The Disaster Of "Trickle-Down" Economics

With the election of Ronald Reagan in in 1980, this country began to be exposed to the Republican economic policy commonly referred to as "trickle-down" economic theory. The idea was that if the government reduced regulations on the rich, making it easier for them to make a lot more money, it would be good for all Americans because some of that money would trickle down and benefit workers. The problem with this economic theory is that it simply didn't work.

The rich were definitely made a lot richer by trickle-down economics. As the top chart (from the Center for American Progress) shows, the income for the richest 1% of Americans rose from $346,600 in 1979 to $1,319,700 in 2007. That was a rise in income for the richest Americans of about 280%. But very little of that ever trickled down to workers. The middle quintile of Americans saw their income rise from $44,100 in 1979 to $55,300 in 2007. That's a rise of only about 25% -- a figure that didn't even keep up with the inflation over that period of time. And the bottom two quintiles of Americans did much worse than that -- seeing their buying power drop precipitously.

Obviously, trickle-down theory was working only for the rich -- and not all Americans as the GOP had assured everyone it would. But instead of admitting they were wrong, the Republicans decided that the rich were just having to pay too much of their new wealth in taxes. So they began to give huge tax breaks to the rich. This made the rich even richer, but did nothing for other Americans. In fact, by reducing the tax on capital gains to 15% in 2003, the rich were encouraged to make their money on the stock market rather than creating jobs to make products (the profit of which would be taxed at a higher rate).

We all know what the result of these failed policies was. It was a severe recession and the loss of many millions of American jobs. And yet, the Republicans still cling to their failed trickle-down economic policy. They still want to give the rich more massive tax cuts (even though they are making record profits). They still claim that giving the rich more money will create jobs (although it has failed to do so for the last thirty years).

It is time to stop this GOP-imposed insanity, and raise taxes on the richest Americans and corporations. But that can't happen as long as Republicans retain enough power in Washington to protect the rich from taxes. So, job one for Americans is to kick the Republicans out of power this coming November. It worked back in 1932, and it's the only option we have in 2012 to cure the nation's economic woes.