October 11, 2010--Where's the Trickle?
Rona was making a good point the other morning.
Folks at the diner were talking about the economy again. Sandy said, "Until last year we were living within our means. We had a mortgage, a small one, but we were able to handle it. And we could meet our other expenses too."
"And?" I asked.
She said, "Like I mentioned, we were living within our means but then we lost our means."
This is a familiar story around here but still we averted our eyes.
"So, whatever happened to trickle down?" Everyone turned to look at Rona, not knowing where she was going with this. "I mean, haven't we had a trickle-down economy the past eight to ten years?"
"I'm not following you," I said.
"George Bush got Congress to pass his tax cuts back in 2001. It cut taxes primarily for the richest people. Right? The top two percent everyone's talking about as these cuts are about to expire. Over the decade they received about $3.0 trillion in tax breaks and the rationale for that was that since these folks are the most productive people if they are allowed to keep more of their money, as the Republicans put it, they will use that extra money to stimulate the economy. They'll use it, trickle-down theory claims, to invest it in ways that grow the economy by creating new businesses and in that way create new jobs. Do I have this right?"
We all nodded. "In other words," Rona continued, "these new jobs would lead to more people spending what they earned. Rich people's reduced taxes were in this way going to trickle down to the middle class who have seen their incomes decline for quite a few years."
She paused. "So what happened? Did it work? Have we seen anything trickling down to the rest of us?" No one said anything. "I haven't."
"Nor have I," said Sandy.
"But now," Rona said, "after this experience with tax cuts for the wealthiest, one could almost call it an economic experiment, instead of seeing prosperity come about as the result of these kinds of tax cuts we are experiencing the worst recession since the Great Depression. Isn't it true that during the eight years of the Bush administration five million jobs were lost"
"It is," Chuck said. "We tried this approach when Ronald Reagan was president and though we didn't have this kind of recession things were not good for the middle class. And the public debt nearly tripled. As I recall, the architect of Reaganomics, David Stockman, quit the administration and became a critic of trickle-down theory."
"And theory it was," I chimed in.
"Aren't theories based on hypotheses, not experience?" Rona asked, of course knowing the answer. "We just ran the trickle-down experiment again and once more it's been proven not to work."
"And yet," Ralph added, "aren't the Republicans still calling for more of the same? Extend all the Bush tax cuts, very much including those for the the top two percent? Actually don't they want to make the cuts permanent? Give away trillions more? All the while again justifying this tax policy as good for working people. More trickle-down economics. Of course they don't call it that anymore. They know the public is on to that one."
"They may be," Rona said, "But aren't you amazed that the richest people and the largest corporations are getting the Tea Party people and others who have been victims of these tax policies to be the staunchest advocates for retaining the high-end tax breaks. How does that work? Why would anyone struggling to get by be out there marching to protect hedge fund managers' billions in income? For the life of me, this I cannot figure out."
"I think I can," Sandy said. "When people are scared it's easy to fool them when they tell you they'll take care of you. Even if everyone knows it's not true. But it still brings some comfort. I'm embarrassed to admit it, but because of the way I'm struggling right now I know I'm susceptible to anyone who tells me that. I haven't signed up for the Tea Party but I do understand its appeal."
"You know the old story," Chuck said, "'Fool me once, shame on you. Fool me twice . . .'"
"'Shame on me,'" Sandy said with a ironic smile.
Folks at the diner were talking about the economy again. Sandy said, "Until last year we were living within our means. We had a mortgage, a small one, but we were able to handle it. And we could meet our other expenses too."
"And?" I asked.
She said, "Like I mentioned, we were living within our means but then we lost our means."
This is a familiar story around here but still we averted our eyes.
"So, whatever happened to trickle down?" Everyone turned to look at Rona, not knowing where she was going with this. "I mean, haven't we had a trickle-down economy the past eight to ten years?"
"I'm not following you," I said.
"George Bush got Congress to pass his tax cuts back in 2001. It cut taxes primarily for the richest people. Right? The top two percent everyone's talking about as these cuts are about to expire. Over the decade they received about $3.0 trillion in tax breaks and the rationale for that was that since these folks are the most productive people if they are allowed to keep more of their money, as the Republicans put it, they will use that extra money to stimulate the economy. They'll use it, trickle-down theory claims, to invest it in ways that grow the economy by creating new businesses and in that way create new jobs. Do I have this right?"
We all nodded. "In other words," Rona continued, "these new jobs would lead to more people spending what they earned. Rich people's reduced taxes were in this way going to trickle down to the middle class who have seen their incomes decline for quite a few years."
She paused. "So what happened? Did it work? Have we seen anything trickling down to the rest of us?" No one said anything. "I haven't."
"Nor have I," said Sandy.
"But now," Rona said, "after this experience with tax cuts for the wealthiest, one could almost call it an economic experiment, instead of seeing prosperity come about as the result of these kinds of tax cuts we are experiencing the worst recession since the Great Depression. Isn't it true that during the eight years of the Bush administration five million jobs were lost"
"It is," Chuck said. "We tried this approach when Ronald Reagan was president and though we didn't have this kind of recession things were not good for the middle class. And the public debt nearly tripled. As I recall, the architect of Reaganomics, David Stockman, quit the administration and became a critic of trickle-down theory."
"And theory it was," I chimed in.
"Aren't theories based on hypotheses, not experience?" Rona asked, of course knowing the answer. "We just ran the trickle-down experiment again and once more it's been proven not to work."
"And yet," Ralph added, "aren't the Republicans still calling for more of the same? Extend all the Bush tax cuts, very much including those for the the top two percent? Actually don't they want to make the cuts permanent? Give away trillions more? All the while again justifying this tax policy as good for working people. More trickle-down economics. Of course they don't call it that anymore. They know the public is on to that one."
"They may be," Rona said, "But aren't you amazed that the richest people and the largest corporations are getting the Tea Party people and others who have been victims of these tax policies to be the staunchest advocates for retaining the high-end tax breaks. How does that work? Why would anyone struggling to get by be out there marching to protect hedge fund managers' billions in income? For the life of me, this I cannot figure out."
"I think I can," Sandy said. "When people are scared it's easy to fool them when they tell you they'll take care of you. Even if everyone knows it's not true. But it still brings some comfort. I'm embarrassed to admit it, but because of the way I'm struggling right now I know I'm susceptible to anyone who tells me that. I haven't signed up for the Tea Party but I do understand its appeal."
"You know the old story," Chuck said, "'Fool me once, shame on you. Fool me twice . . .'"
"'Shame on me,'" Sandy said with a ironic smile.
posted by Steven Zwerling at
2:06 AM
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