Can you tell the difference between trickle-down, voodoo, economics and stimulus plan funding?
Trickle-down economics is synonymous perhaps with Reagonomics. But the gist is that if you provide enough tax credits to businesses and the wealthiest well then the benefits of their wealth will trickle-down to the rest of us.
The funding for those tax credits comes out of our pockets as tax payers in two ways. Initially they come out of our pockets in the form of lower tax revenues which are either financed through slashing government programs like education, infrastructure investment, EPA and FDA enforcement (those guys who inspect our food, water and air supply), healthcare, etc. Notice the demographic who would be most effected by cuts in these programs. Yes. Correct. The people who await the trickle-down....
Then they would come out of our pocket in the form of higher interest rates. The higher interest rates result from the higher borrowing costs that come as the our federal government needs to borrow more in order to finance itself, ourself, until the wealthy deign to trickle-down on us some of our wealth we have given them in the form of tax breaks and slashed social programs.
Every time I discuss trickle-down economics I have this picture of a medieval castle surrounded by paupers and their cottages. An anonymous hand periodically throws a few gold coins from a darkened window in the castle. They land, scattered, around the little plots of land farmed on a subsistence basis by the paupers. Sometimes they land on their heads. And each time the pauper rises up from their labor and says 'thank you lord and lady'. And the anonymous hand rotates back and forth like the hand of Queen Elizabeth.
Clearly, if voodoo economics as Bush the Elder called them or trickle-down economics worked our deficits would not have grown as they did during the Reagan years, nor would an ever increasing gap in wages and income exist now based on the rapid rise of the very richest, the decline in wages of the very poorest and minimal wage growth for those in the middle.
Stimulus funding takes our tax dollars and gives them to the banks and financial institutions whose management expertise led them to incentivize risky lending and whose vision forbade them from seeing the other shoe drop. Maybe, that's because they were hopping to another job before their bonuses were taken away. I don't know.
But the methodology is the same as trickle-down economics. Give our tax dollars to the wealthiest, in this case financial institutions, and hope they trickle-down some of that in the form of loans to small businesses who will then peform their role and create jobs.
So far, the altruism of today's bankers is no different than the altruism of yesterday's gilded wealthy of the Reagan years. In fact, they may be even greedier. They're hoarding our tax dollars while our federal deficit rises. Banks continue to refuse to lend to small businesses. Banks have announced new fees and penalties for credit card users in advance of changes to the laws. Now, their fees and penalties now are beyond what had been known as usurious. But, that's ok. We accepted them. And now they want to raise them.
And the impact on the economy is about the same. Wealth is increasingly concentrated in the hands of fewer people. Wall Street and the markets are reaching new highs at the same time unemployment is reaching new highs. Clearly, our tax dollars have yet to rain down on us. Or, the anonymous hand has yet to throw a few gold coins to the paupers.
Maybe, that's why no one looks up these days. I'm not sure.
And in defense of the stimulus funding, it's had less than one year. Whereas reagonomics had a decade or two, if you count 2001 to 2008.
But, at this point, I can't tell the difference. Can you?