Thursday, April 28, 2016

Trickle Up Poverty

When Ronald Reagan ran for president, his opponents scoffed at his proposal to lower taxes, calling the possible results as “Trickle Down Economics” (a/k/a Reaganomics). They said it was a worthless economic policy. Was it?

In theory, TDE is an economic system where there is no significant barrier to accumulation of wealth by individuals. If the rich do well, benefits will “trickle down” to the rest of the people. Lower taxes on high income or capital gains will benefit not only the rich but everybody on the lower income rungs, as the theory is supposed to work. Reagan's critics had to “eat crow” as the economy boomed after the Reagan tax cuts kicked in. The resulting prosperity lasted more than 25 years. Yes, the rich got richer, but so did the poor and middle-class, “a rising tide lifted all boats”, as Jack Kennedy once opined. The economy was booming during the late 80's and 90's as a result of Reagan's “Trickle Down Economics”.

As envy took hold among a certain section of the population, mainly by liberal Democrats, who thought that by lowering taxes would decrease government revenue, (but during Reagan's two terms, government revenue practically doubled). The clamor for higher tax rates resonated across the national scene, pushed by the Democrats. They claimed it was unfair that rich people got richer and as a result they felt that some of those extra riches should be confiscated by the government by raising taxes on the wealthy. For the last 20 years, drip by drip and inch by inch, the Democrats have pushed for successful people to pay more taxes into the federal treasury to help fund the money losing social programs instituted by the liberal politicians looking to shore their low-information and poor voting base. Since both Hillary Clinton and Bernie Sanders both champion the Marxist/Socialist economic philosophy, part of their campaign proposals include “income redistribution”, which is one of the planks of socialist theory (take from the rich to give to the poor).

During this period of when Reagan's tax cuts kicked in (1983 to 2007), America's net worth climbed from $25 trillion to $57 trillion. In fact, more wealth was created in the U.S. during those 25 years than in the previous 200 years. This period was called by many economists “the greatest period of wealth creation in the history of the planet”. Besides cutting taxes, Reagan lifted price controls on oil and natural gas, cut regulations, took on the unions, and advocated for free trade. All this booming economy came to an abrupt halt in 2008, mainly as a consequence of wrongful public policy (the housing mortgage meltdown).

The old adage of “people who don't learn from history are bound to repeat it” (this was a George Santayana quote) is something the Democrats haven't learned, as they want to punish success through taxing and regulating the producers over and above what is fair and equitable. In economics, there comes a “point of diminishing returns” which generally comes about when you take the incentive away from businesses and entrepreneurs by over taxing and over regulating them. After all, the top 10% of income earners now pay 70% of all income taxes, and they are vilified by the liberal left as not paying their “fair share”. Compare that “fairness” with the fact that 47% of income earners pay no federal income tax ( is that fair?). For example, a few years back the government, in their abject stupidity, instituted a “luxury tax” on products that wealthy people normally bought such as yachts, expensive cars etc. that cost $30,000 or more. The result of this action caused the wealthy people to curtail or stop their purchase of these luxury goods, thereby putting some of the producing companies of these luxury products out of business and the resulting layoff of thousands of workers, who were not wealthy. This oppressive tax was finally repealed after a short period of time. Was that a lesson to be learned by the Democrats, apparently not?

The policies put forth by the Democrats today is tantamount to reversing the theory of “Trickle Down Economics” which worked so well for so many years, and now they want to change it to “Trickle Up Poverty” as that will be the result if the tax and spend Democrats get control of the government after the November elections.

Conservative commentary by Chuck Lehmann

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Lawrence Cutler said...

Renowned economist and pundit Thomas Sowell once opined, "One of the sad signs of our times is that we have demonized those who produce, subsidized those who refuse to produce, and canonized those who complain". And so it is with the Democrat Marxist/Socialist candidates, Hillary Clinton and Bernie Sanders. Hillary blasts the "evil" 1%, but is part of that 1%, and is a $21 million beneficiary of the nations financial institutions by receiving outrageous speaking fees as she "unconvincingly" tries to throw them under the bus in trying to outdo Bernie in appealing to the left-wing Democrat base that has taken over the Democrat Party. Now you know why the citizens think that Hillary is a liar, is dishonest, and is untrustworthy.

Murray Rosen said...

No matter how much people on the left talk about compassion, they have no compassion for the taxpayer.
It is a sad indictment that a sizable portion of our younger generation (the millennials) can embrace a philosophy of socialism, when it has been free enterprise capitalism that has made our country the greatest in the world. Our schools and colleges have failed to instill this basic economic truism into the mushy minds of the Bernie and Hillary supporters. As Winston Churchill once said, "If a person is not a liberal by the age of 20 he has no heart, and if a person is not a conservative by the age of 40, he has no brains". Once these Marxist/Socialist indoctrinated students get a job and are forced to pay taxes and abide by onerous government regulations, they'll see that the "free stuff" promised by both Bernie and Hillary is just B.S.