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AlterNet reports
When Republicans in Congress passed a big, fat tax break bill in December, they insisted it meant American workers would be singing "Happy Days Are Here Again" all the way to the bank. The payoff from the tax cut would be raises totaling $4,000 to $9,000, the President's Council of Economic Advisers assured workers. But something bad happened to workers on their way to the repository. They never got that money.
In fact, their real wages declined because of higher inflation. At the same time, the amount workers had to pay in interest on loans for cars and credit cards increased. And, to top it off, Republicans threatened to make workers pay for the tax break with cuts to Social Security, Medicare and Medicaid. So now, workers across America are wondering, "Where's that raise?". It's nowhere to be found.
The U.S. Bureau of Labor Statistics reported this week that wages for production and nonsupervisory workers decreased by 0.1 percent from May 2017 to May 2018 when inflation is factored in. The compensation for all workers together, including supervisors, rose an underwhelming 0.1 percent from April 2018 to May 2018.
That's not what congressional Republicans promised workers. They said corporations, which got the biggest, fattest tax cuts of all, would use that extra money to increase wages. Some workers got one-time bonuses and an even smaller number received raises. But not many. The group Americans for Tax Fairness estimates it's 4.3 percent of all U.S. workers.
The New York Times story about this record breaker describes the phenomena this way: "Companies buy back their shares when they believe they have nothing better to do with their money than to return capital to shareholders." So despite promises from the GOP and the President's Council of Economic Advisers, corporations believed further enriching their own executives and shareholders was a much better way to use the money than increasing workers' wages--wages that have been stagnant for decades.
(Score: 5, Informative) by Thexalon on Friday June 22 2018, @01:30AM (2 children)
Trickle-down was always a lie. Not a mistake, not an incorrect theory, but something that was known by the people promoting the idea to be complete nonsense.
The Reagan administration came into power with a very clear goal: Eliminate as many federal government programs as possible, especially Social Security, Medicare, and Medicaid. This wasn't because these programs were unpopular, but because the people who had financially and politically backed Reagan's campaign hated paying for them and hated their very concept as socialism gone haywire.
Enter Grover Norquist and Americans for Tax Reform, longtime allies of Reagan going back to his days in California: Norquist reasoned that they could get rid of these programs by doing the tax cuts first without getting rid of the popular programs they wanted to eliminate, drive up a massive deficit, and then the Republicans could go to the public and say "We wanted to keep grandma's Social Security, but the budget unfortunately required that we cut back on it. Sorry, but it's the only responsible thing to do." So far, so good.
But that created a second problem of Democrats like Tip O'Neill saying "Wait a second, you were the ones being irresponsible by making all these crazy tax cuts." Enter Arthur Laffer, who with a vague diagram drawn on a paper napkin put forward the argument that tax cuts would actually increase government revenues (even though that had never happened), and now they had the answer to complaints about irresponsible tax cuts.
But then a third problem came along: The tax cuts would be most dramatic for the rich, in part because their taxes were the highest, and in part because they were the ones who had funded Reagan's campaign and wanted return on their investment. Which folks like Tip O'Neill could again point out seemed more than a bit unfair and corrupt. Enter David Stockman with his "supply-side" ideas, which he would later admit was, in essence, "trickle-down economics" (the term was coined by Will Rogers, and was definitely not intended as a compliment). This provided complex-sounding and technical-sounding reasons why the tax cuts for the rich would benefit everybody else, even though again that didn't and hasn't matched reality. But it seems like it ought to work, and that's enough to convince enough people that skewing tax cuts to the rich is totally reasonable and OK.
The whole thing is lies piled upon lies, with the ideas consistently failing any kind of empirical test they face. And the reason you know the promoters of those ideas aren't honest is that whenever their idea fails to match reality, they don't say "Whoops, we were wrong, back to the drawing board to figure out something better". Instead, they get nice salaries from think tanks and go around continuing to talk about their ideas and pretend like they all work perfectly. And one reason I know that is that I got to hear Arthur Laffer giving his spiel 20 years later - and he went on for an hour providing exactly zero data for any of his claims, mostly because there isn't any. And he didn't supply any evidence in the Q&A afterwords either that might bolster what he was saying, again because there isn't any. That's not a guy looking to get the right answer, that's a propagandist dressed up like an academic.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 1, Informative) by Anonymous Coward on Friday June 22 2018, @02:34AM
Yup. It's called The Two Santa Claus Model [wikipedia.org]
It dates to 1976.
In addition to tax-and-spend Democrats, there were now borrow-and-spend Republicans who cut taxes, mounted up debts, and, as soon as the Ds got power, the Rs squawked about those debts (which the Rs had run up).
Arthur Laffer, who with a vague diagram drawn on a paper napkin
It was just thought experiment.
There was no actual data set.
There has NEVER been an example of Trickle Down working.
In fact, when the marginal tax rate on the billionaire class goes below 50 percent, the economy begins a decline that ends in a crash.
-- OriginalOwner_ [soylentnews.org]
(Score: 5, Informative) by captain normal on Friday June 22 2018, @03:12AM
"This election was lost four and five and six years ago not this year. They dident start thinking of the old common fellow till just as they started out on the election tour. The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickled down. Put it uphill and let it go and it will reach the dryest little spot. But he dident know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night anyhow. But it will at least have passed through the poor fellow’s hands. They saved the big banks but the little ones went up the flue."
Will Rodgers---Nationally syndicated column number 518, And Here’s How It All Happened (1932), as published in the Tulsa Daily World, 5 December 1932.
https://en.wikiquote.org/wiki/Will_Rogers [wikiquote.org]
Everyone is entitled to his own opinion, but not to his own facts"- --Daniel Patrick Moynihan--