Trickle Up or Trickle Down
by Ted Miller
(originally published January 2018 in Tumbleweird)
I recently read a quote from Will Rogers:
This election was lost four and
six years ago, not this year. They didn’t start thinking of the old common
fellow till just as they started out on the election tour. The money was all
appropriated for the top in the hopes that it would trickle down to the needy.
Mr. Hoover was an engineer. He knew that water trickled down. Put it uphill and
let it go and it will reach the driest little spot. But he didn’t know that
money trickled up. Give it to the people at the bottom and the people at the
top will have it before night anyhow. But it will at least have passed through
the poor fellow’s hands. They saved the big banks but the little ones went up
the flue. –
Will Rogers, And Here’s How It All Happened (1932), as published in the Tulsa Daily World, 5 December 1932.
Will Rogers, And Here’s How It All Happened (1932), as published in the Tulsa Daily World, 5 December 1932.
That commentary could have been written today.
The tax bill passed by Congress and signed into law in
December claims to solve a problem that doesn’t exist. By almost any measure,
the economy has continued to improve since the Great Recession of 2007. The
unemployment rate has been reduced from a peak of 10% in 2009 to 4.1%, lower
than it was just before the recession[1]. Gross
Domestic Product (GDP), which measures overall economic activity, is growing at
a healthy rate of 3%[2]. Corporate
profits are soaring at over $1.8 trillion for the third quarter of 2017, the
highest on record[3]. And
the stock market indices are at record highs.
So why do we need to cut taxes? If the goal is to give
relief to the middle class, as the Republicans who passed the law claim, this
tax bill makes only a token, temporary effort at doing so. The middle-class tax
cuts are modest at best and expire after 10 years while the corporate tax cuts
are generous and permanent. The bulk of the tax cuts go to corporations and
wealthy individuals. If that is supposed to help the middle class, it
contradicts history: Providing more money to the rich never trickles down to
the lower classes.
When President Hoover tried it, as Will Rogers wrote, the
money trickled up, not down. Government policies that allowed market greed and
corporate irresponsibility to run unchecked led directly to the Great
Depression of the 1930s.
The tax bill of 2017 is more of the same. Cut taxes on the
rich, deregulate business, and everyone will prosper. But, not only is this tax
cut unnecessary to improve the economy, it comes with a $1.4 trillion price
tag. Yes, the party of fiscal responsibility passed a bill that increases the
national debt by one-and-a-half trillion dollars over 10 years.
There are so many pressing issues that could be paid for
with that missing revenue. Infrastructure improvement was high on the list of
campaign promises, but there are no programs to repair and improve the
country’s infrastructure and now even less money to pay for it. Adequately
funding of health-care continues to be an issue, but Congress won’t even continue
funding the Children’s Health Insurance Program for 9 million children. Veterans
programs continue to be underfunded and there are many other essential programs
that are being cut or defunded by the current administration.
The worst part of the tax cuts is who will end up paying for
them. Social Security, Medicare, and other safety net programs are in jeopardy
and members of Congress have already signaled that cuts to these programs will
be the next target. As the budget deficit grows, average Americans and those in
need of a social safety net will end up suffering the most. This kind of action
is not the promise of a government that works for all its citizens. This is not
how we take care of our fellow citizens and “promote the general welfare.”
In the stock market crash of 1929, those hurt the most
weren’t the big bankers and the wealthy, but the average, hard working American
who suffered from the economic collapse. Following the Great Depression, we
enacted programs for the poor, established social security to take care of our elderly,
and imposed tighter regulations on banks and corporations. Labor laws have
improved the workplace, supported the rights of workers, and helped make
America a place where a living wage is possible.
But for the last several decades, Republicans have worked to
erode or eliminate many of these programs. Banking regulations passed less than
a decade ago in response to the recession are being rolled back. Environmental
regulations are being weakened, labor laws are being undercut, and equality is
being jeopardized. The economy is growing, and corporate profits are at record
levels, but wages for the poor and middle class aren’t improving. The rich keep
getting richer, but they aren't letting that extra wealth trickle down to the
rest of the population.
This tax cut is not about helping the middle class. It’s
about concentrating wealth for members of Congress, their wealthy supporters,
and corporate America.
Will Rogers got it right. Trickle-down economics is a farce.
Capitalism is only sustainable with a well-regulated economy that balances the
drive for profit at any cost. Until we have a Congress that truly represents
the interests of all Americans, our economy will continue to trickle up.
