Is the tax bill signed into law by President Donald Trump a joke or a tragedy?
After the 1929 Wall Street Crash, Republican President Herbert Hoover tried to fix the economy with tax cuts for the wealthy. Humorist Will Rogers ridiculed this idea, saying that “Money was all appropriated for the top in the hopes it would trickle down to the needy.” None did. It made the Depression worse.
This idea is called “trickle-down economics,” “supply-side economics” or “Reaganomics.” In theory, (a) if the wealthy get tax breaks (b) they will invest more money in industry, (c) expanding the economy, (d) making everyone richer because (e) “a rising tide lifts all boats.” This is a fairy tale. The wealthy simply stash the extra money in tax havens, thank you very much.
In reality, (a) businesses need customers (b) with money (c) to buy stuff (d) to pay workers (d) who spend this money (e) as customers of businesses, etc., etc. Cutting taxes on the wealthy does not feed this cycle since (e) they spend very little of any extra money.
Undaunted, Republican President Ronald Reagan tried this loony idea again. His tax cuts almost tripled national debt (Uncle Sam’s “credit card” debt). The rich got richer, however, thank you very much.
Undaunted, Republican President George Bush Junior tried Reaganomics again. Its effect on economic output was negligible. National debt shot up $6 trillion more. The rich got richer, however, thank you very much.
Undaunted, Republicans asked the Congressional Research Service to prove that Reaganomics really does increase economic growth. But in 2012 its economists showed there was no correlation whatsoever between top tax rates and economic growth. Republicans simply buried the report and carried merrily on.
Undaunted, Republicans in Kansas tried Reaganomics again in 2013. They promised their huge tax cuts would be like a “shot of adrenaline” into the “heart of the economy.” Instead, it left their economy in a shambles. However, the rich got richer, thank you very much.
Warren Buffett, the world’s third-richest man, is quite clear: “Between the first computation in 1982 and today, the wealth of the 400 increased 29-fold — from $93 billion to $2.7 trillion, while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn’t trickle down. It surged upward.”
Undaunted, Republicans have stuck us with Reaganomics yet again. Polls show their tax scheme is unpopular. Trump did not “drain the swamp” and become the “voice” for the “little guy.” He became the voice for billionaires.
The super-wealthy will make out like bandits, getting 83 percent of the $1.45 trillion that Republicans will merrily load on to national debt (Tax Policy Center). Yet again, this will saddle us and future generations with interest payments but produce no economic benefit. Tax cuts for corporations will merely drive up stock prices, benefiting only the wealthy. Huge tax cuts for the aristocracy will be permanent. Minuscule cuts for the peasants will evaporate.
And you will get stuck with looking after your aging parents because the looting of Social Security is next on their agenda. Republicans will soon scream about the rising national debt they themselves engineered!
Will Rogers is rolling in his grave laughing. He was vindicated by the CRS report, obviously, and by a 2015 report from the International Monetary Fund. It said the idea of “trickle-down” economics was laughable. It found that when the share of income for the top 20 percent was increased, economic “growth actually declined over the medium term, suggesting that the benefits do not trickle down.” Not surprisingly, the IMF found that raising incomes for the poor and the middle classes (“customers,” remember) produces improvements to the economy.
High taxes are not America’s main problem. (They are lower than Canada’s or Germany’s, for example.) Our economic problems are low wages, expensive health care, crumbling infrastructure, trade deficits and growing national debt. President Barack Obama got stuck with Bush’s tax cuts and wars, all increasing the debt. He turned the economy around, but fixing Bush’s economic mess increased debt further.
So we should now be RAISING taxes on the wealthy to pay down debt, like a business paying off a bank loan from its cash flow. Republicans claim they run the country like a business. Too bad they are running it like Trump ran his casinos. They all went bankrupt.
And we should be fixing our most basic infrastructure. The United Nations recently sent an investigator to report on America’s Third World poverty. (You read that right.) In Alabama he found raw sewage in people’s yards. Parasitic hookworms, found in feces in Third World countries, have returned to America in the Republican South.
Something does trickle down under Reaganomics. It is raw sewage. I shall spare you the bad jokes. It is a tragedy.