Trickle Up Economics Works!

Trump is putting forward a big tax cut/reform proposal; and Trump’s economic team wants the American taxpayer to know that it will be the best damn thing that ever happened to the US economy.  This Washington Post article quotes a variety of officials touting the brilliance of the plan; in particular, Treasury Secretary Mnuchin says it “will grow the economy and will create massive amounts of revenues, trillions of dollars in additional revenues.”  Just in case the bullshit isn’t obvious, this article by Robert Reich explains it nicely.

     But amidst all the criticism of Trump’s plan, it is important to keep one very important fact in view.  Trump’s tax cuts and reforms, along with his spending proposals, are a very effective means for accomplishing their intended purpose.  That is, they are a very effective means of redistributing wealth up the socioeconomic ladder—of taking from the working and middle classes and giving to the rich.  Here is how I explained this in a blog post from December 21 of last year.

     First, everyone gets a tax cut; this helps the rich much more than anyone else, but this is hardly news.  Then, the government spends money like a drunken sailor.  This means much borrowing—from the rich (and foreign governments), because that is where the money is.   And then government gives this money back to the rich in the form of various subsidies disguised as social programs (Medicare Part D, Obamacare) and outsourcing of government functions (like war and prisons) and such.  Meanwhile, ideologues denounce government programs that actually give help to the needful.  And the taxes that everyone else pays go more and more to pay the interest on these loans, leaving less and less for schools and healthcare and such.

Mnuchin’s promise of trillions in new revenue is just more of the same nonsense we heard from Reagan, Bush 1, and Bush 2; it is the Laffer Curve and supply-side economics reborn.  Since Reagan, we have been hearing from conservatives and the GOP that the way to prosperity is to give more and ever more to the rich.  And all it has gotten us is increased economic inequality, wage stagnation, and increasingly insecure working and middle classes.

     Policies like those being proposed by Trump are often characterized by critics as “trickle down economics.”  This label certainly captures the demeaning view of the citizenry that is implicit in such policies.  But a more accurate term might be “trickle up economics.”  Up is certainly how wealth moves under such policies; and for the last few decades, it has been more of a flood than a trickle.