a result of the Marshall Plan.

The world had healed and started producing with newer plants, at least matching American production with cheaper products. Times were good for consumers but America’s deficit blew up.

This did not last long, but ushered in a conservative “revolution” because Democrats never adequately explained to the American People what it was doing. They never explained that the American Public was bailing out a ruined Europe and Asia (even Russia) with a post war boom as its reward.

Republicans wanted to do the same thing they had done after WWI, escape into isolationism and refuse to help Europe rebuild. This was disastrous but Republicans did not care; their previous stupidity especially with protective tariffs had caused the Great Worldwide Depression.

The New Deal was not kind to Republicans, taking the Presidency away from them, that they had monopolized since Lincoln.

So the Reagan Revolution was born, and the deficit grew and grew…exploding in 2007 in the Great Recession.

Yes, sometimes consequences wait a generation to happen. The consequences of deficit building and spending and war!

I have always believe that if Democrats had the courage to explain to the American People what the Marshall Plan did and the bill they had to pay the Reagan Revolution would not have happened.

But they didn’t and the country swung right, believing once again in deficit spending and yes war.

That is where we are today. A very unpopular President was able to keep a barely manageable ruling majority with a stupid tax cut that will cause a Recession in about three years (he hopes after the next election).

Usually President do these kind of things in their second term, leaving a mess for the NEXT President to deal with.

Witness George P. Bush, who was a deficit hawk (most Republicans say they are and then flip and cut taxes and raise spending).

Anybody can be popular with that. But George H. Bush was AFTER the Reagan tax cuts and inherited a deficit that had to have tax increases or a Depression would happen. After his “read my lips” statement, he had to raise taxes and lost. George H.Bush was the patsy for Reagan’s irresponsibility.

Ironically Reagan was not even aware of the damage he had caused having lapsed into Alzheimer’s.

George W. Bush learned from that fate of his father and did not pass a tax cut until his SECOND term. He reasoned that the stimulus to the economy would be enough to elect another Republican in 2008.

It wasn’t. What Bush did not figure was a war, HIS Iraq WAR, would deepen the deficit to the point where markets were overwhelmed by the regulation busting cuts in regulations he also championed and blew up the economy.

The Great Recession elected a Democrat, who once again had to raise taxes and cut spending to stabilize the economy.

The formula to win as an American Politician: Never raise taxes and cut spending. Raise taxes and increase spending (Roosevelt method); Cut taxes and raise spending even a fool can be elected (witness Trump)….

Once again, the population who was as confused by this back and forth fiscal policy was conned by a fool, who promised to cut taxes and promised it would more than make up for itself with GDP growth, proclaiming promised increases that have NEVER happened in history except the war production of WWII.

And in a major upset he won. And like a fool, passed the tax cut in his first term, that left a ticking time bomb of a Recession that will make him America’s most hated President in 2020.

Will it happen? You bet it will.

Don’t believe it? look at Turkey…look at Greece…in fact look at Russia, whose deficit and corrupt practices have created a perpetual state of recession.

A Permanent Recession! That is our fate….that is what Trump has caused!

Greg Beale
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