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‘Trickle-down economics’ a gimmick

November 8, 2012
The Leader Herald

"Trickle down" is the theory proposing that fiscal policies that favor the very rich will eventually create a robust economy benefiting everyone.

At least, that is what Mitt Romney wanted people to believe.

Reagan's 23 percent tax cuts and Bush's 10 percent cut with reductions in capital gain and dividend taxes were examples of tax cuts that favor the rich.

Mark Zandi, chief economist at Moody's and former John McCain adviser in 2008, determined that across-the-board tax cuts deliver little in the effort to stimulate growth in the economy. Specifically, he found the tax cut with the best economic bang for the buck came from payroll tax cuts to wage earners while one of the worst was the across-the-board cut that favored the rich. Zandi stipulated that all tax cuts should be temporary to avoid burdening the nation with long-term fiscal deficits.

Spending stimuli, by definition, are temporary (food stamps and unemployment benefit extensons) and are up to six times better than tax cuts.

Reagan's economic adviser, David Stockman, recently trashed "trickle-down economics," revealing it was just a gimmick with no economic merit that Reagan used to force Congress to stop funding social programs by "starving the beast."

Reagan had to raise taxes soon after to balance the budget and pay for his cold-war arms race.

Bush never corrected his trickle-down mistake (it is now 11 years old), and we are still paying for it. Paul Krugman estimates the total costs of the Bush tax cuts for the rich, the two wars and Medicare Advantage pharma would add up close to the annual deficit level.

Not to be outdone, Romney was determined to repeat the mistakes of the Bush tax cuts with his own 20 percent across-the-board tax cut and was unable to get confirmation from the IRS because deficit neutrality would have been mathematically impossible without other revenue.

By deliberately misinforming the voters, Romney was not only waging class warfare against them, but also showed contempt for their intelligence.

JACK CASSIDY

Johnstown

 
 

 

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