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trickle-down economics
Instead of ‘Abundance,’ Let’s Have a Conversation About ‘Shared Prosperity’
“Abundance” without an eye for who the abundance serves runs the risk of exacerbating the problem at the core of our economic challenges—the hoarding of power and wealth by the people that already have a lot.
May 09, 2025
Those of us who care about building a healthy, thriving, and prosperous future are reeling. The Trump administration’s attacks on our people and our planet plus the outright evisceration of government by Elon Musk and his corporate army are forcing us to reflect on how we got here and to ponder how we move forward.
As believers in the government’s ability—and in fact responsibility—to do good, we are having to face the extremely uncomfortable fact that the government does not work for the majority of people. So, it makes sense that many are talking about how government can work better to create “abundance”—and the recent release of Ezra Klein and Derek Thompson’s book of the same name—as the solution to our despair. Klein and Thompson argue that America’s inability to build and the reason why liberals are losing is the result of excessive red tape, deliberate policy decisions, and bureaucratic inertia, which must be eliminated.
For over a decade I have worked to craft, implement, and evaluate strategies that leverage private, public, and philanthropic investments to deliver tangible and substantial benefits to formerly “redlined” communities. In plain terms, I’ve been fighting like hell to get resources—actual dollars—back into communities of color. And I’ve borne witness to the growing frustration with the perceived inability of all levels of government to deliver results. All too often, regulations have become the scapegoat that some argue drive up the cost or slow the development of essential infrastructure like housing, renewable energy, and transportation networks.
What shared prosperity requires is a shift away from profit maximization and toward affordability.
Don’t get me wrong, I completely agree that we have to urgently build more housing, transportation networks, and clean energy—the ingredients that people need to live healthy and prosperous lives. But just building more by eliminating regulations is not the silver bullet. “Abundance” without an eye for who the abundance serves runs the risk of exacerbating the problem at the core of our economic challenges—the hoarding of power and wealth by the people that already have a lot of, well, abundance.
Just building more—“abundance” as a goal in and of itself—will not allow us to deliver solutions to the thorniest and extremely interconnected challenges we face, like climate change, a widening racial wealth gap, extremely low levels of confidence in the public sector, eroding governance structures, and dwindling public financing due to rising costs and constraints on raising new revenue.
These problems were not created because we don’t build things; rather, they are the outcomes of an economic system built on fabricated scarcity and the doctrine of maximizing profit, exploiting communities of color, and concentrating political and economic power.
It's our inability to share in abundance, our over consumption, and the belief that in order to have more abundance you need to hoard as much of it as possible that truly hurts our planet and our people.
Take this example. Several years ago, California’s investor-owned utilities were planning to invest hundreds of millions of dollars in charging infrastructure to support the state’s transition to electric vehicles. But the majority of the investment was planned for wealthy communities where electric vehicles were already being used. The utilities claimed that low-income families would not use the chargers because they didn’t own electric vehicles, but we argued that investments in charging infrastructure at multifamily housing and in low-income communities were essential to creating the conditions for families to consider switching to clean vehicles. In the end, the utilities agreed that a percentage of chargers should be deployed to low-income communities and over the years those percentages have continued to increase as the stigma that low-income communities would not use chargers was dispelled.
And this lesson is replicable. By focusing on who the benefits of vehicle charging stations were going to, we were able to scale the clean energy transition even faster by opening the option up to more Californians—not just those who already had access.
And so, I propose that to really tackle our complex challenges we must not work toward “abundance,” but instead work toward the goal of “shared prosperity,” of which abundance is a key strategy to achieving that goal.
Shared prosperity first and foremost is rooted in people, not markets, and meets the needs of all people, including those who have suffered the most under our current paradigm, creating an economy in which all communities can thrive. It ultimately recognizes that we are part of an interconnected system and that we are only as strong as our ability to care for the most vulnerable among us.
What shared prosperity requires is a shift away from profit maximization and toward affordability. By definition, it’s prosperous for all, meaning that jobs with good benefits and worker protections are ubiquitous, and so are opportunities to build generational wealth and community resilience to climate, social, health, and economic crises.
The most vulnerable among us need to know that they can count on being able to bounce back. And to do so, our governments, our community-based organizations, and our people must have the capacity and resources to meet the call for support when needed.
Reading Abundance I get the sense that the authors think that people are often the obstacle to progress. Government, community leaders, environmental justice advocates, and environmentalists are not antagonists toward a healthy and prosperous future; they are the force that will ultimately help us achieve it.
Let me give an example of how a pivot from an “abundance” to a “shared prosperity” paradigm can function.
Take the Transformative Climate Communities (TCC) Program, a California state program which has delivered 400 units of affordable housing, planted 13,000 trees, installed over 600 solar panels on homes, deployed 26 electric buses, and placed people into approximately 800 jobs—all thanks to the vision and voices of the communities and their local governments who have been at the center of decision-making that impacts their daily lives. The eight communities—notably formerly redlined communities—where this work is taking place previously had an “abundance” mindset, they just needed the right support and government interventions. TCC is successful precisely because it shifted from this abundance mindset and toward a shared prosperity mindset, putting communities in the driver’s seat to determine how best to build thriving neighborhoods, fight climate change, and determine their own economic futures.
The challenge before us is to design a government that has new and better tools to scale our progress, from financing mechanisms that generate the revenue necessary to do this work, to governance practices to steer our progress, to, yes, revisiting the laws and regulations that govern our built environment to eliminate those that no longer fit our moment and to update those that require retooling.
Above all, we must focus our attention on building abundance and prosperity where it is hardest to achieve, where decades of disinvestment and a legacy of injustice have locked in poverty and pollution. Otherwise, “abundance” is just a new version of trickle-down economics, which not only never trickled-down but continued the grotesque hoarding of wealth and power among the people that already had it to begin with.
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Trump's Bait and Switch: Promise Immediate Gain, Then Inflict 'Temporary' Pain
When private corporations employ bait and switch advertising, Americans are rightfully indignant. Why should we accept similarly dishonest marketing by political entrepreneurs attempting to win elections?
Apr 17, 2025
Are Americans victims of political bait and switch? Immediate pain isn't what Republicans promised voters.
President Donald Trump promised immediate benefits, much of it on "day one"—cheaper eggs, lower inflation, peace in Ukraine. The war rages on. Egg prices have increased. Inflation, fueled by tariffs, is on the way up. But stocks, including Americans' 401-K retirement accounts, are way down.
Mr. Trump is now saying that Americans will suffer pain, but that it will pave the way for long term gains: "Sometimes you have to take medicine to fix something."
When people invest, they personally bear the costs of their better future—a lower short-run standard of living. The current national "investment" is being made at other people's expense, not at the personal expense of our wealthy leaders.
The immediate pain is real, but the gains will come slowly if at all. "Reshoring" cannot be done overnight. It takes years to develop skilled workers, create supply chains, and build new factories.
New factories require investments, but with constantly changing rules investors cannot know whether new factories will be profitable.
Accepting less now in order to get a better future is a classical definition of investment. An individual could work but chooses further education, living on very little in order to earn a better future living. Instead of spending all our income, we buy stock or bonds, increasing our future purchasing power.
But when people invest, they personally bear the costs of their better future—a lower short-run standard of living. The current national "investment" is being made at other people's expense, not at the personal expense of our wealthy leaders.
Indeed there is speculation that some leaders, or friends with whom they shared inside information, became even more wealthy buying stock options minutes before the announcement of the 90-day tariff "postponement" set off a one-day surge in the markets.
There is now pain all around the country. Thousands of federal workers are losing their jobs. Projects around the country and world are being discontinued, causing additional unemployment. When people lose jobs, they also usually lose medical insurance.
There are threats to eliminate medical care for millions of other Americans. Research into disease treatments and avoidance of future epidemics is being reduced.
Reindustrialization—encouraged by tax reductions for the rich and tariffs—will supposedly produce benefits that will trickle down to the men and women in the street. But trickle down benefits have been doubtful in the past, and could well be pure "vaporware."
A more certain way to improve the economy would be to distribute dependable government benefits—jobs, research, health insurance, even cash—right now, and allow consumer expenditures to bubble up to benefit industries that cater to people's actual wishes.
Cutting taxes for the rich, or giving the rich more ability to cheat on their taxes by whacking the Internal Revenue Service enforcement budget, is trickle-down economics run wild.
These tax decreases for the wealthy will be partially paid for with income from higher tariffs. These tariffs will not be paid by foreigners, but by average Americans who purchase the imported goods. Tariffs are an indirect sales tax.
When private corporations employ bait and switch advertising, Americans are rightfully indignant and government regulators may try to outlaw it. Why should we accept similarly dishonest marketing by political entrepreneurs attempting to win elections?
Donald Trump clearly loves tariffs and would like to be considered a second President William McKinley—McKinley II. But the recent stock and bond market behavior, reflecting investors' cold-blooded analysis of Trump's policies, suggests that he could instead become Hoover II. (Republican President Herbert Hoover led the country into the Great Depression after signing a major increase in tariffs.)
Congressional Republicans should remember that, after Hoover, their party did not capture the White House again for 20 years. It was nearly that long before they again controlled Congress.
This is too bad. American political parties are both rife with bad ideas at the moment. Like Republicans, Democratic politicians have some bad ideas that need to be opposed by a responsible opposition party that can sometimes win elections.
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We the People Face the Abandonment of America's Foundational Principles
Are we ready to defend our ideals, or have we lost interest in distinguishing virtue from vice and public good from private greed?
Feb 05, 2025
Misattributed quotes and next-level gaslighting aside, we find ourselves yet again at a crossroads in time—a moment demanding serious reflection on the foundational principles that shaped our republic. This is not hyperbole.
For far too many years, most of what we have been willing to believe contradicts the ideals of the figures said to be revered by those we have entrusted with our government.
As to misattributed quotes, we could jump right in with Thomas Jefferson's actual words regarding our shared principles, but let's first reflect on the insights of his revolutionary compatriot turned bitter political rival, John Adams. In a letter dated April 16, 1776—less than three months before the signing of the Declaration of Independence—Adams shared this wisdom:
Public Virtue cannot exist in a Nation without private, and public Virtue is the only Foundation of Republics.
Now, recognizing that those working to recreate our nation—in their own oh-so-very perfect image—may not favor the Federalist Adams, our indispensable second president, let us fast forward some 140 years to Theodore Roosevelt. "Teddy" Roosevelt, a man well-versed in the ideas of our Founding Fathers and our foundational principles, had this to say in a letter dated January 1917:
Americanism means the virtues of courage, honor, justice, truth, sincerity, and hardihood—the virtues that made America. The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety first instead of duty first, the love of soft living and the get-rich-quick theory of life.
The focus on virtue as the foundation of national character contrasts sharply with the narrative we have been fed by those who, in reality, promote "the things that will destroy America." God only knows why we, the people, have been so accepting of their manipulative tactics instead of insisting upon promoting "the virtues that made America." Regardless, we have once again set ourselves up to watch as policies that overwhelmingly benefit a growing cadre of super-rich are implemented.
Yes, they will fuel their economic fire sufficiently so that some of us will enjoy a few crumbs. But regardless of their justifications, the harsh realities facing the shrinking middle class and the most vulnerable will be disregarded. They'll tell us that our best way forward is to be dragged down some technological path by today's Monied Interests, feeding us an amped-up version of the same greed-driven trickle-down bullshit that we've willfully consumed for nearly half a century. And for good measure, they will, this time, destroy as many ballasts of good governance as they possibly can. Then, their blaze will exhaust itself—leaving behind a stunning path of destruction. Never mind the damage done.
We the People should by now recognize their ways.
Let's now acknowledge that many of our antagonists today would prefer that we conclude this essay with the Anti-Federalist Jefferson's 1801 Inaugural Address, wherein he listed his governing principles and said, "These principles form the bright constellation, which has gone before us and guided our steps through an age of revolution and reformation. The wisdom of our sages, and blood of our heroes have been devoted to their attainment..." However, it seems anything but likely that those currently at the helm of government are willing to acknowledge this in context.
For example, we are far removed from Jefferson's agrarian society, our need for a standing army is without question, and the Monied Interests have evolved beyond anything Jefferson could have imagined. So, we'll conclude, in a moment, with another example of Jeffersonian wisdom. Nonetheless, here's an abbreviated look at Thomas Jefferson's "bright constellation":
- "Equal and exact justice to all…
- Peace, commerce, and honest friendship with all nations…
- The support of the state governments in all their rights…
- The preservation of the General government in its whole constitutional vigor…
- Absolute acquiescence in the decisions of the majority…
- A well-disciplined militia…
- The supremacy of the civil over the military authority…
- Economy in the public expence…
- The honest payment of our debts and sacred preservation of the public faith…
- Encouragement of agriculture, and of commerce as its handmaid…
- The diffusion of information, and arraignment of all abuses…
- Freedom of religion; freedom of the press; and freedom of person…
- and trial by juries impartially selected."
To close, let's turn to the wisdom of an aging Jefferson, as he penned in an 1819 letter:
Of Liberty then I would say that, in the whole plenitude of its extent, it is unobstructed action according to our will: but rightful liberty is unobstructed action according to our will, within the limits drawn around us by the equal rights of others. I do not add "within the limits of the law"; because law is often but the tyrant's will, and always so when it violates the right of an individual.
We may not yet fully realize it, but we are literally in the process of deliberating (for lack of a better term) our foundational principles, and the chaos to come is going to test our commitment to Jefferson's Rightful Liberty—our foremost foundational principle of liberty and justice for all. We will soon know if we, as a nation, will continue our pursuit of a more perfect union.
The good news is that we, individually and collectively, get to decide which path we will pursue. The choice is ours.
Are we ready to defend our ideals, or have we lost interest in distinguishing virtue from vice and public good from private greed? Are we really to be remembered as the ones who abandoned America's Foundational Principles?
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Rejecting Trump's 'Failed Trickle-Down' Policies, 400+ Economic Experts Endorse Harris
"It is a choice between inequity, economic injustice, and uncertainty with Donald Trump or prosperity, opportunity, and stability with Kamala Harris, a choice between the past and the future," wrote the experts.
Sep 24, 2024
Several progressive economists were among more than 400 policy experts who signed onto an endorsement of U.S. Vice President Kamala Harris on Tuesday, arguing that the Democratic presidential candidate's proposals for an "opportunity economy" would improve the financial well-being of families across the country.
Stony Brook University professor Stephanie Kelton, a leading proponent of modern monetary theory; Center for Economic and Policy Research senior economist Dean Baker; University of California Berkeley economists Emmanuel Saez and Gabriel Zucman, whose work has focused on economic inequality; and former Labor Secretary Robert Reich were among the experts who signed the statement of support.
The economists noted that while working with President Joe Biden—who set out to be the "most pro-labor president" in U.S. history and has enacted numerous pro-worker policies—Harris "has taken action to strengthen sectors critical to the U.S. economy by increasing investment in small businesses, clean energy, and domestic manufacturing."
The vice president has pointed out during her campaign that she cast the tie-breaking vote to pass the Inflation Reduction Act in 2022, ushering in historic investments in clean energy and jobs.
Earlier this year, before Biden stepped aside in the presidential race, Harris announced a proposal to ensure state and local governments take action to reduce medical debt.
"From broadening access to affordable housing, to mitigating the financial burdens of medical debt, to rebuilding the nation’s infrastructure and expanding access to high-speed internet in rural communities—her leadership has made the economy stronger
and fairer for all Americans," wrote the economists, who also included center-left policymakers who served in the Obama and Clinton administrations.
The experts expressed confidence that as president, Harris would "work relentlessly to build a strong, pro-growth economy for all Americans."
The document was released the day before Harris is expected to give her latest speech focused on her proposals for an "opportunity economy." Since announcing her candidacy in July, Harris has unveiled proposals for a federal ban on price-gouging in the grocery and food industries, an expansion of Medicare's cap on prescription drug costs, and a restoration of the expanded child tax credit that was opposed by all Republicans in Congress, among other economic policies.
Republican presidential candidate Donald Trump is scheduled on Tuesday to talk about his tax plan, one of the economic policies that the experts said would "risk reigniting inflation and threaten the United States' global standing and domestic economic stability."
As Common Dreams has reported, Trump's plan to reduce the corporate tax rate from 21% to 15%—a further reduction from the one he pushed through as president in 2017—would benefit large companies and rich CEOs with a collective $48 billion in tax cuts, exceeding federal K-12 education funding.
Trump and other Republicans claimed in 2017 that their tax plan would create new opportunities for corporations to hire more workers and hand out raises, but analyses have shown that the policy disproportionately benefited the rich.
"The choice in this election is clear: between failed trickle-down economic policies that benefit the few and economic policies that provide opportunity for all," reads the statement. "It is a choice between inequity, economic injustice, and uncertainty with Donald Trump or prosperity, opportunity, and stability with Kamala Harris, a choice between the past and the future."
In a separate statement on Tuesday, dozens of anti-poverty and food justice groups were among those that endorsed Harris' price-gouging plan.
With food prices skyrocketing by 26% in some cases over the last five years, Harris has pledged to introduce rules in her first 100 days in office imposing "harsh penalties" on companies guilty of "greedflation"—keeping prices high in order to pad their profits.
"Your plan would tackle a problem that affects not just grocery shoppers, but almost everyone involved in the food system," said the groups, including the American Economic Liberties Project, Farm Action, and the Rural Coalition. "Addressing price gouging and corporate consolidation would not only help working Americans fight the inflation hitting their pocketbooks, but lay the foundation of a prosperous, sustainable, and more resilient food system for tomorrow."
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Americans Are Wising Up to the GOP’s Tired Trickle-Down Scam
Trump and other Republican politicians are trying their best to revive their nonsensical horse-and-sparrow supply-side rationale so the rest of us can pay to make the rich far richer.
Jun 13, 2024
They’re at it again. And it’s not even original: The trickle-down economics that two-dozen Republican governors and former U.S. President Donald Trump are reviving as you read these words has a long history.
“Trickle down,” of course, was the theory advanced by former President Ronald Reagan that if America only made rich people massively richer with staggering tax cuts, ending anti-trust regulation, and government subsidies for their industries, they would use all that extra free money to build new factories, hire people, and the abundance would trickle down to the average worker.
It was a lie, but it wasn’t the first time the GOP had tried that lie. Then knew exactly what they were doing, and what outcome it would produce. Instead of raising the pay of their workers, the rich people on the receiving end of Reagan’s, Bush’s, and Trump’s tax cuts simply added the cash to their money bins and investments, bought new yachts or trophy wives, and blasted themselves into outer space on penis-shaped rockets.
Thankfully, the Biden administration and this generation of Democratic politicians have rejected Reagan’s neoliberalism and low-tax ideology in favor of what centuries of history shows us works: for the wealthy to again pay their fair share of taxes to sustain the commons.
Nonetheless, Republican politicians think we haven’t noticed and they’re trying to pull it off again at both the state and federal level. A bill with 102 GOP co-sponsors (the Tax Cuts and Jobs Permanency Act) is in motion in the House of Representatives right now to double-down on Trump’s tax cuts.
How did we get here, and why are they still pushing something that’s so discredited it’s become a punch-line for late-night comedians?
The GOP was captured by the morbidly rich in the 1880s and has been dancing to their tune ever since, regularly throwing bones to bigots, religious zealots, womanhaters, and gun nuts to get enough votes to hold power.
Ever since that era, their main focus has been to increase the wealth of the morbidly rich while keeping down wages and saddling average people with as much debt as possible. As I’ve explained before, conservatives believe this crushing of the middle class is the best way to “ensure social stability” and thus “save America.”
The first Democratic president to call Republicans out for that era’s version of trickle-down economics (which back then, before income taxes, had to do with suppressing wages, fighting the early union movement, and letting industrial oligarchs wipe out small competitors) was Grover Cleveland, in his 1888 State of the Union speech:
As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.
But the first tax on wealthy Americans went into place way before that, in 1839, shepherded through Congress by Representative Abraham Lincoln. It was a tax on luxury items and expensive land exclusively owned by rich people. As Lincoln wrote to his friend William Wait on March 2, 1839:
I believe it can be sustained, because it does not increase the tax upon the “many poor” but upon the “wealthy few”… [which] by taxing [luxuries and land], as is well known, that belong, not to the poor, but to the wealthy citizen.
On the other hand, the wealthy can not justly complain, because the change is equitable within itself, and also a sine qua non to a compliance with the Constitution. If, however, the wealthy should, regardless of the justness of the complaint, as men often are, when interest is involved in the question, complain of the change, it is still to be remembered, that they are not sufficiently numerous to carry the elections.
Lincoln followed up as president with the nation’s first income tax in 1861, put into place to fund the Civil War. It was also a progressive tax; it only hit people who made above $800 ($32,000 today).
However, taxing the rich to pay for the needs of the nation was also an idea that long predated even Lincoln. As former President Thomas Jefferson wrote to Pierre Samuel Du Pont de Nemours in 1811:
We are all the more reconciled to the tax on importations, because it falls exclusively on the rich, and, with the equal partition of intestate’s estates, constitute the best agrarian law. In fact, the poor man in this country who uses nothing but what is made within his own farm or family, or within the U.S. pays not a farthing of tax to the general government, but on his salt; and should we go into that manufacture, as we ought to do, he will pay not one cent.
Our revenues once liberated by the discharge of the public debt, and its surplus applied to canals, roads, schools, etc., and the farmer will see his government supported, his children educated, and the face of his country made a paradise by the contributions of the rich alone without his being called on to spare a cent from his earnings. The path we are now pursuing leads directly to this end which we cannot fail to attain unless our administration should fall into unwise hands.
Following Cleveland’s calling out of the morbidly rich of his day, late 19th-century advocates for that class came up with the “horse and sparrow” theory of taxation. This was back in the day when everybody used horses for transportation and people were used to seeing small birds pecking undigested grain from the horses’ droppings that filled America’s streets.
The sales-pitch was that if you fed horses extra oats, more than they could normally digest, they’d pass through all that undigested oat into their manure for the sparrows to pick at; rich people’s excesses, in other words, would spill over to the average “sparrow” working person. It was embraced by Republicans in Congress and not only didn’t it work; it was blamed, in part, for the Panic of 1896.
Republican Warren Harding revived Horse and Sparrow economics in 1920 (many people still owned horses) when he campaigned on dropping the then-91% top income tax bracket down to 25%. He was elected and kept his promise, the result being the “Roaring 20s” when the rich got fabulously richer while working people saw their wages actually drop (leading to an explosion of unionization efforts by pissed-off workers that were violently suppressed by employers and police).
It all came to a startling and final end in October, 1929 with the Great Crash that set off what was then called the Republican Great Depression (the “Republican” part of that label largely wore off after the election of Republican President Dwight Eisenhower in 1952).
Republicans stopped talking about horses and sparrows around that time, but the theory never really died; Reagan simply reinvented it in 1980 as “Supply-Side Economics,” aka trickle-down.
Today, Republican politicians—heavily supported by right-wing billionaires since five Republicans on the Supreme Court legalized political bribery—are trying their best to revive their nonsensical horse-and-sparrow trickle-down rationale so the rest of us can pay to make the rich far richer. Trump promises to renew his expiring tax cuts for billionaires if he’s elected, which the Congressional Budget Office (CBO) says will add another $4.6 trillion to the $7 trillion deficit he gave us during his four years in office.
In Kansas, Republican legislators keep pushing through new tax cuts for the rich (one would reportedly cut Charles Koch’s tax bill this year by almost a half-million dollars) and Democratic Gov. Laura Kelly keeps vetoing them. Republican legislatures in Wisconsin and Pennsylvania just passed tax cuts for the wealthy totaling $2 billion and $3 billion respectively, although both states have Democratic governors who will veto such legislation.
In Mississippi, however, Republican Gov. Tate Reeves and his GOP colleagues in that state’s legislature have radically and repeatedly cut taxes, threatening to eliminate the income tax (which produces a third of the state’s revenue) altogether. Rich Mississippians will be fine; the necessary cuts will fall on the poor and the state’s educational and physical infrastructure, which are not much used by the very wealthy who fund Reeves anyway; they send their kids to private schools and fly private jets.
Other Republican-controlled states are seeing similar actions to raise taxes and fees on working class people while cutting taxes on the morbidly rich. Georgia’s Republicans just cut state taxes by a billion dollars; North Carolina reduced their income tax on the richest from 5.5% to 3.99%; and Iowa is trying to transition to a flat tax so that even the poorest of workers must pay the same tax rate as that state’s most wealthy, who will see a huge tax cut.
Altogether, The Center on Budget and Policy Priorities notes, just between 2021 and 2023:
Twenty-six states cut their personal income tax rates and/or corporate income tax rates, 13 of them multiple times… Combined, the cuts will cost those 26 states an estimated $124 billion by 2028, including $13 billion that they have already lost (2022-2023) and $111 billion over the next five years (2024-2028)… This 3.6% share is equivalent to more than a third of states’ general fund spending on higher education and more than half of what goes to state correctional systems.
Thankfully, the Biden administration and this generation of Democratic politicians have rejected Reagan’s neoliberalism and low-tax ideology in favor of what centuries of history shows us works: for the wealthy to again pay their fair share of taxes to sustain the commons.
As President Joe Biden told an audience just last week:
We’ve gone from trickle-down economics to the point where we’re in a situation where we build from the middle class out and the bottom up. And that way the wealthy still do very well. No one wealthy is hurting at all. We’re in good shape. So, we have to keep it going that way.
Republicans have been hustling this scam for over 150 years, and in the states they control educational outcomes are plummeting, child and infant mortality is skyrocketing (along with homicides), and infrastructure threatens to disintegrate as funding cuts come online.
Nonetheless, it finally seems Americans are catching on and increasingly rejecting horses, sparrows, and politicians who try to sell them on more trickle-down tax cuts for the rich.
More Americans need to know this history. Pass it along.
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Trickle-Down Economics, Not Immigrants, Threaten the American Dream
The ongoing attacks on the humanity of immigrants pose a threat to all of us, and we lose sight of our nation’s abundance and the promise upon which it was built.
May 12, 2024
At an age when many children are learning their ABCs, my father was a farmworker in Mexico. His job was to plant seeds with his small hands while chasing away crows that threatened to eat the freshly buried grain. I imagine him, a child, spending his days toiling behind the ox as it plowed the soil. My mother’s childhood was similar: She worked as a housekeeper and seamstress. Their meager earnings were needed for their families’ survival and as a result, neither was able to go to school.
When they were in their 20s, mom and dad immigrated to the United States, determined that my siblings and I would get an education. They believed in an American dream where prosperity was the reward for anyone who worked hard, and they did everything they could to make it come true.
Today, the belief “that anyone who works hard can get ahead” has diminished. A November 2023 poll by The Wall Street Journal/NORC found that only 36% of U.S. voters believe in the American dream, a number that has steadily declined over the past few decades.
We can reclaim the American dream and reimagine it as the freedom to thrive for all of us.
It’s not hard to understand why. The federal minimum wage of $7.25/hour has not increased since 2009, despite increases in inflation in every consumer category. Full-time workers earning minimum wage do not earn enough to pay for a two-bedroom rental anywhere in the country. Half of U.S adults struggle with healthcare costs, and 66.5% of bankruptcies are due to medical expenses. Forty-four percent of us are not prepared to pay for a $1,000 emergency. Student loan debt totals $1.74 trillion. Poverty and hunger have increased despite generations of unprecedented economic growth. By all accounts, many Americans are struggling to do impossibly more with increasingly less.
It doesn’t have to be this way. The original American dream, coined in 1931, was a vision of our collective prosperity as a society, and “a happier life” for us all. In The Epic of America, James Truslow Adams described “a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”
In other words, the freedom to thrive for all of us—no matter how much money we have, what we look like, or where we were born.
By the 1970s, my parents were both working in factories, earning minimum wage. They bought a house and raised nine children. We had health insurance, went to school, and lived in a relatively safe community. We were far from wealthy, but society’s promise of upward mobility in exchange for hard work was kept. Then came “trickle-down economics” and decades of policy decisions that transferred wealth away from working families in favor of corporations and the highest earners.
As a result, the U.S. has experienced an “uninterrupted increase in (economic) inequality since 1980.” According to a March 2024 report, the wealth of the top 1% in our country now exceeds $44 trillion, an increase of $2 trillion over the previous quarter. To conceptualize this, if you or I spent $1 million per day, it would take us 3,000 years to spend $1 trillion.
To make matters worse, opportunistic politicians distract us with divisive rhetoric and dehumanizing attacks on immigrants striving for a better life, scapegoating the very people who, like my parents, believe in the potential of our nation and work hard to make that belief a reality. People like the six men from Central America and Mexico who perished the night of the Baltimore bridge collapse as they worked filling potholes while many of us slept.
States like Texas and Georgia have moved to deputize local law enforcement to serve as federal immigration agents, resulting in racial profiling and instilling fear in local communities. Governors in Florida and Texas have played dangerous political games with human beings, shipping them like cargo to “liberal” areas in a cynical ploy that erodes our shared humanity. The governor of Texas has signaled plans to challenge the right of all children to receive an education, despite established precedent set by Plyler v. Doe. This mix of political and economic pressures robs us of the opportunity for meaningful dialogue and results in a society that is increasingly politically polarized, instead of joining together to ensure our country fulfills its promise.
These ongoing attacks on the humanity of immigrants pose a threat to all of us, and we lose sight of our nation’s abundance and the promise upon which it was built.
It’s no wonder so many Americans have lost faith in the American dream.
But there is a different perspective worth considering. It’s a perspective that motivates millions of immigrants to call this country home.
In 2023, my colleagues traveled the country and met with hundreds of immigrants to hear their stories and explore the lens through which immigrants view the country. We heard optimism about the abundance of our nation. A vision of belonging, and a desire to live with self-determination. A place where true prosperity includes a sense of community, joy, love, safety, dignity, inclusion, and purpose.
We are a nation that has yet to live up to its potential. But if we dare to collectively view our country through this lens, we can reclaim the American dream and reimagine it as the freedom to thrive for all of us.
The freedom to thrive will be possible when every one of us can see a doctor without facing financial ruin. When all workers are paid fairly, have safe working conditions, and can comfortably afford a place to live. When all children have access to an education and no one goes hungry. When our full humanity is recognized, embraced, and our interconnectedness celebrated. When we are free to love and to worship in ways that align with our experiences and beliefs, and when we each have the power to live our lives meaningfully. For immigrants, this also means the safety, inclusion, and dignity that comes with citizenship, and the recognition that we are a stronger nation because of the contributions of immigrants.
This will require policy choices that once again leverage our country’s wealth in favor of the many, instead of consolidating it among the few, and policies that are inclusive and rooted in our shared humanity. It will require us to envision a society that is radically different from our current reality. And it will require all of us—including the millions of immigrants who call our country home—working together to bring it to fruition.
My father, mother, and siblings were in attendance when I graduated with my master’s degree. It was a moment of immense joy and pride for my family, and the fruition of my parents’ humble dreams. For me it was a moment of profound gratitude for their vision and belief in what was possible, and a powerful reminder that the freedom to thrive is indeed worth fighting for.
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All I Want for Tax Day Is a Reversal of Trump’s Regressive Tax Cuts
Like the Bush tax cuts before it, the Trump tax cut was a trickle-down failure.
Apr 15, 2024
Happy Tax Day. As Supreme Court Justice Oliver Wendell Holmes said, “Taxes are the price we pay for a civilized society.”
But who should pay the most for this civilized society? As Adam Smith, the father of modern economics, instructed in his The Wealth of Nations, a tax system should be based on the principle of equal sacrifice. This means the richer should pay a larger share of their incomes in taxes than the poorer.
But today’s wealthy Americans are paying a much smaller share of their incomes in taxes than most Americans.
Which is why the debate that’s already begun over the 2025 expiration of the Trump tax cuts is so illuminating and important.
Whenever you hear Republicans complain about the federal budget deficit, bear this in mind: The Bush and Trump tax cuts are the major culprits.
The major reason some very wealthy people are backing former President Donald Trump is they want the Trump tax cuts to become permanent and not expire as scheduled in 2025.
As this debate unfolds, you should know four basic facts. The Trump tax cut that went into effect in January 2018 is:
- Skewed to the rich. Households with incomes in the top 1% will receive an average tax cut of more than $60,000 in 2025, compared to an average tax cut of less than $500 for households in the bottom 60%, according to the Tax Policy Center. As a share of after-tax income, tax cuts at the top—for both households in the top 1% and the top 5%—are more than triple the total value of the tax cuts received for people with incomes in the bottom 60%.
- Expensive. The Congressional Budget Office estimated in 2018 that the Trump tax cut would cost $1.9 trillion over 10 years. Recent estimates show that making the law’s individual income and estate tax cuts permanent would cost another $350 billion a year beginning in 2027. Together with the 2001 and 2003 tax cuts enacted under George W. Bush (most of which were made permanent in 2012), these laws have severely eroded America’s revenue base.
- Budget-busting. Federal tax revenue as a share has fallen from about 19.5% of the total economy in the years preceding the Bush tax cuts to just 16.3% of the economy in the years following the Trump tax cuts. Whenever you hear Republicans complain about the federal budget deficit, bear this in mind: The Bush and Trump tax cuts are the major culprits. Moreover, the relatively smaller share of the economy financing the federal government is not enough to pay for the nation’s investment needs and our commitments to Social Security and health coverage.
- Based on a “trickle-down” lie. Trump claimed that the corporate tax cut would “very conservatively” lead to a $4,000 boost in household income. Research shows that workers who earned less than about $114,000 on average in 2016 saw no change in earnings from Trump’s corporate tax rate cut, while top executive salaries increased sharply. Similarly, research has shown that the law’s 20% pass-through deduction, which was skewed in favor of wealthy business owners, has failed to trickle down to workers in those companies who aren’t owners. Like the Bush tax cuts before it, the Trump tax cut was a trickle-down failure.
More generally, trickle-down economics—the abiding faith on the political right that tax cuts as well as deregulation are good for an economy—continues to live on, notwithstanding its repeated failures. Ever since former U.S. President Ronald Reagan and former British Prime Minister Margaret Thatcher first tried them, trickle-down policies have exploded budget deficits and widened inequality.
Reagan’s tax cuts and deregulation at the start of the 1980s were not responsible for America’s rapid growth through the late 1980s. His exorbitant spending (mostly on national defense) fueled a temporary boom that ended in a fierce recession.
Yet the U.S. never restored the highest marginal tax rates before Reagan. And deregulation—especially of financial markets—is a continuing harmful legacy.
The result? From 1989 to 2021, typical working families in the United States saw negligible increases in their real (inflation-adjusted) incomes and wealth.
Over the same period, the wealthiest 1% of Americans became $29 trillion richer. The national debt exploded. And Wall Street’s takeover of the economy continued.
Meanwhile, and largely as a result, Americans have become more bitterly divided along the fissures of class and education.
So why is trickle-down economics still with us? What explains the fatal attraction of this repeatedly failed economic theory?
The easiest answer is that it satisfies politically powerful moneyed interests who want to rake in even more. Armies of lobbyists continuously demand tax cuts and “regulatory relief” for their wealthy patrons.
But why has the public been repeatedly willing to go along with trickle-down economics when nothing ever trickles down? What accounts for the collective amnesia?
The answer is that the moneyed interests have also invested a portion of their gains in an intellectual infrastructure of economists and pundits who continue to promote this failed doctrine—along with institutions that house them, such as The Heritage Foundation, Cato Institute, and Club for Growth.
Consider Stephen Moore, the founder and past president of the Club for Growth and a leading economist at The Heritage Foundation, whose columns appear regularly in The Wall Street Journal and who is a frequent guest on Fox News.
Moore helped draft and promote Trump’s trickle-down tax. He is now advising Trump on making that tax cut permanent, if Trump returns to the White House next year.
Moore and others like him are happy to disregard the evidence and history of trickle-down’s abject failures. They simply repeat the same set of promises made decades ago when Reagan and Thatcher set out to convince the public that trickle-down would work splendidly.
The public has so much else on its mind and is so confused by the cacophony that it doesn’t remember—until immediately after the next trickle-down failure.
If Democrats take over both houses of Congress in 2024, and President Joe Biden gets a second term, they must reverse the regressive tilt of the Trump tax law—raising more revenue while advancing the interests of low- and moderate-income families across the country rather than those of the wealthy. To achieve this:
- Tax cuts for people making over $400,000 should end on schedule in 2025. The Trump tax law’s provisions primarily benefiting high-income households are costly and do not trickle down.
- The tax system must raise more revenue from wealthy people and profitable corporations to offset tax cuts extended or expanded for those with incomes below $400,000, to finance high-value investments in people and communities, and to improve the federal budget outlook.
- New progressive tax policies should be enacted to reduce the ability of the wealthy to avoid taxes on their large unrealized capital gains and roll back the special breaks they receive when they do pay tax. Policymakers can also generate progressive revenues by extending and making permanent the mandatory IRS funding enacted in the Inflation Reduction Act, which supports revenues by increasing tax collections primarily from high-income households.
- Top priorities for extending and expanding tax provisions in 2025 should be the Child Tax Credit, the Earned Income Tax Credit for adults not raising children, and the enhanced premium tax credits for Affordable Care Act marketplace coverage. These credits have a long history of success—in stark contrast to the record of failure of the corporate tax rate cut and regressive tax cuts on wealthy individuals. This includes a marked drop in the child poverty rate in 2021 under the American Rescue Plan’s expansion of the Child Tax Credit—a policy that should be made permanent in 2025.
- Additionally, some 16 million people who work for low wages and who are not raising children in their homes received help through the Rescue Plan’s EITC expansion in 2021, and there were historic gains in the number of people receiving health coverage in the ACA marketplaces during the 2024 open enrollment season, with most enrollees able to find coverage for less than $10 per month. These should continue.
- Revenues also can be used for additional services Americans need. The costs of childcare, home-based care for older adults and people with disabilities, and housing remain unacceptably high for millions of families, and federal investment in these areas falls far short of need. Higher taxes on the wealthy will help offset these costs.
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The GOP Rolls Out Its 'Two Santas' Plot for Debt Ceiling and the Long Con Continues
This isn't a crisis. This is a plot.The corporate media refuses to tell the American people what this is: a cynical political and media strategy devised by Republicans in the 1970s, fine-tuned in the 1980s, and since then rolled out every time a Democrat is in the White House.
May 26, 2023
"The only thing wrong with the U.S. economy is the failure of the Republican Party to play Santa Claus." —Jude Wanniski, March 6, 1976
As the Fitch credit rating service puts the United States on “watch” for a possible downgrade and Democrats dither about the 14th Amendment, Republicans just declared the House of Representatives in a break because, from their point of view, there really is no crisis.
In fact, from the GOP’s perspective, it’s all going according to plan.
As Teagan Goddard’s Political Wire noted yesterday:
“RNC Chair Ronna McDaniel told Fox News that the U.S. potentially defaulting on its debt ‘bodes very well for the Republican field.’”
It’s no accident or coincidence that the threat of a failure to pay the nation’s bills never once happened during the presidencies of Reagan, Bush, Bush, or Trump. Or that it did happen every single time during the presidencies of Clinton, Obama…and, now, Biden.
You could even call it a conspiracy: there’s an amazing backstory — with a unique name — here. And it all started with a guy named Jude Wanniski, who literally transformed American politics with a plan that the American mainstream media, astonishingly, continues to ignore.
Here’s how it works, laid it out in simple summary:
To set up its foundation, Wanniski’s "Two Santas” strategy dictates, when Republicans control the White House they must spend money like a drunken Santa and cut taxes on the rich, all to intentionally run up the US debt as far and as fast as possible.
They started this during the Reagan presidency and tripled down on it during the presidencies of Bush and Trump with massive tax cuts for billionaires and increases in spending across-the-board.
Those massive tax cuts and that uncontrolled spending during Republican presidencies produced three results:
- They stimulated the economy with a sort of sugar high, making people think that the GOP can produce a good economy;
- They raised the national debt dramatically (it’s at $32 trillion today, almost all of which tracks back to Reagan’s, Bush Jr.’s, and Trump’s massive tax cuts and Bush’s two illegal off-the-books wars);
- And they made people think that Republicans are the “tax-cut Santa Clauses.”
Then comes part two of the one-two punch: when a Democrat is in the White House, Republicans must scream about the national debt as loudly and frantically as possible, freaking out about how “our children will have to pay for it!” and “we have to cut spending to solve the crisis!”
The “debt crisis,” that is, that they themselves created with their massive tax cuts and wild spending.
Never again would Republicans worry about the debt or deficit when they were in office; but they knew well how to scream hysterically about it and hook in the economically naïve media as soon as Democrats again took power.
Do whatever it takes, the strategy goes: use the 1917 Liberty Bond debt ceiling to shut down the government, crash the stock market, and damage US credibility around the world if necessary.
This will force the Democratic president in the White House to cut his own social safety net programs and even the crown jewel of the New Deal, Social Security, thus shooting their welfare-of-the-American-people Santa Claus right in the face.
And, sure enough, here we are again with a Democrat in the White House.
Which is why, following Wanniski’s script, Republicans are again squealing about the national debt and saying they will refuse to raise the debt ceiling, possibly crashing the US economy.
And, once again, the media is preparing to cover it as a “Debt Ceiling Crisis!” rather than what it really is: a cynical political and media strategy devised by Republicans in the 1970s, fine-tuned in the 1980s, and since then rolled out every time a Democrat is in the White House.
Politically, it’s a brilliant strategy that was hatched by a fellow most people have never heard of: Jude Wanniski.
Republican strategist Wanniski first proposed his Two Santa Clauses strategy in The Wall Street Journal in 1974, after Richard Nixon resigned in disgrace and the future of the Republican Party was so dim that books and articles were widely suggesting the GOP was about to go the way of the Whigs.
There was genuine despair across the GOP, particularly when Jerry Ford couldn’t even beat an unknown peanut farmer from rural Georgia for the presidency.
Wanniski argued back then that Republicans weren’t losing so many elections just because of Nixon’s corruption, but mostly because the Democrats had been viewed since the New Deal of the 1930s as the “Santa Claus party.”
On the other hand, the GOP, he said, was widely seen as the “party of Scrooge” because ever since the 1930s they’d publicly opposed everything from Social Security and Medicare to unemployment insurance and food stamps.
The Democrats, he noted, had gotten to play Santa Claus for decades when they passed out Social Security and unemployment checks — both programs of FDR’s Democratic New Deal — as well as their “big government” projects like roads, bridges, schools, and highways that gave a healthy union paycheck to workers and made our country shine.
Even worse, Democrats kept raising taxes on businesses and rich people to pay for all that “free stuff” — and Democrats’ 91% top tax rates on the morbidly rich didn’t have any negative effect at all on working people (wages were steadily going up until the Reagan Revolution, in fact).
It all added, Wanniski theorized, to the public perception that the Democrats were the true party of Santa Claus, using taxes on the morbidly rich to fund programs for the poor and the working class.
Americans loved the Democrats back then. And every time Republicans railed against these programs, they lost elections.
Therefore, Wanniski concluded, the GOP had to become a Santa Claus party, too.
But because Republicans hated the idea of helping working people, they had to come up with a new way to convince average voters that the GOP, too, had the Santa spirit. But what?
“Tax cuts!” said Wanniski.
To make this work, the Republicans would first have to turn the classical world of economics — which had operated on a simple demand-driven equation for seven thousand years — on its head. (Everybody then understood that demand — “working-class wages” — drove economies because working people spent most of the money they earned in the marketplace, producing “demand” for factory-output goods and services.)
To lay the ground for Two Santa Clauses, in 1974 Wanniski invented a new phrase — “Supply-Side Economics” — and claimed the reason economies grew and became robust wasn’t because people had good union jobs and thus enough money to buy things (“demand”) but, instead, because business made things (“supply”) available for sale, thus tantalizing people to part with their money.
The more products (supply) there were in the stores, he said, the faster the economy would grow. And the more money we gave rich people and their corporations (via tax cuts) the more stuff (supply) they’d generously produce for us to think about buying.
At a glance, this 1981 move by the Reagan Republicans to cut taxes while increasing spending seems irrational, cynical, and counterproductive. It certainly defies classic understandings of economics. But when you consider Jude Wanniski’s playbook, it makes complete sense.
To help, Arthur Laffer took that equation a step further with the famous “Laffer Curve” napkin scribble he shared with Dick Cheney and Don Rumsfeld over lunch. Not only was supply-side a rational concept, Laffer suggested, but as taxes went down, revenue to the government would magically go up!
Neither concept made any sense — and time and our $32 trillion national debt have proven both to be colossal idiocies — but if Americans would buy into it all, they offered the Republican Party a way out of the wilderness.
Ronald Reagan was the first national Republican politician to fully embrace the Two Santa Clauses strategy.
He told the American people straight-out that if he could cut taxes on rich people and businesses, those “job creators” (then a newly-invented Republican phrase) would use their extra money to “build new factories” so all that new stuff “supplying” the economy would produce faster economic growth.
George HW Bush — like most Republicans in 1980 who hadn’t read Wanniski’s piece in The Wall Street Journal — was initially horrified. Ronald Reagan was proposing “Voodoo Economics,” said Bush in the primary campaign, and Wanniski's supply-side and Laffer’s tax-cut theories would throw the nation into debt while producing nothing to benefit average Americans.
But Wanniski had done his homework, selling “Voodoo” supply-side economics to the wealthy elders and influencers of the Republican Party.
Democrats, Wanniski told the GOP, had been “Santa Clauses” since 1933 by giving people things. From union jobs to food stamps, new schools to Social Security, the American people loved the “toys” and “free stuff” the Democratic Santas brought every year, as well as the growing economy the increasing union wages and social programs produced in middle class hands.
But Republicans could stimulate the economy by throwing trillions at defense contractors, oil companies, and other fat-cat donor industries, Jude’s theory went: spending could actually increase without negative repercussions because that money would trickle down to workers from the billionaires and corporate CEOs buying new yachts and building new mansions.
Plus, Republicans could be double Santa Clauses by cutting people’s taxes!
For working people, the tax cuts would only be a small token — a few hundred dollars a year at the most — but Republicans would heavily market them to the media and in political advertising. And the tax cuts for the rich, which weren’t to be discussed in public, would amount to trillions of dollars, part of which they knew would be recycled back to the GOP as campaign contributions from the rich beneficiaries of those tax cuts.
Every time a Democrat was in the White House, they’d be forced into the role of Santa-killers if they acted responsibly by raising taxes; or, even better, they’d be machine-gunning Santa by cutting spending on their own social programs.
There was no way, Wanniski said, that the Democrats could ever win again.
Every time a Democrat was in the White House, they’d be forced into the role of Santa-killers if they acted responsibly by raising taxes; or, even better, they’d be machine-gunning Santa by cutting spending on their own social programs.
Either one would lose them elections, and if Republicans executed the strategy right, they could force Democrats to do both!
Reagan took the federal budget deficit from under a trillion dollars when he was elected in 1980 to almost three trillion by 1988, and back then a dollar could buy far more than it buys today.
Republicans embraced Wanniski’s theory with such gusto that Presidents Reagan and George HW Bush ran up more debt in twelve years than every president in history up until that time, from George Washington to Jimmy Carter, combined.
Surely this would both “starve the beast” of the American government and force the Democrats to make the politically suicidal move of becoming deficit hawks.
And, with Newt Gingrich using the formerly obscure weapon of the “debt ceiling” — a vestige of the 1917 Liberty Bond Act that nobody had paid attention to in living memory — that’s just how it turned out.
Bill Clinton, the first Democrat they blindsided with Two Santas and the newly-discovered “debt ceiling,” had run on an FDR-like platform of a “New Covenant” with the American people that would strengthen the institutions of the New Deal, re-empower labor, and institute a national single-payer health care system.
A few weeks before his inauguration, however, Wanniski-insiders Alan Greenspan, Larry Sommers, and Goldman Sachs co-chairman Robert Rubin famously sat Clinton down and told him the facts of life: Reagan and Bush had run up such a huge deficit that he was going to have to both raise taxes and cut the size of government programs for the working class and poor.
Clinton buckled under the threat of the debt ceiling, raised taxes, balanced the budget, and cut numerous social programs. He declared an “end to welfare as we know it” and, in his second inaugural address, an “end to the era of big government.”
Clinton shot Santa Claus, and the result was an explosion of Republican wins across the country as GOP politicians campaigned on a “Republican Santa” platform of supply-side tax cuts and pork-rich spending increases.
Democrats had controlled the House of Representatives in almost every single year since the Republican Great Depression of the 1930s, but with Newt Gingrich rigorously enforcing Wanniski’s Two Santa Clauses strategy with brutal “debt ceiling” threats, they finally took it over in the middle of Clinton’s presidency.
State after state turned red, and the Republican Party rose to take over, in less than a decade, every single lever of power in the federal government, from the Supreme Court to Congress to the White House.
Newt had done his job in the House of Representatives. Looking at the wreckage of the Democratic Party all around Clinton in 1999, Wanniski wrote a gloating memo that said, in part:
“We of course should be indebted to Art Laffer for all time for his Curve... But as the primary political theoretician of the supply-side camp, I began arguing for the ‘Two Santa Claus Theory’ in 1974. If the Democrats are going to play Santa Claus by promoting more spending, the Republicans can never beat them by promoting less spending. They have to promise tax cuts...”
Ed Crane, then-president of the Koch-funded Libertarian CATO Institute, noted in a memo that year:
“When Jack Kemp, Newt Gingrich, Vin Weber, Connie Mack and the rest discovered Jude Wanniski and Art Laffer, they thought they’d died and gone to heaven. In supply-side economics they found a philosophy that gave them a free pass out of the debate over the proper role of government. ... That’s why you rarely, if ever, heard Kemp or Gingrich call for spending cuts, much less the elimination of programs and departments.”
Two Santa Clauses had fully seized the GOP mainstream.
Never again would Republicans worry about the debt or deficit when they were in office; but they knew well how to scream hysterically about it and hook in the economically naïve media as soon as Democrats again took power.
When Jude Wanniski died, George Gilder celebrated the Reagan/Bush adoption of his Two Santas “Voodoo Economics” scheme — then still considered irrational by mainstream economists — in a Wall Street Journal eulogy:
“Unbound by zero-sum economics, Jude forged the golden gift of a profound and passionate argument that the establishments of the mold must finally give way to the powers of the mind. ... He audaciously defied all the Buffetteers of the trade gap, the moldy figs of the Phillips Curve, the chic traders in money and principle, even the stultifying pillows of the Nobel Prize.”
Republicans got what they wanted from Wanniski’s work. Using the “debt ceiling” argument — essentially Two Santas in drag — Republicans have forced two Democratic presidents, and are about to force a third, to gut-shoot the Democratic Santa established by FDR.
They held power for forty years, transferred over $50 trillion from working class families into the money bins of the top one percent, and cut organized labor's representation in the workplace from around a third of workers when Reagan came into office to around 6 percent of the non-governmental workforce today.
Think back to Ronald Reagan, who more than tripled the US debt from a mere $800 billion to $2.6 trillion in his 8 years. That spending produced a massive stimulus to the economy, and the biggest non-wartime increase in America’s national debt in all of our history.
There was nary a peep from Republicans about that 218% increase in our debt; they were just fine with it and to this day claim Reagan presided over a “great” economy.
When five rightwingers on the Supreme Court gave the White House to George W. Bush in 2000, he reverted to Wanniski’s “Two Santa” strategy and again nearly doubled the national debt, adding several trillion in borrowed money to pay for his tax cut for billionaires, and tossing in two unfunded wars for good measure, which also added at least (long term) another $8 trillion.
Hopefully this time Democratic politicians and our media will, finally, call the GOP out on Wanniski’s and Reagan’s Two Santa Clauses scam.
There was not a peep about that debt from any high-profile in-the-know Republicans; in fact, Dick Cheney — who knew Wanniski personally — famously said, amplifying Wanniski’s strategy:
“Reagan proved deficits don’t matter. We won the midterms. This is our due.”
Bush and Cheney’s tax cuts for the rich raised the debt by 86% to over $10 trillion (and additional trillions in war debt that wasn’t be put on the books until Obama entered office, so it looked like it was his).
Then came Democratic President Barack Obama, and suddenly the GOP was hysterical about the debt again.
So much so that they convinced a sitting Democratic president to propose a cut to Social Security (the “chained CPI”). Obama nearly shot the Democrats’ biggest Santa Claus, just like Wanniski predicted, until outrage from the Democratic base stopped him.
Next, Donald Trump raised our national debt by over $7 trillion, and the GOP raised the debt ceiling without a peep every year for the first three years of his administration, and then suspended it altogether for 2020 (so, if Biden won, he’d have to justify raising the debt ceiling for 2 years’ worth of deficits, making it even more politically painful).
And now Republicans are using the debt ceiling debate to drop their Two Santas bomb right onto President Joe Biden’s head. After all, it worked against Clinton and Obama and the media never caught on. Why wouldn’t they use it again?
And if the GOP’s debt-ceiling default crashes the economy, all the better: Republicans can just blame Biden: it’ll increase the chances of Republican victories in 2024!
Americans deserve to know how we’ve been manipulated, and by whom.
Americans deserve to know how we’ve been manipulated, and by whom. Sadly, although I and others (it’s even detailed on Wikipedia!) have been calling out Wanniski’s strategy for decades, none of the national media have ever seriously examined this 40+ year GOP strategy.
Hopefully this time Democratic politicians and our media will, finally, call the GOP out on Wanniski’s and Reagan’s Two Santa Clauses scam. And put an end to it once and for all with the constitutional remedies of the 14th Amendment and the “take care” clause of the Constitution’s Article II.
If not, get ready for Biden to cave in just like Clinton and Obama did, demoralizing progressives and cutting Democratic turnout in 2024.
Or, even worse, if McCarthy can’t hold his caucus together, prepare for an all-out economic disaster — a second Republican Great Depression — followed by an openly fascistic second Trump presidency or something very much like it.
Spread the word.
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Failing the Poor and the Economy, Kansas Gov Signs 'Regressive' Tax Deal
Law will impose $384 million tax hike on sales tax and items most often purchased by low-income earners
Jun 16, 2015
Following the end of the longest legislative session in state history, which dragged on an extra 23 days, Kansas Governor Sam Brownback on Tuesday signed a massive budget deal into law that includes a $384 million tax hike--mostly on the poor.
It's the largest tax increase ever introduced in the state, and more than half of it will come from sales tax and cigarette tax, which financial experts have long warned are regressive and punitive for low-income people as they force them to pay a larger percentage of their earnings than someone in a higher bracket.
The deal upholds many of the tax cuts Brownback introduced in 2012, which gave an annual $24,000 windfall to wealthy Kansans--which they will keep--but drove tax rates up for the poorest 20 percent of the state. It also cuts $50 million from the state budget.
Brownback went whole hog to convince lawmakers to pass the deal, including crying and calling legislators from his granddaughter's birth.
Kelly Davis, midwest regional director at the Institution on Taxation and Economic Policy, explained the deal thusly:
Early on in his tax-cutting frenzy, the Governor offered that Kansas was a "real live experiment" for other states in terms of showing the positive impact of supply-side economics. Those words have come back to haunt him and other supporters of trickle-down economic theories. If Kansas is an experiment, Friday's vote makes it clear that the experiment failed.
...Kansas's tax changes, even the provision that allegedly exempts 380,000 low-income people from income taxes, will do nothing to alter the fact that the Sunflower State earlier this year earned a spot on ITEP's "Terrible Ten" list because it has 9th most regressive tax structure in the country.
As the Kansas City Star points out, the higher sales taxes could backfire in border towns, as residents could simply cross state lines to do their shopping in neighboring Missouri, where the food tax will soon be five times lower.
The move is part of a trend of Republican-led states pushing tax schemes that exclusively benefit the rich and exclusively burden the poor.
The budget becomes law just months after Brownback signed into a law a controversial welfare bill that places strict limits on benefits and how they may be spent.
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IMF Report Admits IMF's Obsession with Capitalism Is Killing Prosperity
"By releasing this report, the IMF has shown that 'trickle-down' economics is dead; you cannot rely on the spoils of the extremely wealthy to benefit the rest of us."
Jun 16, 2015
In light of how the International Monetary Fund has spent most of its existence parading around the world telling governments to make their economies more friendly for multinational corporations by suppressing wages, restricting pensions, liberalizing industries, and more or less advocating, they ignore the popular will of workers and the less fortunate--all in the name of market capitalism and endless economic growth--a new report released by the IMF on Monday contains an ironic warning: stop doing all that.
"This reinforces Oxfam's call on how we need to reduce the income gap between the haves and have-nots and scrutinize why the richest 10% and top 1% have so much wealth. By releasing this report, the IMF has shown that 'trickle-down' economics is dead; you cannot rely on the spoils of the extremely wealthy to benefit the rest of us."
--Nicolas Mombrial, Oxfam International
Though it perpetuates the idea that economic growth is the master to whom all should bow, the new research--conducted by the IMF's own economists and submitted under the title Causes and Consequences of Inequality (pdf)--argues that many of the policies promoted by the IMF have harmed nations by exacerbating widespread economic inequality. As many have noted, current disparities between the world's richest and poorest represent a nearly unprecedented level of global inequality, which the report describes as the "defining challenge of our time."
To strengthen economies, the report declares, nations should admit that "trickle-down" theories of wealth and prosperity do not work. Instead of those, the study recommends raising wages and living standards for the bottom 20 percent, installing more progressive tax structures, improving worker protections, and instituting policies specifically designed to bolster the middle class.
"Fighting inequality is not just an issue of fairness but an economic necessity," said Nicolas Mombrial of Oxfam International in response to the report. "And that's not Oxfam speaking, but the International Monetary Fund."
This is not the first time the IMF's research has bolstered its biggest critics' arguments. According to the International Business Times, the new analysis on inequality "echoes previous IMF research that show that redistributive policies have a positive effect on countries' economic output."
But as the Guardian's economics editor Larry Elliott notes, the new paper creates obvious "tension between the IMF's economic analysis and the more hardline policy advice" it continually gives to countries seeking foreign assistance or development funds. With Greece as the most obvious example, Elliott cites details from the report and writes:
During its negotiations with Athens, the IMF has been seeking to weaken workers' rights, but the research paper found that the easing of labor market regulations was associated with greater inequality and a boost to the incomes of the richest 10%.
"This result is consistent with forthcoming IMF work, which finds the weakening of unions is associated with a higher top 10% income share for a smaller sample of advanced economies," said the study.
"Indeed, empirical estimations using more detailed data for Organization for Economic Cooperation and Development countries [34 of the world's richest nations] suggest that, in line with other forthcoming IMF work, more lax hiring and firing regulations, lower minimum wages relative to the median wage, and less prevalent collective bargaining and trade unions are associated with higher market inequality."
The study said there was growing evidence to suggest that rising influence of the rich and stagnant incomes of the poor and middle classes caused financial crises, hurting both short- and long-term growth.
No one should be fooled into thinking that the new research aims to alter the IMF's central commitment to advancing the financial interests of the global elite.
In fact, part of the argument presented in the paper is that such enormous levels of global economic inequality could seriously undermine the institution's public defense of capitalism's overall supremacy. "For example," the paper states, "[too much inequality] can lead to a backlash against growth-enhancing economic liberalization and fuel protectionist pressures against globalization and market-oriented reforms."
According to a recent report by Oxfam International, almost half the world's wealth is owned by one percent of the population, while the bottom half of the world's population owns the same wealth as the richest 85 people in the world. For Oxfam's Mombrial, who heads the international anti-poverty group's office in Washington D.C., the IMF's report is a welcome development that should put a nail in the coffin of the austerity-driven policies prescribed by governments and powerful financial institutions like the IMF, World Bank, and others.
"The IMF proves that making the rich richer does not work for growth, while focusing on the poor and the middle class does," Mombrial said. "This reinforces Oxfam's call on how we need to reduce the income gap between the haves and have-nots, and scrutinize why the richest 10 percent and top 1 percent have so much wealth. By releasing this report, the IMF has shown that 'trickle-down' economics is dead; you cannot rely on the spoils of the extremely wealthy to benefit the rest of us. Governments must urgently refocus their policies to close the gap between the richest and the rest if economies and societies are to grow."
As Oxfam and other international campaigners have been saying it for decades, he concluded, "The IMF has set off the alarm for governments to wake up and start actively closing the inequality gap, not just between the rich and poor, but for the middle class too. Their message to them is pretty clear: if you want growth, you'd better invest in the poor, invest in essential services and promote redistributive tax policies."
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