Arranology

Conservative Propaganda: The Trickle-Down Scam

with 6 comments


For almost 100 years, from the moment the income tax was instituted, conservatives have insisted with increasing hysteria that taxes are what kill the economy. Not taxes on you or me, of course. They’re not much concerned with those, as they’ve proved time and again. No, they’re talking about the taxes on Bidness and the Rich. You know, the “trickle-down” theory, wherein there seems to be a hard-core, faith-based belief that if the rich get richer because they don’t have to pay taxes like the rest of us, why, they’ll “invest” that “extra” money to create more low-paying jobs, and thus a tiny portion of their wealth will “trickle down” to the lower economic strata.

There is zero evidence to suggest, let alone prove, that economies work this way, but that doesn’t stop Grover “The Toad” Norquist’s Bathtub Battalion from claiming otherwise at the tops of their lungs. Our so-called “president”, acting in his capacity as chief mouthpiece and corporate rip-off enabler, was out on the hustings yesterday saying the same old shit, decorated by his usual smirk.

“The message is unmistakable: America’s economy keeps growing, government revenues keep going up, the budget deficit keeps going down — and we’ve done it all without raising your taxes,” Bush said during a speech at the Eisenhower Executive Office Building, where he introduced two small-business owners, a member of the National Guard and the parents of eight children. He said they all racked up big savings thanks to the tax cuts.

“When you’ve got more money in your pockets to save, spend or invest, this causes the economy to grow,” Bush said, adding that “a growing economy has led to growing tax revenues. Because people are making more money, they’re also paying more taxes.”

Like everything else Bush says (“How do you know when Bush is lying? His lips are moving”), it isn’t true. In point of fact, the economy has been growing at pretty much the same 2-3%/yr pace that it did during the 90’s. There are a couple of big differences, alright, but they’re not in the rate of economic expansion, a fact that even faux-economists at the conservative propaganda unit, The American Enterprise Institute, have been forced to admit.

Many economists say Bush’s tax cuts…contributed greatly to the deficit. Over the past six years, the cuts have cost the federal government more than $1 trillion, returning the money to taxpayers. That cash probably helped lift the economy out of recession, economists said, but they added that the Federal Reserve’s decision to cut interest rates to their lowest point in decades was probably more important.

“I would say the tax cuts would, at best, be one factor among many,” said Alan D. Viard, a former Bush White House economist who is now a resident scholar at the American Enterprise Institute.

Bush is being a salesman and trying to focus a salesman’s pitch. Viard, though, is keeping his eye on the prize. Let’s spend just a moment de-constructing that first short graf, shall we?

  • “Many economists say Bush’s tax cuts…contributed greatly to the deficit.”
    Yes, well, giving away the Treasury – which had a surplus (see chart) when Bush came into office – is liable to do that. Add a round of severe, long-lasting tax-cuts on business and the rich, and you’ve pretty much guaranteed that that deficit you just created won’t be a surplus again for many, many years to come, no matter how much the economy grows.
  • “…the cuts have cost the federal government more than $1 trillion, returning the money to taxpayers.”
    No, uh-uh. Not “taxpayers”. The lower 99% of people who pay taxes saw little if any cuts in what they were expected to pay. In fact, many of us saw increases as states scrambled to make up the funds the federal govt was no longer doling out. The only two groups of “taxpayers” who saw significant cuts in the amounts they had to pay were corporations and the richest 1%, many of whom were already paying less than middle-class tax payers because of tax shelters and various other mechanisms that have been put in place to cut their contributions to a minimum.
  • “That cash probably helped lift the economy out of recession….”
    Who says? The propaganda teams at AEI and the Heritage Foundation?

In fact, an analysis by the Congressional Budget Office – quoted only two grafs along from the ones above – shows that they’ve been gathering evidence that the tax cuts had NO effect on boosting the economy. None.

[A]ccording to a recent analysis by the nonpartisan Congressional Budget Office, revenues grew much faster than the economy between 2003 and 2006, primarily because of a surge in corporate profits. Corporate tax receipts grew from 1.2 percent of the economy in 2003, their lowest level since 1983, to 2.7 percent of the economy in 2006, their highest level since 1978.

Peter Orszag, head of the budget office, said it was still working to explain that expansion. But he said a growing body of research — including evidence that corporate profits in Europe and Japan experienced similar expansion — suggests that Bush’s tax policy had little to do with it.

“It is not the case that U.S. tax-policy changes drove the change in corporate profits, which drove the increase in corporate tax revenue,” Orszag said.

(emphasis added)

IOW, the rise in revenues came from the conscienceless rip-off of resources and consumers, not to mention taxpayers and underpaid workers, by the corporatocracy, who were able to get their fat, grubby fingers on a lot more of our nation’s wealth than at any time since the 19th century Robber Barons thanks to conservatives using their political power to funnel money away from the rest of us and into the pockets and bank vaults of the super-rich. How did you think the vast income disparity between the rich and everybody else happened? By accident?

And mind you, this so-called “improvement” only rates that description in contrast to the devastating hole we’ve been in since the tax cuts spurred the major recession of 2001-2006. It’s not like we’re showing a surplus now. We’re not. It’s just that the deficit is somewhat smaller than it has been for the past 6 years. As Steny Hoyer put it, “It is a sad commentary on President Bush’s fiscal record that he is crowing that the deficit will be ‘only’ $205 billion.” It’s tantamount to having a guy who just broke all the windows in your house with a baseball bat demand credit for replacing one of them.

Let’s get back to Viard for a minute. The less cynical among you are probably wondering why, after sparking a major victory behind their presidential figurehead, AEI would be willing to admit that what they advocated and fought so hard for – those tax cuts for the rich – didn’t live up to the promises AEI and others made for them. Remember, in 2001 conservative propaganda outlets like AEI were sending their pundit-reps onto TV every day with instructions to push a “Tax cuts are the panacea for economic distress” mantra to convince us all that tax cuts for the wealthy would fix everything. Now they’re admitting they didn’t?

It’s simple to explain, though. AEI doesn’t want to give us the impression – today, anyway – that we’re all done, that we can rescind the cuts and cancel the other goodies corporations have in the pipeline because tax incentives don’t work. Viard’s not-so-subtle message is that the tax cuts weren’t enough. Corporations, Viard is saying, need more, and we can probably project without too much difficulty what he’s talking about: complete elimination of the capital gains tax, elimination of the alternate minimum tax, still lower income taxes at the upper income levels – in fact, the elimination of practically all taxes on corporations and the rich. Viard isn’t admitting a mistake, he’s preparing the ground for the next round of rip-offs.

It’s precisely the same mindset that conservatives, unwilling to give up all those potential oil profits, demonstrate on Iraq: If policies we advocated aren’t working, it isn’t because we were wrong, it’s because we didn’t do [insert policy here] enough. We didn’t go far enough, expend enough lives, steal enough resources. We need MORE, MORE, MORE. Once we have it ALL, we may let you have a little of it back – not enough to support your old middle-class lifestyle, but enough to keep you from starving.

Maybe.

That’s what Bush is out there selling. That’s what it’s been about from the beginning – the attempted privatization of SocSec, the attempted dismantling of Medicare and Medicaid, the war over the oilfields in Iraq, all of it.

What you need to keep mind is the conservative definition of success. If it’s working for the rich, that’s all that counts. The argument that tax cuts for the wealthy would be good for us, too, somewhere down the line, was nothing but PR. In fact, if it had worked that way, conservatives would reverse their field and fight it. It would then and only then be considered a failure because the wrong people were profiting from it.

This isn’t a myth, like the others to which they all cling with such fervor. This is a deliberate LIE, and they know it. It’s nothing but propaganda, and it’s about time we know it, too.

6 Responses

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  1. Actually almost all economists agree that tax cuts for the wealthy are better for the country as a whole. Why do you ignore obvious facts?

    Kyle

    July 12, 2007 at 3:53 pm

  2. Kyle, christ but are you full of it. Please name ONE economist who is not a card carrying rightwing nut who says tax cuts help the country as a whole.

    This is rightwing baloney with no bipartisan support, or any support at all from serious economists who do their work on paper, and not cocktail napkins.

    Mark

    July 12, 2007 at 4:15 pm

  3. [...] Conservative Propaganda: The Trickle-Down Scam By Mick For almost 100 years, from the moment the income tax was instituted, and with increasing hysteria, conservatives have insisted that taxes are what kill the economy. Not taxes on you or me, of course. They’re not much concerned with … Mick Arran – mickarran.com [...]

  4. If only the money would actually trickle down, but it seems to be trickling out… along with our jobs.

    Laura

    July 15, 2007 at 5:45 am

  5. No, Laura, it’s not trickling out. That’s the whole point. Our jobs are trickling out so the money can trickle up.

    mick

    July 15, 2007 at 8:50 am

  6. I know, I know… how about up and out? I’m thinking of Hoover being sold to China after taking advantage of all those ‘tax breaks’ and lay-offs and outsourcing to improve their ‘bottom-line’? It just seems like the money eventually leaves the US general economy because the top is investing in the global playground.

    Laura

    July 15, 2007 at 4:39 pm


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