The lie of trickle down economics

Ronald Reagan is often credited with popularizing "trickle down" economics -- the theory that the best way to help average citizens in this country is to offer huge tax breaks to large corporations. The logic goes that those companies will use the extra money to create more, better paying jobs for Americans, thereby allowing the money to "trickle down" to us, the American people.

The famous and lauded economist, John Kenneth Galbraith, noted that "trickle-down economics" had been tried before in the United States in the 1890s but under a different name. They called it the "horse and sparrow theory." He wrote that trickle down economics was a new name for, "...what an older and less elegant generation called the horse-and-sparrow theory: If you feed the horse enough oats, some will pass through to the road for the sparrows."[1] Galbraith stated that the "horse and sparrow" theory was at least partly to blame for the Panic of 1896. A panic not too dissimilar from the one "trickle down" economics has caused here in late 2008. Over a hundred years later and we're still trying the same failed economic theory -- but this time under a new name.

If the 26 years since Reagan was first elected have proven anything, it's that this economic theory, regardless the name you give it, is a sham. It's nothing more than a very thinly veiled excuse for the richest Americans to increase their personal holdings while shipping our jobs overseas in order to -- you guessed it -- increase their personal holdings. It's a return to the feudal system and we are the serfs. And the worst part? If you voted republican in any of the presidential elections since 1982 then you were voting for the guys who put the feudal lords back up on the hill and put us, the American people, back in the fields. Sorry, the truth hurts. But don't feel bad, you're not to blame -- they are. They were lying to you. They might have believed that their theory truly would help America as a whole, but their ignorance does not excuse the lie. They should have known better if they were going to run for president.




So that's the lie. But what is the truth?

The truth is that lowering the tax burden on Americans in a down economy is very important. That's why Obama will dramatically CUT taxes for everyone making less than $226,981 annually. If you make more than that, up to $603,402, then congratulations! -- you are doing well in this great nation and you will see neither a decrease nor increase in your Federal taxes. If you are one of the exceptionally fortunate 2 or so percent of Americans who make $603,403 or above then you will see a tax increase. I'm sorry, I know you really wanted to re-do the third-floor bathrooms in the Maui house this year -- but we're fighting an expensive war and people are losing their jobs and homes so it'll have to wait a couple years. Count your blessing, quit your whining, and get over it.

So under Obama, about 95% of Americans, those making $226,980 or less, will get a substantial tax cut. About 3%, those making between $226,981 and $603,402, will stay where they're at. And the 2% or so making $603,403 and up will see a tax increase.

Under McCain, the biggest Tax cuts go to the richest Americans. Period.

It's just sad.




The most amazing thing about the lie of trickle down economics is that the proponents of the lie could never get elected without the support of poor and middle class Americans. But why would people making less than $100,000 or $200,000 a year vote for candidate who promises to give the biggest tax cuts (remember tax money is OUR money) to corporations and the richest Americans? Common sense tells us and the real world application of this economic theory has proven time and time again that corporations and their wealthy leaders by and large do not use the tax cuts for the greater good. They use them for huge salaries, bonuses, and golden parachutes for themselves. So why do we keep voting for those who promise to keep that theory rolling?

The answer is simple. It's because every time they tell us how the democrats want to increase taxes on the wealthiest 3% of Americans, they simultaneously tell you that you could one day soon be one one of those wealthy few, if only you work hard and pull yourself up by your bootstraps. (Never mind that almost all the folks selling that line inherited their riches.)

The 95% percent of us who get screwed by giving all our tax money to CEOs are the ones who drive the economy. Those fat cats just kept taking, and taking, and eventually found that the consumers for the products that their companies built were all broke. Same for the folks paying the mortgages on the homes bought with loans from the fat cat's banks.

What good does your huge corporate tax cut do you if the bank you own is sitting on 10 billion dollars worth of loans that can't and won't be repaid?

Obviously the CEOs have golden parachutes and will retire to their yachts and Italian villas.

As for the rest of us? Were left to pick up the pieces.

How do we start picking up the pieces?

First: If a guy says we need to cut taxes for corporations in order to revive the economy -- DON'T VOTE FOR HIM. Unless you make over $650,000 a year. Then you should vote for McCain. I'm confident that the other %98 of us can handle it.

[1] Galbraith, John Kenneth (February 4, 1982) "Recession Economics." New York Review of Books Volume 29, Number 1.