So which decade was it? The one that featured the longest uninterrupted period of growth on record, the taming of inflation, modest unemployment (except in 1982) and modest interest rates, entrepreneurial dynamism and the creation of almost 19 million new jobs? Or was it the decade when fundamental social problems were ignored, the rich grew richer, the poor poorer and the middle class got squeezed, the deficit multiplied more than in all of previous American history combined and the nation moved from the biggest lender to the biggest borrower on earth?
The answer, of course, is that it was all of these, which just makes the challenge of sorting out the decade even harder. The statistics employed in this struggle are often twisted beyond recognition. Liberals, who want to make the decade look as bad as possible, often use numbers covering 1979-1991. That gives them the end of the Carter years, which were rotten, and the Bush recession at the other end. Conservatives, who want to make it seem like a golden age, often try to use a five-year time frame-preferably 1983-1988. That’s after the deep 1982 recession and before the droopy Bush years.
So let’s use census figures to look at the period 1979-1989 (the numbers, for technical reasons, are less often broken down 1980-1990) and try to get a few things straight:
Adjusted for inflation, the bottom 20 percent of the country lost about 6 percent in real pretax income, which is not as catastrophic as sometimes alleged. But according to a Congressional Budget Office study, this group also worked harder (5 percent more work hours than in the past). All told, the figures represent a genuine loss for the people who could least afford it. The trickledown most certainly didn’t trickle to them.
The middle 60 percent of the population gained about 5 percent in real income. That means that Clinton was not quite accurate in his basic campaign thrust. The middle class didn’t really “work harder for less money.” But those Americans, as a group, did work slightly more hours than before (2 percent) for only slightly more money, which when you factor in their heavier tax burden left them essentially running in place. Conservatives like George Will who try to argue how wonderful the 1980s were for the economy should remember that during the supposedly dismal 1970s, the real income of this same middle class went up more than twice as much (12 percent), after inflation. And from the beginning to the end of the 1960s, middle-class income grew an astonishing 35 percent. So all of that Clinton talk about the economic stagnation of the middle class is indisputably true.
While they worked a bit (2 percent) harder than in past years, the pretax real income of the top fifth of Americans went up a full 20 percent during the ’80s. For the top 1 percent-about 2 1/2 million people-the improvement in real income is 100 percent; in other words, their after-tax, inflation-adjusted incomes doubled. It’s no wonder that the number of American millionaires tripled to more than 1 1/2 million.
The New York Times published an article under Ronald Reagan’s byline last week that asserted that “most of the economic gains of the 1980s were made by low- and middle-income citizens, not the wealthiest Americans.” That is a classic example of a statement that is technically true but overwhelmingly false. It’s true because there are many more low- and middle-income people to make small gains than there are rich people to make large gains. It’s false because it covers up the fact that the rich expanded their already disproportionate share of national wealth. Even far steeper tax hikes than Clinton’s would not close that gap.
If the deficit is eventually brought under control, the 1980s will be viewed as a long shopping spree, where we ran up the credit-card tab on bonbons instead of long bonds but survived to tell the tale. If the deficit worsens, then we’ll all blame the 1980s for pushing us closer to bankruptcy. In other words, the better Clinton does, the better the memories of Reagan and Bush will be. Even in history’s eyes, they’re all in this together.
