Trickle-Down Economics

[pghin08]

http://www.cbo.gov/doc.cfm?index=12485

This is a link to a recent study done by the Congressional Budget Office on income disparity in the US. If you don't feel like reading it (particularly the full summary), here is the gist:

"CBO finds that, between 1979 and 2007, income grew by:

275 percent for the top 1 percent of households,
65 percent for the next 19 percent,
Just under 40 percent for the next 60 percent, and
18 percent for the bottom 20 percent."

Note that the above numbers are after-tax income.


So permit me to give my summary:

We cut taxes in the Reagan years in order to facilitate economic growth. The thought being, if we give tax breaks to corporations and other wealthy folk, everyone will benefit because there will be more job creation, and the wealth will "trickle-down" to the middle class and poor.

But something happened on the way to Reagan's American Dream. Those wealthy that we gave the tax breaks to? Do you know what they did with that money? They KEPT IT! There was no trickling anywhere! How shocked we should all be!


My apologies for being a bit hard-lined on this, but I simply don't understand people who say this system works.

[habsheaven]

I think the numbers you posted show that it reluctantly "leaks" down. That is the problem. Even if "trickle down" economics were to work. A "trickle" is just that, a trickle. It is not a "stream" or a "flow". The economy requires more than a trickle.

[duane1969]

I find it hard to directly connect trickle-down economics and those numbers. There are too many other factors that equate to household income besides the government's economic plan.

Also, trickle-down was about creating jobs, not guaranteeing a salary or income. Income is directly affected by education more than anything else. There aren't many drop-outs that are millionaires and there aren't many people with a doctorate degree living in poverty.

Salaries increased thru the 80's and 90's as the economy strengthened. It is just common sense that the further down the ladder you are the lower your raise will be. Walk into any business and I guarantee you that the manager will be earning more and getting better raises than the staff. That is life.

Trickle-down was about creating jobs and it worked. When Reagan took office in 1981 unemployment was at 7.5% and shot up to over 10% by mid 1983, but when he left office in January 1989 it had slid to 5.4% and it stayed below 6% until almost 1992.

[AUTaxMan]

So income grew by 18% for the bottom quintile and 40% for the next three quintiles? Not bad.

[pghin08]

I find it hard to directly connect trickle-down economics and those numbers. There are too many other factors that equate to household income besides the government's economic plan.

Also, trickle-down was about creating jobs, not guaranteeing a salary or income. Income is directly affected by education more than anything else. There aren't many drop-outs that are millionaires and there aren't many people with a doctorate degree living in poverty.

Salaries increased thru the 80's and 90's as the economy strengthened. It is just common sense that the further down the ladder you are the lower your raise will be. Walk into any business and I guarantee you that the manager will be earning more and getting better raises than the staff. That is life.

Trickle-down was about creating jobs and it worked. When Reagan took office in 1981 unemployment was at 7.5% and shot up to over 10% by mid 1983, but when he left office in January 1989 it had slid to 5.4% and it stayed below 6% until almost 1992.

You know me, I'm not for guaranteeing anybody anything. However, this was packaged as being "what's good for the wealthiest is good for everybody". And that plainly wasn't true. Unemployment is a tricky number too, affected by various sources (don't think anyone would say that our spike in 2008-2010 in unemployed people was due to taxes).

I'm no math whiz, but this seems pretty simple to me. Those that got the breaks, KEPT the breaks.

[AUTaxMan]

You know me, I'm not for guaranteeing anybody anything. However, this was packaged as being "what's good for the wealthiest is good for everybody". And that plainly wasn't true. Unemployment is a tricky number too, affected by various sources (don't think anyone would say that our spike in 2008-2010 in unemployed people was due to taxes).

I'm no math whiz, but this seems pretty simple to me. Those that got the breaks, KEPT the breaks.

What are the unemployment numbers during your time frame? Trickle down economics is about expanding the tax base. That would be more reflected in the unemployment numbers than anything else. Look at the numbers following the Reagan tax cuts and following the Bush tax cuts in particular.

[pghin08]

What are the unemployment numbers during your time frame? Trickle down economics is about expanding the tax base. That would be more reflected in the unemployment numbers than anything else. Look at the numbers following the Reagan tax cuts and following the Bush tax cuts in particular.

http://data.bls.gov/pdq/SurveyOutputServlet

But again, the tax situation is not the only thing that drives unemployment.

[AUTaxMan]

Nothing to see there. Server is down.

[pghin08]

Nothing to see there. Server is down.

Sorry, it's not letting me copy and paste my table. If you go to www.bls.gov, you can find it. Stupid government websites!

[mrveggieman]

Trickle down economics clearly does not work. Why give tax breaks to the wealthy who clearly do not need them instead of giving them to the poor who clearly does? What regan and bush did with trickle down was a case of reverse robin hood. Robbing the poor to give to the rich. SMH.