The Washington Post published an article this week titled A Middle-Class Family’s Only Option: A $43,000 Health Insurance Premium about how the GOP’s refusal to extend ACA/Obamacare subsidies means that Stacy Newton’s family in Jackson Hole, Wyoming will have to pay $43,000 a year for health insurance if they want to stay covered.

If, however, the United States had an extra trillion dollars a year — the amount we’re now spending every year on interest payments against the GOP’s $38 trillion national debt — the Newtons would only pay a few hundred dollars a month and we could also have Universal Childcare & Pre-K, Paid Family & Medical Leave, Tuition-Free College, Affordable Housing & No More Homelessness, End Child Poverty & Hunger, and, as mentioned, Affordable Healthcare for all Americans.

Which raises the question: where did our $38 trillion dollar national debt — that’s costing us $1 trillion a year in interest — come from? After all, when Reagan came into office in 1981 we’d been paying down the debt from WWI and WWII to the point where the entire national debt was only $800 billion (less than $1 trillion).

So, where the hell did all this debt come from? Turns out, you could call it a conspiracy: there’s an amazing backstory to our national debt with the unique name “Two Santas.”

This conspiracy/strategy was developed by a Republican strategist named Jude Wanniski back in the 1970s, and he quite literally transformed America and the GOP with it.

Here’s how it works, laid it out in simple summary:

The Two Santas strategy dictates that when Republicans control the White House they must spend money like a drunken Santa and massively cut taxes on the rich, all to intentionally run up the US debt as far and as fast as possible.

They started this during the Reagan presidency when he dropped the top income tax rate on the morbidly rich from 74% down to 28%, and the GOP tripled down on it with four subsequent massive tax cuts for the rich during the presidencies of Bush, Trump I, and Trump II.

Massive tax cuts for the rich and uncontrolled spending during those four Republican presidencies produced three results:

Then comes part two of the one-two punch: when a Democrat gains the White House, Republicans and GOP-friendly media must scream about the national debt as loudly and frantically as possible, freaking out about how “our children will have to pay for it!” and “we have to cut spending to solve this crisis!”

The “debt crisis,” that is, that they themselves created with their massive tax cuts and wild spending.

Do whatever it takes to force Democrats to kill their own social programs: shut down the government, crash the stock market, and even damage US credibility around the world if necessary.

This, Wanniski argued back in the day, would force the Democrats in power to cut their own social safety net programs and even dial back the crown jewel of the New Deal, Social Security, thus shooting their welfare-of-the-American-people Santa Claus right in the face.

And, sure enough, here we are with Trump again in the White House having already added $1 trillion to the national debt just this year, with another $5 trillion to come from this year’s tax cuts for the rich, the only significant legislation passed by the GOP Congress all year.

It’s a cynical political and media effort devised by Republicans in the 1970s, fine-tuned in the ’80s and ’90s, and since then meticulously followed by every GOP presidency since.

And, politically, it’s been a brilliantly effective strategy that was hatched by a man most Americans have never heard of: economist and GOP partisan Jude Wanniski.

Wanniski first proposed his Two Santa Clauses strategy in The Wall Street Journal in 1974, after Richard Nixon resigned in disgrace and the future of the Republican Party was so dim that books and articles were widely suggesting the GOP was about to go the way of the Whigs.

There was genuine despair across the GOP back then, particularly when incumbent President Jerry Ford couldn’t even beat an unknown peanut farmer from rural Georgia for the presidency.

Wanniski argued back then that Republicans weren’t losing so many elections just because of Nixon’s corruption, but mostly because the Democrats had been viewed since the New Deal of the 1930s as the “Santa Claus party.”

On the other hand, the GOP, he said, was widely seen as the “party of Scrooge” because they publicly opposed everything from Social Security and Medicare to unemployment insurance and food stamps.

The Democrats, he noted, had gotten to play Santa Claus for decades when they passed out Social Security and unemployment checks — both programs of FDR’s Democratic Socialist New Deal — as well as their “big government” socialist projects like roads, bridges, public schools, public hospitals, and highways that gave a healthy union paycheck to workers and made our country shine.

Even worse, back in that day, Democrats kept raising taxes on businesses and rich people to pay for all that “free stuff” and Democrats’ 91% top tax rates on the morbidly rich — from the 1930s up to Reagan’s era — didn’t have any negative effect at all on working people (wages were steadily going up until the Reagan Revolution, in fact).

It all added, Wanniski theorized, to the public perception that the Democrats were the true party of Santa Claus, using taxes on the rich to fund programs for the poor and the working class.

Americans loved the Democrats back then. And every time Republicans railed against these “socialist” programs, they lost elections.

Therefore, Wanniski concluded, the GOP had to become a Santa Claus party, too. But, because Republicans hated the idea of helping out working people, they had to come up with a new way to convince average voters that the GOP, too, had the Santa spirit. But what?

“Tax cuts!” said Wanniski.

To make this work, the Republicans would first have to turn the classical world of economics — which had operated on a simple demand-driven equation for seven thousand years — on its head.

(Everybody then understood that “demand” — aka “working-class wages” — drove economies because working people spent most of the money they earned in the marketplace, producing “demand” for factory-output goods and services. Consumer spending, in fact, accounts for roughly 70% of the entire US economy.)

To lay the groundwork to roll out Two Santa Clauses, in 1974 Wanniski invented a new phrase — “Supply-Side Economics” — and said the reason economies grew and became robust wasn’t because people had good union jobs and thus enough money to buy things but, instead, because businesses made extra/new things available for sale, thus tantalizing people to part with their money.

The more products (supply) there were in the stores, he argued, the faster the economy would grow. And the more money we gave rich people and their corporations (via tax cuts) the more stuff (supply) they’d generously produce for us to think about buying.

At a glance, this 1981 adoption of Wanniski’s Two Santas strategy by the Reagan Republicans to “cut taxes while increasing spending” seems irrational, cynical and counterproductive. It certainly defies classic understandings of economics. But when you consider Jude Wanniski’s playbook, it makes complete sense.

To help, economist Arthur Laffer took that equation a step farther with the famous “Laffer Curve” napkin scribble he shared with Reagan over lunch. Not only was supply-side a rational concept, Laffer suggested, but as taxes went down, revenue to the government would magically go up!

Neither concept made any sense — and time has proven both to be colossal idiocies — but, Wanniski argued, if think tanks, rightwing media, and Republican politicians could convince Americans to buy into it, they offered the GOP a way out of the wilderness.

Ronald Reagan was the first national Republican politician to fully embrace the Two Santa Clauses strategy, although it’s been followed by every Republican in federal office ever since and still is today.

Jumping in with both feet, Reagan told the American people straight-out that if he could cut taxes on rich people and businesses, those “job creators” (also a then-newly-invented Republican phrase) would use their extra money to “build new factories” and “increase wages” so all that new stuff “supplying” the economy would produce faster economic growth.

George HW Bush — like most Republicans in 1980 who hadn’t read Wanniski’s piece in The Wall Street Journal — was initially horrified. Ronald Reagan was proposing “Voodoo Economics,” said Bush........

© Common Dreams