Tag Archives: trickle down fallacy

Open Letter To ALL Elected Republicans

Posted on by under Bits 'n Pieces, Economic issues, education, Environmental Issues, guns, History, Law and justice, Political commentary, Rants, voting rights

Sometimes the angst builds and one just has to let off a bit of steam.  This is one of those times.  This letter is intended for Republican members of Congress, but also governors, state legislators, and ALL elected representatives who are failing us.

It’s sad that so many people have put their lives in your hands, yet you are playing Russian roulette with them.  You have betrayed the people you claim to represent, worse yet you have betrayed this nation while convincing the masses that you are acting on their behalf while filling your own coffers and laughing all the way to the bank.

Voting rights … as a citizen and taxpayer I demand the two bills that failed last year be re-visited and passed.  You say unfettered gun ownership is a constitutional right?  I SAY voting is a much more important constitutional right!!!  Those guns you are so damn protective of have killed 8,607 people so far this year, more than 300 of them children under the age of 17, and yet you say this is the “price we must pay for freedom”.  Bullshit!

You roll back regulations designed to save lives AND the environment, and then you point the finger of blame everywhere but at yourself when a train carrying deadly chemicals derails or a bank goes under because of a lack of oversight.  Look in the mirror!!!  Therein lies the blame!  Regulations on business exist because people are greedy and the more they have, the more they want and when they want more, they don’t give a damn who they step on to get it.  THIS is part of the purpose of government, but you shirk your duty in the interest of your own bank account!

Too many people in power don’t give one damn about the people of this country.

You can dye your hair, but eventually your roots will start to show.  You can whitewash history, but our roots will out.  American history IS Black history.  The U.S. didn’t exist as an entity until 1776, but African slaves were brought here and put to work as early as 1619, more than a century earlier.  They were beaten, starved, their children taken from them and sold to the highest bidder to be worked literally to death, but today we are supposed to turn a blind eye, to pretend it never happened???

The joke’s on us … on me … on every person in this country who isn’t wealthy.  NO, DAMMIT … Trickle Down economics is a myth, a fairy tale, it DOES NOT WORK!!!  And yet, once again, that is what we are being told.  “Oh, just put more money into the hands of the wealthy corporations and it will trickle down and fill your pot!”  NO, IT WON’T.  It never has and it never will.  WHEN will we stop being told this mythical lie???  WHEN will you politicians realize that we’re smarter than you give us credit for being?  Meanwhile, your pots are overflowing with donations from the likes of Charles Koch, Bernie Marcus, Paul Singer, the DeVos family and more.  Rather reminiscent of that fable that Marie Antoinette once said, when told that people were starving and couldn’t afford bread, “Let them eat cake!”

And then you blame everything that goes wrong on those of us who have compassion, empathy, who care about such things as human lives, the planet, other species – you call us ‘woke’ and make it sound like the dirtiest word in the English language.

You would take away the rights of women, of Black and Asian people, of Jews & Muslims, of any and all who do not fall into that “white, Christian, male” category and turn this nation into something ugly.  Well, if you succeed, you can have your damn country, for I want no part of it!  I don’t share your vision, and neither do the majority of people in this country, but in your eyes, we are naught but tools to be used, manipulated, then thrown away when we are no longer of use to you.  Beware, for when people have nothing left to lose, they fight.  That fight will come and it will be on your shoulders.

The Games They Play

Posted on by under Economic issues, History, Political commentary

Politics as performance art … er, without the art.  I don’t know about you folks, but I’m sick and damn tired of the games people play, the manipulation and hypocrisy from our elected officials.  Just do the job and sit down and shut up!!!  Here’s what we can expect to dominate over the next month or two …

Get ready: Two big upcoming theatrical performances

Biden wants to tax the rich, and House Republicans don’t want to raise the debt ceiling. Here’s what will happen.

Robert Reich

09 March 2023

President Biden is proposing to trim the federal budget deficit by close to $3tn over the next 10 years. He was an FDR-like spender in the first two years of his presidency. Has he now turned into a Calvin Coolidge skinflint?

Neither. He’s a cunning political operator.

Biden knows that he – along with his three immediate predecessors (Trump, Obama and George W Bush) – have spent gobs of money. In addition, Bush and Trump cut taxes on the rich and on corporations.

Not surprisingly, the national debt has soared. It’s not so much an economic problem as a political one. The huge debt is giving Republicans a big, fat target.

House Republicans are planning to stage theater-of-the-absurd pyrotechnics – refusing to raise the debt ceiling. Which means that at some point this summer, Biden’s treasury department will say that the nation is within days (or hours) of defaulting on its bills. A default would be catastrophic.

To counter this, Biden is planning his own pyrotechnics.

In the budget released this week, he’s proposing a “billionaire minimum tax” that would require wealthy American households worth more than $100m to pay at least 20% of their incomes in taxes (most middle-class Americans pay about 30%). Plus, they’d have to pay 20% a year on unrealized gains in the value of their liquid assets, such as stocks, which can accumulate value for years but are taxed only when they are sold (and not even then, if left to their heirs).

Here’s the important thing: the tax would apply only to the top one-100th of 1% of American households. Over half of the revenue would come from those worth more than $1bn.

Biden is proposing additional tax hikes on the wealthy: reversing the Trump tax cut by raising the top tax rate to 39.6% from 37%, increasing the corporate tax to 28% from 21%, and raising the tax on stock buybacks from 1% to 4%.

All told, Biden’s new tax proposals would amount to an almost $3tn tax increase over a decade – on the richest of the rich. Oh, and did I say? Taxing the rich is enormously popular.

Biden also wants to let Medicare officials negotiate with pharmaceutical companies for lower drug prices and cap the costs of drugs for seniors – a proposal that is also hugely popular.

But here’s the dirty little secret. Neither of these two theatrical productions – neither the Republicans’ refusal to raise the debt ceiling nor Biden’s big tax hike on the super-rich – will ever happen. They’re both fantasies.

A default on the nation’s obligations would bring on an economic calamity that Republicans don’t want to be responsible for. And a giant tax increase on the super-rich would be a miracle, given their political clout.

These two productions are being staged for the public – two competing performances, each intended to score political points against the other.

Biden’s performance is rational, and the Republicans’ is irrational and unserious, but that doesn’t really matter.

They will both end in a dramatic flurry of last-minute negotiations, seemingly death-defying moves and countermoves, and breathtaking cliffhangers.

Exciting? Of course. Important? Meh.

The denouement? The debt ceiling will be raised. The national debt will be lowered a bit. Social Security and Medicare will be left alone. And Biden and the Democrats will have leeway to do one or two more things before the gravitational pull of the 2024 election pulls them in – perhaps expand childcare or pre-K or enable more students to attend community college.

Yesterday I was in Columbus, Ohio, debating Arthur Laffer about the economy. We appeared before hundreds of students who had never heard of Arthur Laffer (or me, for that matter). If you’ve heard of him but don’t quite recall what he did, let me refresh your recollection: Art was the founder in the 1980s of so-called “supply-side economics,” the bonkers idea that the benefits of lower taxes on the wealthy trickle down to everyone else.

Trickle-down economics provided the theatrical scripts for Ronald Reagan’s, George W. Bush’s, and Donald Trump’s tax productions. The tax cuts were real, but the idea they were based on was always a fantasy. Nothing ever trickled down.

Industrial Dictatorship

Posted on by under Economic issues, education, Environmental Issues, History, Political commentary, Social commentary

I have many ‘pet peeves’ these days, one of which is the wealth inequality in this country.  It keeps growing and growing like an overfed toddler and while most people struggle to pay their bills and put food on the table, the 1% or so at the top laugh their way to their broker’s office to see just how much richer they are today than they were a month ago.  I’ve never heard it explained any better than Robert Reich does …

The three myths used by the ultra-wealthy to justify the ultra-wealthy

Robert Reich

29 September 2022

The stock market is down but don’t cry for America’s mega-billionaires. A record share of the nation’s wealth remains in their hands. They’re also paying a lower tax rate than the average American.

So how do they justify their wealth and their low tax rates? By using three myths. All are utter rubbish.

  1. The first is trickle-down economics. They (and their apologists) claim that their wealth trickles down to everyone else as they invest it and create jobs.

Really? For over forty years, as wealth at the top has soared, almost nothing has trickled down. Adjusted for inflation, the median wage today is barely higher than it was four decades ago. Trump provided a giant tax cut to the wealthiest Americans, promising it would generate $4,000 increased income for everyone else. Did you receive it?

In reality, the super-wealthy don’t create jobs or raise wages. Jobs are created when average working people earn enough money to buy all the goods and services they produce, forcing companies to hire more people and pay them higher wages.

  1. The second myth is the “free market.” The ultra-rich claim they’re being rewarded by the impersonal market for creating and doing what people are willing to pay them for. The wages of other Americans have stagnated, they say, because most Americans are worth less in the market now that new technologies and globalization have made their jobs redundant.

Baloney. Even if they’re being rewarded, there’s no reason why the “free market’ would reward vast multiples of what the rich were rewarded decades ago. The market can induce great feats of invention and entrepreneurialism with lures of hundreds of thousands or even millions of dollars — not billions. And as to the rest of us succumbing to labor-replacing globalization and labor-saving technologies, no other advanced nation has nearly the degree of inequality found in the United States, yet all these nations have been exposed to the same forces of globalization and technological change.

In reality, the ultra-wealthy have rigged the so-called “free market” in America for their own benefit.

Billionaires’ campaign contributions have soared from a relatively modest $31 million in the 2010 elections to $1.2 billion in the most recent presidential cycle — a nearly 40-fold increase. What have they got for their money? Tax cuts, freedom to bash unions and monopolize markets, and government bailouts. Their pockets have been further lined by privatization and deregulation.

  1. The third myth is that they’re superior human beings — rugged individuals who “did it on their own” and therefore deserve their billions.

Bupkis. Six of the 10 wealthiest Americans alive today are heirs to fortunes passed on to them by wealthy ancestors.

Others had the advantages that come with wealthy parents. Jeff Bezos’ garage-based start was funded by a quarter-million dollar investment from his parents. Bill Gates’s mother used her business connections to help land a software deal with IBM that made Microsoft.

Elon Musk came from a family that reportedly owned shares of an emerald mine in Southern Africa. (By the way, when I mentioned this in a recent video, Elon went nuts — tweeting that “You [sic] both an idiot and a liar.” Hmmm. Did I touch a nerve, Elon?)

Don’t fall for these three myths. Trickle-down economics is a cruel joke. The so-called “free market” has been distorted by huge campaign contributions from the ultra-rich. Don’t lionize the ultra-rich as superior “self-made” human beings who deserve their billions. They were lucky and had connections.

In reality, there’s no justification for today’s extraordinary concentration of wealth at the very top. It’s distorting our politics, rigging our markets, and granting unprecedented power to a handful of people.

The last time America faced anything comparable was at the start of the 20th century. In 1910, former President Theodore Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power” could destroy American democracy.

Roosevelt’s answer was to tax wealth. The estate tax was enacted in 1916, and the capital gains tax in 1922. Since that time, both have eroded. As the rich have accumulated greater wealth, they have also amassed more political power — and have used that political power to reduce their taxes.

Years later, Franklin D. Roosevelt saw the 1929 crash not only as a financial crisis but as an occasion to renegotiate the relationship between capitalism and democracy. Accepting renomination in 1936, he spoke of the need to redeem American democracy from the despotism of concentrated economic power.

“Through new uses of corporations, banks and securities,” he said, an “industrial dictatorship” now “reached out for control over Government itself. … [T]he political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor—other people’s lives… Against economic tyranny such as this, the American citizen could appeal only to the organized power of Government. The collapse of 1929 showed up the despotism for what it was. The election of 1932 was the people’s mandate to end it.”

FDR gave workers the power to organize into labor unions, the 40-hour workweek (with time-and-a-half for overtime), Social Security, unemployment insurance, and workers’ compensation for injuries. He raised taxes on the top.

But since then, these reforms have also eroded.

The two Roosevelts understood something about the American economy and the ultra-rich that has now reemerged, even more extreme and more dangerous. We must understand it, too — and act.

**

By the way, here’s the new video that put Musk into a lather:

Sunday One (or two) Liners …

Posted on by under Bits 'n Pieces, Political commentary, Random

It is Sunday morning, and I have promised to make a nice brunch for my family.  And then I must wash my daughter’s uniforms, because otherwise she will have no pants to wear to work tomorrow.  And so, I do not have a lot of time and am going with just a few brief snippets this morning that I came across while trolling the news.

Pinocchio x2

I frequently wonder about the physical and mental well-being of republicans in Congress.  Turns out I am right to be concerned.  Take, for instance, Ohio’s representative Jim Jordan, who told Anderson Cooper last week that he has never heard Trump tell a lie.  “I’ve never heard the president… He’s always been square with me, that’s for darn sure.”  When asked to think harder, he contemplated for a moment, then said, “I don’t know of it.  Nothing comes to mind.”  This man is not only deaf, but also not too smart and does not belong in Congress!

Aliens, Anyone?

In Florida, Bettina Rodriguez Aguilera is looking to replace retiring Miami Republican Representative Ileana Ros-Lehtinen.  Aguilera may fit right in with the current batch in Congress, for she already lives in a world of fantasy.  Ms. Aguilera says she’s been aboard a spaceship crewed by aliens. As in extraterrestrials, not Mexicans. Three blond, big-bodied beings — two females, one male — visited her when she was 7 years old and have communicated telepathically with her several times in her life.  Among other things, she claims to know …

  • There are 30,000 skulls — “different from humans” — in a cave in the Mediterranean island of Malta.
  • The world’s “energy center” is in Africa.
  • The Coral Castle, a limestone tourist attraction South Miami-Dade, is actually an ancient Egyptian pyramid.

Great … well, as I said, she will fit right in with the others who claim that Trump is an honest and decent man … just about as much a stretch of the imagination as alien abductions.

Re-writing History?

Presumably on Trump’s orders, the Department of Homeland Security has removed 12 reports from FEMA’s (Federal Emergency Management Agency) website.  Rather like removing the phrase “climate change” from the EPA’s website, don’t you think?  The reports?  They were primarily positive evaluations of FEMA’s operations during the tenure of President Obama.  Go figure.  I wonder if the next generation, or the one after, will be able to believe anything they read about President Obama in their history books?

Trickle-Down Didn’t Trickle

First quarter reports on U.S. economic growth showed a distinct slowing of such growth.  Why?  Because consumer spending slowed to a pace not seen since 2013.  Now wait … weren’t those ‘tax cuts’ supposed to encourage people to go out and spend more money?  What happened, Donnie?

According to an article in Reuters, “Consumer spending in the last quarter was undercut by a decline in purchases of motor vehicles, clothing and footwear as well as a slowdown in food and beverages outlays.”

Hmmm … who could have predicted this?  Oh wait … I did!!!!

A footnote here … while most working people say they are seeing little, if any, difference in their paychecks, America’s biggest banks are boasting record profits.  Think about that one … more on this later.

Say WHAT?

“I would rather have the popular vote because it’s, to me, it’s much easier to win the popular vote.” – Donald Trump

Trump now says he wants to get rid of the electoral college – the very tool that put him in the Oval Office – as it is much easier to win the popular vote.  If it’s so bloomin’ easy, then why did he lose the popular vote to Hillary Clinton by nearly 3 million votes???

Where is that doctor who supposedly declared him mentally fit?  Oh … yeah …

Shut up, Public!!!

Mick Mulvaney, acting director of the Consumer Financial Protection Bureau (CFPB) says that he is considering removing the agency’s database of consumer complaints from public view.  His excuse is that he claims it contains information that has not been vetted by the bureau and could be used unfairly against financial institutions.

Awwwww … gee golly gosh … we certainly wouldn’t wish to be unfair to the very institutions that caused the financial crisis of 2007-2008 now, would we.  We The People, after all, are not smart enough to understand that information and make our own judgments, just like Trump said we aren’t smart enough to understand his tax returns, so he just kept them private.

Well, now that I’ve managed to either make you chuckle or growl on this fine Sunday afternoon, I shall go make some mini-quiche and pancakes for my girls!  I hope you all enjoy a wonderful, relaxing Sunday afternoon!

Tax Bill Reconciliation?

Posted on by under Political commentary

Members of Congress have been busy as little beavers, trying to bring the House and Senate versions of the ‘tax reform bills’ together into a single bill for Trump to sign.  They seem to be in such a rush that they do not have time for such things as facts and credible analyses.  They remind me of the rabbit in Alice in Wonderland who is looking at his pocket watch, repeatedly saying, “I’m late, I’m late …”

What’s the rush?  Well, first of all, they are under pressure from Trump and from their rich donors to “get ‘er done”.  More to the point, while the budget was extended for two weeks, that is a very short time to prepare a spending bill, get the necessary votes, reconcile the House and Senate versions, and get it signed.  Look how long the tax bill is taking, after all! Thus, a government shutdown still looms.  So, I understand the rush, but … both of these bills are so terrible that neither deserve consideration, and to completely disregard the facts, to ignore every likely outcome, is destined to do far more harm to the people of this nation than it will benefit them.  Let us take a look …

Today, the Department of Treasury, under the ‘leadership’ of Trump’s handpicked Steven Mnuchin, issued its “Analysis of Growth and Revenue Estimates Based on the U.S. Senate Committee on Finance Tax Reform Plan”. The tax bills are filled with fallacies and fantasies that are far more appropriate for children’s storybooks than for government policies.  Let us begin with the claim by Congress that the gigantic tax cuts for the wealthy will pay for themselves.  The Treasury Department report itself debunks this myth, as have a number of independent and non-partisan groups before this.  The plan will cost an estimated $1.5 trillion in lost revenue from major corporation and wealthy taxpayers, and is only projected to generate an additional $408 billion in additional revenue from growth.  Thus, the deficit would be more than a trillion dollars to add to our already astronomical national debt.

Treasury analysisBut, that isn’ even the worst of it, for that $408 billion in additional revenue is fallacy #2.  It is based on the assumption that all those large corporations that are saving all that money will reinvest it into solvent enterprises that will a) generate corporate tax dollars, and b) employ people who will pay taxes.  In short, it is based on the fantasy of ‘trickle down’ economics, which I have written about previously, and which has been de-bunked and proven wrong so many times that it should not even enter into the equation.  The Treasury report makes an assumption, based on this marvelous falsehood about trickle down economics of a sustained 2.9% growth rate per year over the next ten years.  Ain’t gonna happen, folks.

There are certain rules for the reconciliation process, one of which is called the Byrd Rule.  The Byrd Rule requires all provisions in the bill to be funded by revenues, and they cannot increase the deficit beyond the 10-year budget window. Obviously, neither version of the current bills being considered could pass either stipulation in the Byrd Bill, nor even come close.  That, in itself, should send them scurrying back to the drawing board for something more reasonable.

Thus far, most of the republicans in Congress still support basically whatever outcome the committee reconciling the bills comes up with, but there are some who are beginning to look at the deficit numbers and have concerns.  One such Senator is Susan Collins of Maine, who says she is as yet undecided, and has laid out certain conditions that would determine her vote, including assurances that federal Medicare payments will not be cut and that Republicans will support two separate health care bills aimed at reducing premium costs.  Far too little, and she does not even mention the deficit, but if it keeps her from voting in favour of the bill, then it’s a start.

While the increase to the national debt is the most important fallacy of these abominable bills, the impact on the average citizen must also play a role.  I did some quick and dirty math earlier today and determined that my own household would be left with a deficit of some $2,500 dollars at the end of next year.  Not a huge sum, perhaps, but still … I cannot call this a tax ‘cut’ by any stretch of the imagination. It means that we will be tightening our belts and spending less money next year, contributing less to the economy.

Now, putting this all together, if the Senate finds a way around the Byrd Rule, and if Susan Collins and the rest are somehow convinced to vote ‘aye’, here is what I see happening.

  • Median earners will have less disposable income, for they will be able to claim fewer deductions, thus effectively raising their tax rate. With less disposable income, they will spend less money on non-essential goods and services.  There goes that 2.9% growth rate, folks.
  • As consumers spend less and less, and fewer people have healthcare because the individual mandate will be gone, the economy will actually begin to lose ground, rather than grow. The national debt, therefore, will increase even faster than the Treasury Department predicts.
  • As the national debt increases, as the economy takes a hit, quarter after quarter, consumer confidence will wane and people who are already struggling will slow their contributions to their 401(k) plans, further reducing economic growth and further increasing the national debt. It is at this point that I look for a hug dip in the stock market.
  • The stock market increase in the past year has been unnatural and largely without a solid foundation. It was built on consumer confidence that stemmed from the lies coming from the administration.  When/if it dips very much, look for a recession.  And then, POP goes the republican bubble.

Now, my analysis is an over-simplification, and there are far too many variables to consider in this short post.  Plus, I am not an economist.  But common sense should tell us all that one cannot build a castle on a foundation of hot air, and that is precisely what Congress is trying to do.  There is no long-range view that has been taken, the immediate goal simply being to pass a bill that benefits all the ‘right’ people, for mid-terms are coming up in less than a year and members of Congress need to get those campaign donations coming in.  Besides that, the pest in the White House keeps calling and asking where the bill is, for he is sitting at his desk, pen in hand.

Thus concludes this bedtime story that is worthy of being included in the Grimm’s Book of Fairy Tales, for it is, indeed, a grim tale.