When are conscientious Democrats going to call trickle-down econ the lie that it is?

[closeupready]

Even George H.W. Bush coined it "voodoo economics" when he was competing against Ronald Reagan for the GOP nomination in 1979 because that's what it always was, and he knew it; a bunch of nonsense cobbled together sloppily from wish lists of the 1% - and also, he knew that dramatic income and wealth inequality historically led to the breakdown of civil society; thus, the maligned tax increase in 1991 which doomed his bid for a second term.

Trickle down doesn't work. The data shows that. Tax increases on the wealthy DO work. Tax increases constitute a check (direct and indirect) on unbridled greed, and help make for an egalitarian, civil society.

I'd like to see Democrats stop pushing the ideas that spring from Milton Friedman's miserably failed theories and start pushing the ones that spring from an economist whose ideas have been shown to work well, repeatedly, such as John Maynard Keynes.

[immoderate]

1. Good luck with that. Stupid is hard to fix.

All presidential candidates are Reaganites. From both parties.

--imm

[closeupready]

4. Good point. It's frustrating though.

[Jackpine Radical]

26. Stupid may be hard to fix but

venal is unfixable.

[Wellstone ruled]

2. Friedman and his beliefs on how to run

the world was a total flop when he first proposed them. However,the Birtcher's and other so called Conservatives loved his story line. One only has to remember Louis Rukeyser and his so called business round table broadcasted on PBS,from there came the legitimatizing of the so called Milton Friedman Theory of Economics. Can remember our Econ Prof at the Mad Town U,who attended College with old Milt talking about how his theories were plain Bullshit and many of his friends were Wall Street Bankers,and,to be aware of the possibility that these supply side theories becoming the Standard Operating Policy for our country. This was in 1960,and even in that time frame,Keynesian Professors were warning of the full court press by the Media to legitimatize this Bullshit. Our nation tried these similar theories and policies in the 1880's to !910 and then again in the 1920's and you know what that result was. Most folks remember the Christmas Carol and Scrooge,well that is the true story of Milton Friedman's School of Economics at the University of Chicago. When we think of Trickle Down,we think of peeing on a tree,same no.

[closeupready]

5. Interesting perspective, thanks.

[Jackpine Radical]

28. I was also at Mad Town U in those days.

It was certainly an island of Keynesian sanity in a sea of Chicago/Austrian School greed unbridled and at large in academe. The fact that Chicago School doctrine could become sh predominant is a marker of how far economics is from the science that it pretends to be with its fancy math trappings. You can build all the math models you want, but when the basic assumptions (e.g. about human nature & "rational" decision making) are rubbish, so is the entire fancy superstructure you build on top of it.

[jwirr]

34. I think it was able to become dominant so fast and stay so long has a lot to do with the fact that

it plays into the greed of people. It tells us we do not have to think about anyone but ourselves because help is on the way already. And that is the opposite message from the other economic models.

[pampango]

3. Krugman agrees and seems to think we are getting the message.

Why the One Percent Hates Obama - Their tax rates back to pre-Reagan levels

A peculiar aspect of the Obama years has been the disconnect between the rage of Obama’s enemies and the yawns of his sort-of allies. The right denounces financial reform as a vast government takeover — and lobbies fiercely against it — while the left dismisses reform as symbols without substance. The right accuses Obama of being a socialist stealing the money of hard-working billionaires, while the left dismisses him as having done nothing to address inequality.

On all these issues, the truth is that Obama has done far more than he gets credit for — not everything you’d want, to be sure, or even most of what should be done, but enough so that the right has reason to be furious.

The latest case in point: taxes on the one percent. I keep hearing that Obama has done nothing to make the one percent pay more; the Congressional Budget Office does not agree:



According to CBO, the effective tax rate on the one percent — reflecting the end of the Bush tax cuts at the top end, plus additional taxes associated with Obamacare — is now back to pre-Reagan levels. You could argue that we should have raised taxes at the top much more, to lean against the widening of market inequality, and I would agree. But it’s still a much bigger change than I think anyone on the left seems to realize.

http://krugman.blogs.nytimes.com/2014/11/13/why-the-one-percent-hates-obama/?_r=0

[closeupready]

6. He's done a lot, and I'd like to see Obama do so much more.

Unfortunately, I don't think he's going to be able to get very much done in the remainder of his term.

[jwirr]

35. He has done a lot but then he turns around and supports something like TPP and you wonder what

side he is on. He has a wonderful way with speech. One of the things he could do is give a really GOOD speech on why trickle down did not work anywhere in the world and put the Democratic Party back on track to follow their FDR model.

[pampango]

37. AFAIK, Krugman does not support the TPP. Last December he wrote that it's not especially important.

If he has changed his opinion of it since then, I have not seen it.

The answer is that I’ve been having a hard time figuring out why this deal is especially important.

The usual rhetoric — from supporters and opponents alike — stresses the size of the economies involved: hundreds of millions of people! 40 percent of global output! But that tells you nothing much. After all, the Iceland-China free trade agreement created a free trade zone with 1.36 billion people!!! But only 300,000 of those people live in Iceland, and nobody considers the agreement a big deal.

The big talk about TPP isn’t that silly. But my starting point for things like this is that most conventional barriers to trade — tariffs, import quotas, and so on — are already quite low, so that it’s hard to get big effects out of lowering them still further.

The deal currently being negotiated involves only 12 countries, several of which already have free trade agreements with each other. ... OK, I don’t want to be too dismissive. But so far, I haven’t seen anything to justify the hype, positive or negative.

http://krugman.blogs.nytimes.com/2013/12/12/tpp/?_r=0

Krugman seems to be very much and FDR Democrat. He consistently writes in support of higher taxes on the rich, a focus on income inequality, stronger unions, better ways to provide health care and retirement security and against austerity budgets and politics. It seems to me that he thinks and speaks a lot like FDR.

FDR favored lower tariffs and multilateral organizations to regulate international politics (the UN), finance (the IMF and World Bank) and trade (the International Trade Organization). He believed that could possibly temper extreme nationalism which had caused so much trouble in the first half of the 20th century. He was willing to sacrifice some degree of national sovereignty because he believed that countries working together in such organizations would learn to solve their disagreements through negotiation and compromise rather than unilateral national action.

Krugman's bread-and-butter is analyzing economic policy (including the effects of trade agreements on real people) from a liberal perspective. He is quite good at it. He may change his opinion of the TPP or he might not but, so far, he does not seem to think that it is inconsistent with being an FDR Democrat. We may disagree with him on one policy or another, but there is no reason to question which "side he is on".

[jwirr]

39. Agree with you. I was talking about President Obama's support for the TPP. Sorry if I was not clear.

[Octafish]

7. Catch-22.

It's crazy not to take money out of politics but if you try to take it out of politics you put your side at a disadvantage to the same people who put the money in politics so it continues to the point that not only are money and politics co-joined at a molecular level, they've manage to fuse Right with Left, Right with Wrong, and Republican with Democrat.

What's needed is REFORM. It's a dirty word around the smoke-filled room.

[badtoworse]

8. Tax increases on the wealthy are effective if their capital is captive

If they can easily move it to a less onerous tax regime, the value seems questionable to me.

There are trillions in corporate profits parked off shore and the US has the highest corporate tax rates in the world. That does not support your argument.

[closeupready]

9. The US has the lowest effective corporate tax rates in the world.

Amid talk in Washington about corporate tax reform, the study said the seven
companies, which in 2013 reported more than $74 billion in combined U.S. pre-tax
profits, came out ahead on their taxes, gaining $1.9 billion more than they
owed.

At the same time, the CEOs at each of the seven companies last
year was paid an average of $17.3 million, said the study, compiled by two
Washington think tanks.

The seven companies cited were Boeing Co, Ford
Motor Co, Chevron Cor ..

http://economictimes.indiatimes.com/articleshow/45187797.cms

[badtoworse]

10. That's one year and a select group of companies

Loss carry forwards and miscellaneous tax credits are one offs, not necessarily available to all companies and not always available. With a combined US corporate tax rate of close to 40% there is no incentive for many companies to repatriate income unless they can somehow reduce their tax bill - that is undeniable.

[closeupready]

12. OMG - stop! 40%??? Now you're just making stuff up.

It's 12%.

“This isn’t an April Fool’s Day joke; as of April 1, the United States of America will have reached the inauspicious position of having the highest corporate tax rate in the developed world,” said Sen. Orrin Hatch (R-UT) in a statement “I want America to be number one in many things, but having the highest corporate tax rate is definitely not one of them.”

This is constant refrain from Republicans, who then blame the supposedly high U.S. corporate tax rate for discouraging job creation. But as we’ve noted time and time again, while the U.S. has a high statutory corporate tax rate (meaning the rate on paper), U.S. corporations actually pay incredibly low taxes due to the ever-proliferating loopholes, credits, and deductions in the tax code and the use of overseas tax havens.

U.S. corporate taxes that were actually paid (the effective rate) fell to a 40 year low of 12.1 percent in fiscal year 2011, despite corporate profits rebounding to their pre-Great Recession heights. The U.S. both taxes its corporations less and raises less in revenue from corporate taxes than its foreign competitors:

http://thinkprogress.org/economy/2012/03/30/456005/reminder-corporate-taxes-very-low/

[badtoworse]

14. The reason the rate of taxes paid is low is because a lot of the money is staying offshore.

The US federal corporate tax is 35% and throw in 4 or 5% for state income tax and you get to around 40%. The point is that the income is not captive. Wealthy people do the same - they stash it in the Caymans, Malta or some other tax haven.

Raising taxes might have incentivized investment in the past when keeping money offshore wasn't as easy as it is today, but those days have passed

[closeupready]

19. Right; just open a numbered Swiss bank account, right? Oh, wait

I guess not - Obama shut effectively down that tax evasion scam. I guess he didn't get the news that 'those days have passed'. Someone should tell him that he's not actually as effective as he actually is.

When you are the US, there are all kinds of things you can do to make it painful to stash cash in offshore tax havens. You can never stop it 100%, I'll concede that.

[badtoworse]

22. So how much more in taxes is being collected?

[closeupready]

29. $5.5 Billion from 39,000 US tax evading individuals.

http://www.gao.gov/assets/660/653369.pdf

[badtoworse]

33. $5.5 billion over a 10 year period? Big deal.

[Blanks]

11. It's not really tax increases on the 'wealthy'...

It's tax increases on 'high earners'. It's different. You aren't really taxing wealth so much as you're taxing income. If they don't extract so much income from their place of employment as income - they don't pay such a high percentage of their income in taxes.

Of course a lot of the capital gains that they are manipulating need to be classified as income, but the idea that we are taking something from somebody (by raising taxes on the wealthy) is a false notion. We just need to put income tax back to where it was under Eisenhower. If they don't want to pay a high percentage - they just take home a reasonable income. They can pay their lower payed employees more if the company wants to send less money to the Feds.

[closeupready]

13. Yes. Your last two sentences is it, in a nutshell.

They can still take home a lot, and pay their subordinates more - and maybe even hire more people if more employees.

[Blanks]

24. I run across a right wing moron on Facebook...

He likes to repeat: "it's not right to take away people's hard earned money".

That's not what we are suggesting though. Employers need to adjust their compensation packages to a more equitable system, and since they've demonstrated that they won't do that - the federal (and state) government needs to step in and have tax policies that encourage companies to pay their folks at the top less, and the folks at the bottom more, or send more money to the federal government.

That's the perspective that I think we need to approach this from. We aren't 'taking' it from the wealthy, because it isn't their money until after their employer has taken their taxes out. If they're self employed they can invest in the business instead of paying themselves an exorbitant amount, but we aren't taking it from anyone.

[wyldwolf]

15. Please clarify. Is it your contention Democrats haven't called out tickle-down economics?

Clinton: 'Trickle-Down Economics Has Failed'
http://www.bloomberg.com/politics/articles/2014-10-27/clinton-trickledone-economics-has-failed

Elizabeth Warren Simplifies Thomas Piketty: 'Trickle Down Doesn't Work. Never Did'
http://www.huffingtonpost.com/2014/04/25/elizabeth-warren-thomas-piketty_n_5213690.html

[closeupready]

20. Okay, but these reflect very recent changes in the popular rhetoric.

[wyldwolf]

21. see post #18

[closeupready]

25. Okay, done with you and your snark, Confucious.

Have a nice evening!

[wyldwolf]

27. Translation: you don't need no stinking facts!

[Ykcutnek]

16. Is "trickle-down tax cut fairy dust" and "it doesn't work" good enough for you?

[wyldwolf]

17. pretty amazing this OP has already racked up 10 recs.

[Ykcutnek]

18. I can already hear grunting sounds.

Goal posts are heavy to move.

[Nye Bevan]

30. The Obamas will earn over $10 million per year once his presidency is over,

and will be worth well over $100 million within 10 to 15 years after his presidency is over.

And people wonder why Obama is not pushing for a significantly higher top income tax rate or a wealth tax? Really?

[Adrahil]

31. He DID push for higher rates... But...

That will not get through the House. What then? Try again?

[Nye Bevan]

32. Actually, he restored the top income tax rate to the Clinton-era level.

And slapped a significant extra tax for Obamacare on dividends and capital gains.

But I don't see any real push by any prominent Democrats to go much higher. Most of them will end up either on Wall Street or as highly paid lobbyists.

[Populist_Prole]

36. Kicked for visibility

Recommended too, though the issue has been pressing on a sore spot for far too long now.

Supply side doesn't work for the working class. Never did; never will.

[Bluenorthwest]

38. The destruction of the middle class under Reagan, along with his anti choice and anti gay policies,

his racist rhetoric and his flat out stupid choice to ignore AIDS for years and years are subjects which are now off limits. There are extremely popular figures in the Democratic Party who supported all of that, for decades and the way the rest of the crap is explained away is by magically waving the hand and saying 'I thought they had the best ideas for the economy'. So to avoid precious images from being asked 'how could you have supported that AIDS policy for so long' we all are supposed to agree that reasonable and intelligent people can see Reaganomics as a pretty good thing. Remember, our 'former Reagan Republicans' have millions of their own, gained while the rest of us became worse off. Trickle down worked for them. Why wouldn't they still see it as good stuff?

[tenderfoot]

40. That will happen when we get a conscientious news media that will report such statements...

eom