David Cay Johnston is on the line with us. He is an investigative journalist and author. His most recent book, “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With The Bill.” His website, DavidCayJohnston.com and David welcome to the program.

David Cay Johnston: Well thanks for having me on again, Thom.

Thom Hartmann: It’s great to have you back, David. You do, just, your writing is just absolutely brilliant and your research is astounding. We are seeing now a populist revolt in the United States. On the right, somehow, not somehow, on the right with the help of a few hundred million dollars, a number of oil billionaires and republican PR firms have managed to get average Americans, average working Americans out in the street yelling and screaming because they know that their jobs are going away and they know that their wealth is going away. And somehow the republicans have convinced them that it has to do with liberals and brown people that are the villains. And on the left, there’s an equal populist revolt and it seems to be showing up in the form of apathy about the Obama administration and possibly people not showing up to vote in this election. This is a disaster all the way around. What the hell is really going on, David Cay Johnston?

David Cay Johnston: Well, there is an effort here to divert us from the actual results of the policies that we’ve been following. And the results are now in historically and they’re pretty shocking.

Thom Hartmann: May I interrupt?

David Cay Johnston: Yep.

Thom Hartmann: You said we’ve been following these policies. I track them back to possibly the last two years of the Carter administration when he started deregulation but really to Reagan’s first year with the Reagan tax cuts.

David Cay Johnston: Yes.

Thom Hartmann: Do you think that that’s an actual point?

David Cay Johnston: Absolutely. Ronald Reagan fundamentally changed the country. It’s very important to remember…

Thom Hartmann: It really was a revolution.

David Cay Johnston: That’s right. And it’s very important to remember two numbers here. 37 and 1980. 1980 is the year Reagan ran for office saying get rid of all these policies, let’s go this other direction. And 37 is the median age, half of all Americans are younger than 37. That means that the oldest of them were only 7 when he took office and basically everybody under the age of 50 has only known Reaganism. So it’s very easy to mislead people and indeed one of the things the republicans don’t want to talk about is how did President Bush’s 2000 promise made after the Internet bubble collapse, that if you elected him his tax cuts would make us all better off.

Thom Hartmann: Right. And so, and frankly Reagan said the same thing.

David Cay Johnston: That’s right.

Thom Hartmann: You know, with his tax cuts in ’91 and ’93 and I think there was another one in ’96. So David Cay Johnston you’ve done the math, you’ve done the research, you’ve done the work. What was the result of the Reagan tax cuts? What was the result of the Bush tax cuts? How did that all work out for us? Because I remember, you know, I’m an old enough fart to remember, well actually I don’t remember the details of this stuff, but I mean during the Truman administration, the Eisenhower administration, the Kennedy administration, the Johnson administration, the Nixon administration, the Gerald Ford administration. We had taxes that were, you know, top tax, top marginal tax rate on the very rich was 74% income tax and it seemed to me like the economy was doing pretty good back then.

David Cay Johnston: It was 91% at one time which encouraged businesses to reinvest in their business. But let me give you the latest numbers. They have just become available, I analyzed them, they’re posted at Tax.com.

Thom Hartmann: Tax.com?

David Cay Johnston: Tax.com. And here’s what I did. I examined the new IRS data for the whole eight years now of the Bush administration, 2001 through 2008. How much did Americans make more because of the Bush administration? How much did our incomes rise, because remember that was the promise. Elect me, I’m going to cut your taxes, the economy is going to grow. So I adjusted everything for inflation, to 2008 dollars, and I adjusted for the fact that there are more taxpayers. And the result? Total income earned by Americans in those 8 years was 2.7 trillion dollars less than if we had stayed at the level of the year 2000. and that’s not my base year, that’s the one candidate George Bush cited in asking to be elected. He said I’ll make this better.

Thom Hartmann: So to translate that into the kind of English that you could say to somebody as they’re walking out of a bar in downtown Newark or any other city in America and not necessarily downtown. You get what I mean, the average Joe.

David Cay Johnston: Absolutely. It’s the functional…

Thom Hartmann: To translate that, Bush stole 2.74 trillion dollars from us and gave it to his rich buddies.

David Cay Johnston: No, no, no. That’s not, no. It’s 2.7 trillion dollars we didn’t earn, the whole country. The average American made 2.7…

Thom Hartmann: Okay that we would have made otherwise.

David Cay Johnston: That’s right. If we had just stayed at the level. Remember he said he’d make us better off than we were. But if we had just stayed at the level of 2000, that’s his standard, not my standard, his standard, we would have earned on average 21 thousand dollars more each, that’s effectively $50 per week per taxpayer for those eight years. Now 2.7 trillion dollars is so much money we wouldn’t have to have the stimulus package if we had earned that much money.

Thom Hartmann: Wow.

David Cay Johnston: And that’s, just remember Thom, that’s not any growth, that’s just staying even. And because George Bush made this promise repeatedly after the Internet bubble burst, he stuck to this policy throughout his administration, it’s reasonable to hold him to it. And between 2003 and 2007 when he had his full tax cut package in place and we had a peak year, I did the analysis just for his best years. We were almost a trillion dollars income less in those five years than during 2000.

Thom Hartmann: Amazing. So that’s how much per working family or worker or family or person?

David Cay Johnston: Well per taxpayer, on average it’s about 21 thousand dollars over 8 years, that’s about almost $50 a week.

Thom Hartmann: That we would have made that we didn’t.

David Cay Johnston: That’s exactly right.

Thom Hartmann: 21 thousand bucks.

David Cay Johnston: With no growth, just staying even and remember the number of taxpayers at the end of this period was 10% larger than when, because the population keeps growing, than when Bush was elected. I mean I don’t know what else can scream this policy was a failure. And one of the reasons for it is, that when you have much lower tax rates, business owners are encouraged to withdraw money from the business rather than reinvest it, and to put it into unproductive uses like oil paintings and mansions and…

Thom Hartmann: Like Swiss bank accounts.

David Cay Johnston: … and second corporate jets for their spouses and other…

Thom Hartmann: Right. And Swiss bank accounts, let’s not forget those.

David Cay Johnston: Absolutely.

Thom Hartmann: UBS and their VP Phil Gramm were doing very, very well during that period of time.

David Cay Johnston: They certainly were and you’ll remember, you know, lots of the big tax shelters that I exposed that the government then went after when it wasn’t doing so.

Thom Hartmann: Yeah. Amazing. David Cay Johnston, his new book, “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With the Bill.” DavidCayJohnston.com and Tax.com.

David Cay Johnston: That’s right, Tax.com.

Thom Hartmann: Just Tax.com. That’s great. David, thanks so much for being back with us.

David Cay Johnston: Thom, thank you, take care.

Thom Hartmann: Great talking with you.

Transcribed by Suzanne Roberts, Portland Psychology Clinic.