Trickle Up Economics

Most political scientists around the country believe that the United States is a moderate to moderately conservative country. There are countless examples to prove that. (i.e. flat out asking people where they fall on the political spectrum, how they vote, et cetera.) I think for the most part that is true. Despite voting for Obama, a liberal’s liberal, the country voted against issues like gay marriage, gay adoption, and properly funding schools. Andrew, you and I will have to politely disagree on school referendums. However, what irritates me the most is American’s views on taxes. Let’s get this out of the way. Nobody enjoys paying for taxes. I don’t but I also understand their importance. If you were to ask the average American, do you want a strong military, police, and fire units? Do you want clean air and water? Do you want a good educational system? Do you want effective bridges and safe roads? Do you want a nice library? Do you want a strong Food and Drug Administration to protect us from potentially dangerous food and prescription drug issues? I can go on but I would guess that 99% of us would say that we would answer yes to all of those questions. I think the problem, most Americans agree on, is that we pay too many and too much taxes. That is of course a matter of opinion but something I can sympathize with. I feel things like social security, and multiple wars are a terrible waste of money. Other people think we spend too much money on the education system, the environment, the arts, or on our poor. In this great country, we are all entitled to our own opinion. But here is what gets me. Why on earth do so many people favor Republican style economic philosophies?! We have tried supply side economics (aka trickle down economics) numerous times in the past and it never works. I blame a mixture of brain-washing and ignorance. The wealthy have scared the rest of us into thinking that if these socialist Democrats raise taxes on the wealthy, American businesses will all crash!! Republicans have successfully convinced Americans that by significantly reducing taxes on the wealthy, they will in turn take all of their extra money and spend it on hiring more employees, investing in more stocks, and starting new business. Therefore, more and more jobs are created and everybody wins! Here’s the problem; this type of economics has never worked. This theory was made famous by Ronald Reagan when he took office in 1980. George W. Bush is also a big backer of trickle down economics. Back in 1980, the richest 1% of Americans had 8% of the wealth. In 2008, the richest 1% of Americans own 20% of the wealth. Basically, by giving the rich tax cuts, they don’t do as their supposed to… they just get richer themselves! There is an old economic joke about horses and sparrows regarding the trickle down theory. The horses are supposed to represent the wealthy and the sparrows are the poor. Horses like to eat oats. Sparrows like to eat oats. If you just give the horses all of the oats, they will eat and eat and eat until they become as fat as a cow. The horses won’t share any of the oats but the sparrows are free to eat the oats that the horses shit out. That’s exactly what happens in trickle down economics. Ronald Reagan cut taxes on the wealthy by as much as 47% for the top earners but because he did not limit government spending, and because the rich just kept the extra money, all that happened was our deficit ballooned out of control and the economy later took a nose dive – essentially killing George H.W. Bush’s presidency. It is funny how history often repeats itself. Fortunately, presidents like Bill Clinton saw the problems in trickle down economics and instead gave breaks to the middle class. Clinton is hardly an economic socialist. How about another liberal – FDR as an example of how liberal economic theory has helped America. FDR immediately raised taxes on the wealthiest and took that money and gave it to the poor in the forms of government jobs to repair our infrastructure. This “New Deal” with America greatly helped us get out of the Great Depression. To put it in real dollars, the Gross Domestic Product of America when FDR started was 200 billion dollars. When he left, it was almost 900 billion. (Fairness in conversation though – FDR also started Social Security which will eventually bankrupt America unless restructured.) One reason I really like Obama is his interest in creating a 2008 New Deal. He wants to raise taxes on the wealthy (those making more than $200,000) and cut taxes on everybody else. He then wants to give that money back in government jobs. He wants to greatly expand Teach for America, the Peacecorps, Americacorp, and he wants to start a new one… the Greencorps where Americans work for the government cleaning up the environment. Don’t get me wrong, I am not a socialist. I am a firm believer in free market economics. But to sum up this long post, I feel the best way to improve our economy is to give the money to the middle class – you know, the people who will actually spend money. The middle class will then buy more goods which will create jobs and get our economy back on track. I think my argument was fair and backed up with facts. Thoughts?