At the outset of the 1980s Reaganomics promised that prosperity would "trickle down" from the wealthiest to the lowliest. What trickled down instead was massive debt at every level of government, at the corporate level and at the individual level -- to the extent that today total debt in the United States exceeds $10 trillion, or $40,000 for every man, woman and child in the country.
It was pure illusion, of course, that lower taxes would generate greater revenues, and that citizens could have services and entitlements without paying for them. In fact, the gap between revenue and spending was never so great as it was in the Reagan years. Now we are paying the price. Three months after George Bush signed the biggest deficit reduction package in American history, he submitted a budget with the biggest deficit ever -- in excess of $300 billion -- and that does not include money needed to pay for the Persian Gulf war. Soon, it will take at least $1 of every $4 spent by the government just to cover the interest on that debt.
The colossal nature of the federal deficit, coupled with the recession, the S&L bailout resulting from the head-in-sand attitude toward regulation during the Reagan years, and a 27 percent reduction in federal grants, has had a devastating impact on state and local governments. Maryland, whose estimated tax shortfall is now nearly half-a-billion dollars, has had to revise its budget twice since fiscal 1991 began, as revenue projections sank. Virtually every metropolitan county is struggling as well. But Maryland is hardly alone; some 30 states now confront serious budget deficits as revenues plummet.