Trickle up!

Republicans, unbelievably, are once again forcing trickle-down economics on the United States, despite the idea being almost unanimously derided by reputable economists and financiers. It’s almost as if Republicans are unaware that the latest experiment in trickle-down has practically bankrupted the state of Kansas and has done little or nothing for North Carolina. They can’t leave this bogus ideology alone.

What does work economically is to put cash into the hands of the poor and not-so-poor, because they immediately go out and spend it, either on better health insurance, a real holiday, new clothes or something better than fast food. The bouncy resulting profits still eventually accrue to the donors Republican Congressmen adore so much in the form of dividends – it just takes a little more time to filter through. In the meantime poorer people have bigger incomes and, very importantly, feel better about the world, are not so resentful or prone to extremes, and even more tolerant of immigrants. But somehow the Republican politicians have an ideological aversion to the poor and middle class. They yatter on about the latter, but seem to secretly despise them as “losers”.

What is wanted now is not trickle down policies but the quickest and best way of fixing the country economically and helping the less fortunate at the same time: TRICKLE-UP economics.
Will we get it? Not until the issue of money in politics is corrected.

  • Owen Bell

    In my view, these tax cuts are far worse than the ones passed by Reagan when the term ‘trickle down’ was first used. Under Reagan, taxes were cut for everyone and the income tax code was simplified significantly. Trump supporters like to compare Trump to Reagan, but the reality is rather different.
    For starters, the main beneficiaries of Trump’s tax reforms are not people, but corporations (no Mitt Romney corporations are not people.) The corporate tax rate will be lowered from 35% to 20%. Now even if all of the exemptions and loopholes in the corporate tax code were eliminated, this would probably result in lost revenue, especially in the short term. But the Republicans have not eliminated that many loopholes. Instead, they have increased the number of ‘pass through’ businesses- that is, businesses that are taxed at the personal income tax rate not the corporate rate. Also, under Reagan, a far higher proportion of people paid income taxes than they do today. So any reductions in income tax will benefit the wealthy far more now. The deficit is larger now than under Reagan, despite not having a Cold War to pay for. Moreover, taxes were higher prior to Reagan’s reforms than they were before Trump’s, so the effect of any fiscal stimulus will be smaller.

    Overall I’m very sympathetic to those who want to simplify taxes. I also believe America’s headline corporate tax rate is too high, even if loopholes mean the average corporate tax rate paid is 24%. But Republicans need to balance their desire for lower taxes with the need to balance the budget and fund America’s already patchy social security system properly. Cutting taxes this dramatically now may give the economy a short term boost. But in the long term, it will undoubtedly be bad. The Fed will raise interest rates sooner to prevent the economy from overheating, neutering the effects of the fiscal stimulus. The debt will rise, crowding out future private investment. And when entitlements are inevitably cut to pay for the tax cuts, increasing poverty levels and angry seniors will swing against the GOP.