The Neoliberal Horror Picture Show

On March 12, 2020, facing a rapidly spreading pandemic, New York theaters announced a general shutdown, which has become by now the longest in Broadway history. Beyond its catastrophic impact on the theater industry, the shutdown carries a symbolic meaning. The ongoing coronavirus outbreak has laid bare the backstage of the longest-running spectacle in the United States: the neoliberal horror picture show.

This show — in which, over the past four decades, we’ve been both participants and spectators — was not created in a single moment, nor by a single person. But more than any other American president, Ronald Reagan is the one whose name has become synonymous with neoliberal measures.

On August 13, 1981, less than seven months after taking office, Reagan signed the Economic Recovery Tax Act as a cure for the country’s ongoing crisis of stagflation: slow economic growth alongside high rates of inflation and unemployment. The ERTA, the largest tax cut in recent U.S. history, slashed tax rates — including on income, estate, and capital gains — across the board.

But that wasn’t the end. About five years later, in October 1986, Reagan supplemented the ERTA with the Tax Reform Act. As a result, over the course of his presidency, the top income tax rate dropped from 70% to 28% — the lowest of its kind among the industrial nations of the time.

These reforms epitomized the president’s faith in supply-side economics. Reagan believed that cutting taxes on the wealthy would generate economic growth, whose fruits would “trickle down” to lower-income populations. While the financial effects of the so-called “Reagan Revolution” remain the subject of heated debate, it’s hard to deny its profound impact on the nation’s political economy.

According to economic sociologist Monica Prasad, the ERTA taught Republicans that “tax cuts could be popular,” turning their party from one of “fiscal rectitude” into one that sees tax cuts as the main goal of domestic policy. Not only have future presidents not reversed Reagan’s fiscal reforms, they have replicated them over and over, most recently in 2017, when President Donald Trump signed the Tax Cuts and Jobs Act, falsely calling it “the biggest tax cuts and reform in American history.” Tax cuts have virtually become a nonpartisan issue; after all, it was a Democratic president — Barack Obama — who signed the second- and third-largest tax cuts since Reagan’s reforms.

In the meantime, income inequality has skyrocketed, as economists like Thomas Piketty, Joseph Stiglitz, and others have shown. Since 1980, the net income of the bottom 50% of earners in the United States has grown only by 20%. Over the same four decades, the net income of the upper 0.01% of earners has soared up by 420%.

Inequality is too complex and too crucial to be reduced to one policy or even a single president. But Reagan’s legacy is clearly one of ever-expanding socioeconomic gaps — the upshot of neoliberal measures like financial deregulation, the eradication of unions, and the reduction of social services expenditure.

It is no coincidence that on the day Reagan enacted the ERTA, he signed another law — the Omnibus Budget Reconciliation Act — which strictly restricted eligibility for welfare, squeezing savings out of Social Security, Medicare, food stamps, and other government benefits. The act heralded Reagan’s systematic demolition of the American welfare state, which had been established in the Progressive Era, in the 1930s New Deal, and in the 1960s Great Society programs. 

Reagan, who started his career as an actor, promised in his 1981 inaugural address “a healthy, vigorous, growing economy that provides equal opportunities for all Americans with no barriers born of bigotry or discrimination.” That was only Act One. Reagan’s successors followed suit, refueling the neoliberal spectacle which, as writer George Monbiot explains, “redefines citizens as consumers” and sees “competition as the defining characteristic of human relations.”

Now, with almost 100,000 confirmed coronavirus-related deaths in less than four months, we can no longer ignore the devastating costs of neoliberalism — which are by no means new, but have been rendered painfully visible.

The demographic data is still incomplete, but initial statistics have already shown that the pandemic has taken a disproportionate toll on people of color. According to the Center for Disease Control and Prevention, COVID-19 death rates in New York City among African Americans (92.3 per 100,000) are more than two times higher than among white Americans (45.2 per 100,000). The equivalent data for Hispanics and Latinos (74.3 per 100,000) is also substantially higher.

These outrageous disparities are the outcome of economic, social, and medical inequalities that bedevil racial minorities, including preexisting health conditions, high-risk work circumstances, and low access to care. For example, African Americans are twice as likely, and Hispanics three times as likely, as whites to lack health insurance. While people of color are more likely to be poor, the inequality created by neoliberal policies plagues the poor regardless of ethnicity or race. Even without the official figures, it seems fair to expect that the same rule will apply to white Americans: The lower your income, the more likely you are to contract or even die from the coronavirus.

Far more than just wreaking havoc, the pandemic has both accentuated and deepened economic inequality, making the lives of roughly 40 million Americans who live in poverty even more intolerable and perilous. In 2017, approximately 7 million school-age children lived in households without home internet service; 22 million American children depended on free or low-cost daily school lunches; and more than 1.5 million public school students experienced homelessness. For these children and their families, social distancing, remote learning, and voluntary quarantine are virtually impossible.

The show must not go on. The coronavirus outbreak could — and should — bring the curtain down on the neoliberal horrors. The change can begin with the primary engine of inequality: the American tax system, in which the 400 wealthiest families pay a lower tax rate than any other income group, from retirees to construction workers. 

In “The Triumph of Injustice,” economists Emmanuel Saez and Gabriel Zucman argue for progressive taxation on extreme wealth, adjusted to the era of multinational corporations. Daniel Markovits of Yale Law School showed that even a one-time 5% tax on the richest 5% of American households could raise up to $2 trillion — the size of the entire first coronavirus stimulus package. Even the Financial Times, the beacon of the global financial establishment, has advocated for wealth taxes and basic income, “policies until recently considered eccentric,” in a recent editorial.

When this plague ends, and the lights finally go up on Broadway, they can also go down on the tragedy of American inequality. Ironically, it seems that in order to make that happen, we must heed the advice of the actor-turned-president who introduced his tax policy in his July 1981 Address to the Nation. “This is an unequalled opportunity to help return America to prosperity,” said President Reagan, “and make government again the servant of the people.”

Image Source: Wikimedia Commons/U.S. National Archives and Records Administration

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