"As a consequence of business and the uber-rich having to pay less tax (the uber rich paid something like 95% in the 50s), government had no more money to invest in colleges and other welfare schemes."
There are a couple of misconceptions involved in this statement, although both are commonly held by most of the population, so this is not aimed at you personally.
The tax rates previous to Reagan allowed considerable flexibility for business and the wealthy to utilize their money in investments that benefited the society and very few actually paid the higher rates as a result. Reagan promised that the wealthy would continue to make those investments if we would only "trust them". We know how that turned out.
The economic fantasies of the supply siders were aptly named by Bush, who ran against Reagan in the GOP primary, as "voodoo economics". Since then, the media and most establishment economists have pushed the Reagan version of taxation and government spending extremely effectively until even most "progressives" accept it as gospel.
According to their version, if the government wants to spend on welfare and the public purpose it must "find" revenue first by removing it from the private sector to be redirected. This creates a battle of ideologies involving the "efficiency" of government against that of private business and the moral issues surrounding taxation of wealth to support others who were not deemed worthy (welfare queens and "others") or responsible.
This version of macro-econ, although completely false since FDR suspended the dollar's convertibility to gold, resonated with voters whose only experience with money was similar with wages and spending within one's means. This perverted the intended purpose of taxation and money creation to foster many debates that likely wouldn't happen if the truth of both were better known. However, since the DNC had been assumed by the neoliberal faction now in control of its party, there was no pushback based in factual information and processes.
Both parties simply adopted the easier path of least resistence and adapted them to appeal to their individual voter base, the GOP inciting a mistrust of government's abilities to manage the economy and the DNC inciting a campaign of envy against the wealthy and corporations. Neither party has yet to tell anyone the truth about their government's ability to create as much money as it wants to achieve its goals, even in the complete absence of "revenue" from any source.
As the monopoly issuer of our nation's currency that is sovereign (not pinned to a commodity or other currency) and created by fiat (on command) in unlimited quantity, Congress never needs, not uses, "taxpayer money" or bond proceeds to enable its spending. Both taxes and bonds serve effective purposes within the economy, but neither are "funding" sources for its spending.
This is not information that the neo-cons or neoliberals want the voters to have because it removes another barrier that exists philosophically between the parties' platforms and voter appeal. What would the "liberal" voters think if they found out that all misery in the economy that could be mitigated with additional money creation was entirely a "political" choice, not economics?
Pelosi's "paygo" would likely condemn her to defeat at the first election, if not in a recall, and all conservatives would have to own up to their racist and classist motivations without false economics as cover. Even Bernie would be held liable for his constant hit list of the wealthy that would be taxed heavily to "pay for" his agenda, especially since his long time econ advisor is one of the most prominent MMT economists currently.
