According to Simon Johnson the 2020 campaign platform for Democratic candidates has to veer away from Trump's trickle-down economics. This cutting taxes for the rich will not spur growth in the long term. Worse it will just entrench inequality further. American voters need to know that it is wrong to continue “some version of the Reagan regime, which is likely to deliver consistently mediocre growth and extreme income inequality.”

While the author underscores the urgency to tackle economic inequality, he knows too well that the “oligarchy” that Ronald Reagan had created will resist any tax increase and fight it tooth and nail. The 2017 overhaul of the federal tax law was Trump’s legislative achievement. In retrospect Reagan was totally wrong about his fiscal policy being a boon to the economy. On the contrary it had contributed to the biggest budget deficits in US history. As a result to Trump's tax cut, last month the budget deficit rose by 2% to $209 billion. In the 2019 budget year, the US ran up a deficit of $984 billion, the most in seven years. For 2020 it will hit $1 trillion and will stay above this figure for the next decade.

The idea that cutting taxes for the rich was a good way to both raise revenue for the government and create jobs for the unemployed has not just been discredited by the IMF, even George H W Bush called it “voodoo economics” in 1980. Thanks in part to the chaotic manner in which Trump's bill was rushed through Congress in 2017, tax cut had enabled multinational corporations to dodge paying hundreds of billions of dollars, by claiming their profits were earned outside the US. As the IRS is underfunded and understaffed, it currently fails to collect nearly 15% of total tax liabilities – primarily to the benefit of those with high incomes.

What the author finds worrying is that “as rich people accumulated more wealth, both in personal terms and through the companies they controlled, they plowed some of this money into boosting their own political influence, with a view to increasing their wealth still further.” During his 2016 campaign, Trump vowed to “drain the swamp” in Washington. But since he took office, his focus has been protecting his own personal interests, pursuing policies to enrich his family and fellow plutocrats.

Ronald Reagan was blamed for the 2008 economic crisis. The late president was responsible for deregulation in the financial sector and, in particular, loosening restrictions on mortgage lending to people with lower down payments. In the wake of one of the worst financial crises in history, governments in the US and Europe moved to adjust financial regulation.

The Dodd-Frank Act, officially called the Dodd-Frank Wall Street Reform and Consumer Protection Act, was signed into law by President Obama in 2010 in response to the crisis that became known as the Great Recession. Dodd-Frank put regulations on the financial industry and created programmes to stop mortgage companies and lenders from taking advantage of consumers. In February 2017 Trump moved to chisel away at Obama’s legacy on financial regulation, announcing steps to revisit the rules.

There is a saying: History does not always repeat itself, but it often rhymes. The author points out that the “US has, of course, faced a situation like this once before – at the end of the nineteenth century. The response then was a range of reforms spread out over decades, including antitrust legislation and legal rulings against the strongest corporate interests on the planet, direct election of the US Senate, and enactment of the federal income tax (in the face of a hostile Supreme Court). Expanding social insurance – ultimately including government-run social security – and strengthening financial-market regulation in the 1930s was part of the same broad response. The system that emerged served the US well, until it was steadily dismantled following the election of Ronald Reagan in 1980.”

As Trump’s 2017 overhaul of federal tax law has inflicted much harm on the country’s budget, the next Democratic president will have no choice but to repeal Trump’s tax cut and Jobs Act.