After presiding over a milder recession in 2001, his first year in office, Bush is now desperately trying to avoid a major one in his last year. George Bush’s only domestic policy— enormous tax cuts for the wealthiest 1% and crumbs from their table for everyone else—is now officially just as big a disaster as his foreign policy, threatening U.S. and world economies.
The president, the Congress and the chairman of the Federal Reserve now agree that the only way to lessen the looming economic catastrophe is to do just the opposite of what the Bush presidency has done for its entire existence—by putting more money into the hands of the poor and the middle class.
Hey, wait a minute. Whatever happened to trickle-down economics? The trickle-down theory was that if we gave huge tax cuts to rich people they would use that money to create more jobs. More people would be working and pouring more money back into our economy, which would create even more jobs, and on and on.
Well, guess what? Trickle-down was a lie. When wealthy people get enormous tax cuts, they don’t spend the money to create more jobs. They don’t spend the money on anything at all if they can help it. They’ve already got more money than they can ever possibly spend.
What they do is put the money into tax shelters so they can avoid paying any taxes to the government on it. Since it was the government that generously awarded them those enormous financial windfalls, that sounds really ungrateful. But the government doesn’t seem to mind. After all, it was the government that set up all those handy-dandy loopholes so that the wealthy could avoid paying taxes.
Some clever guys working in the Reagan administration created the myth that trickledown economics benefited everyone. President Ronald Reagan himself may even have believed it. Reagan believed a lot of myths about welfare queens and trees causing pollution.
It turns out that enormous tax cuts for the wealthy benefit—surprise!—the wealthy. The government then has less money to spend on anything that benefits the rest of us, little things like education, health care and job creation.
An Idea That Works
Even though trickle-down doesn’t work, trickle-up does. That’s why when Bush wants to boost the economy to lessen the effects of his recession, not even he has the guts to propose lavishing any more billions on his favorite welfare recipients—the wealthiest in the land.
Instead, Bush is proposing a $145 billion economic stimulus package directed at those who could be expected to spend it immediately—namely, the poor and the middle class who have been sucked dry to benefit Bush’s wealthy campaign contributors for the past seven years.
Unlike the wealthy whose enormous tax cuts might at best create a few additional jobs in the yacht-building industry, middle class and poor people who receive money from the government spend it right away, primarily on overdue bills. A sudden influx of $145 billion directly into the economy moves more consumer goods and creates more employment.
What a concept. The government directs financial benefits toward people who actually need them instead of rich folks who already have more money than they know what to do with. Then, the entire country benefits from an improved economy, not just the wealthiest 1%.
Actually, President Franklin Delano Roosevelt figured it out back in the 1930s. But Republicans have spent so many decades demonizing and trying to dismantle government programs such as welfare and Social Security that we forgot how it all worked.
Of course, after years of kicking people at the bottom in the teeth, it’s a difficult habit for some politicians to break. That’s why President Bush’s initial proposal for an economic stimulus intentionally leaves out the poorest Americans. Anyone who made too little to pay taxes wouldn’t get any money at all from the government.
A family of four with a yearly income of $40,000 a year or more would receive a full benefit of $800 for an individual or $1,600 for a couple. Below that, the benefit drops until the same family earning $24,000 a year or less gets nothing. When the idea is to put money into the hands of people who will spend it immediately, the only way to explain excluding the poorest people is sheer hatred. After all, the poorest people would spend the money the fastest.
As the great Hoosier philosopher Kin Hubbard once said, “Being poor is no crime in this country, but it might as well be.” What’s your take? Write: email@example.com.