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Abstract

Supply-side tax and spending policies have intensified poverty, unemployment and inequality, especially for women, minorities and organized labor. At the same time Reaganomics is shrinking and weakening the welfare state. To better understand and resist this conservative assault it is necessary to demystify the "economics" and "politics" of supply-side doctrine. This paper (a) defines the basic assumptions of supply-side economics; (b) identifies some of its problems and contradictions; (c) discusses its impact on the welfare state; and (d) analyzes it as part of a broader plan for coping with the current economic crisis. It argues that the supply-side tax cut not only lowers government revenues, but provides a justification for cutting domestic programs. Domestic cutbacks, in turn, are achieved by new laws that change program rules and regulations, transfer federal social welfare responsibility to the states, that weaken the political support for the programs themselves. This legislated conservative legacy will be more difficult to reverse than if the cuts were achieved by just lowering appropriations. As a domestic strategy, Reaganomics is part of a broader response to the current economic crisis that involves redirecting larger amounts of capital into the private sector and weakening the political strength of women, minorities and organized labor whose demands for an adequate standard of living have become to costly for business and government to absorb.

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