Tag Archives: trickle down economics

Republicans Blowing Smoke on Economy According to Newsweek

In an article in Newsweek’s The Gaggle on Press, Politics and Absurdity, Arthur Romano details how the Republican agenda for the economy doesn’t hold up when examined. The article is entitled Estimates Say Fewer Jobs, Larger Deficits if Republicans Were in Charge”. Romano examines and calculates the figures based on stated Republican positions and actions they have proposed.

The article notes:

As House Minority Leader John Boehner put it in a “major economic address” on Tuesday, President Obama is “doing everything possible to prevent jobs from being created” while refusing to do anything at all “about bringing down the deficits that threaten our economy.” Elect Republicans in November, Boehner assured his audience, and we will put an end to this insanity.

There’s only one problem with Boehner’s message: so far, the things that Republicans have said they want to do won’t actually boost employment or reduce deficits. In fact, much the opposite. By combing through a variety of studies and projections from nonpartisan economic sources, we here at Gaggle headquarters have found that if Republicans were in charge from January 2009 onward—and if they were now given carte blanche to enact the proposals they want to—the projected 2010–2020 deficits would be larger than they are under Obama, and fewer people would probably be employed.

It is good to finally see some response from the media to questioning the absurd pronouncements and posturing by Republicans beyond merely quoting their phony claims. Anyone can repeat the nonsense that many Republicans and Tea Party fanatics have been spouting. It’s something else to actually look beyond the heated rhetoric and rantings of the right wing and analyze what putting these folks and their friends back in power would actually mean.

As just one example of why people should read the Newsweek article to understand just how ridiculous the Republican claims are, let’s look at the claim that extending the Bush Tax cuts for the very wealthy will help small business create more jobs.

As Newsweek notes:

“…it’s unlikely that extending the cuts for the richest Americans would have much of an effect on small-business hiring, which is a claim that Republicans make with some regularity. Why? Because of the taxpayers that report running small businesses on their taxes, only 2 percent fall into the top two income brackets.* The other 98 percent of small-business owners make less than $250,000 a year and wouldn’t pay higher taxes under Obama’s plan.

History isn’t on the GOP’s side, either. If keeping the top marginal tax rate at 35 percent—the rate under Bush, and the rate that Republicans are fighting to preserve—spurs so much hiring, why didn’t America experience any job growth at all during Bush’s time in office? And if a top marginal tax rate of 39.6 percent—the rate under Bill Clinton, and the rate that Democrats are fighting to restore—is such a job killer, why did payrolls grow by 20 percent during the 1990s?”

I urge you to read the article to get more details and understand better why the Republican economic
rantings are just a lot of smoke obscuring the reality that things would be worse off, not better if Republicans gain control of either House of Congress.  If you thought we had gridlock and weren’t getting enough done now, expect nothing to get done if Republicans get back control of either house.

Initiative 1033 is Recycled Discredited Trickle Down Theory

Tim Eyman’s Initiative 1033 is recycled, discredited trickle down economics mumble jumbo. He is pushing an economic theory that has no legs. I-1033 both proposes to cut state and local spending by freezing budgets and doing a complex tax redistribution scheme to use sales tax dollars and fees collected from everyone to help wealthy property owners reduce their property taxes.

The threat to the state and cities and counties is severe. Eyman unfortunately is using people’s fear of the recession and job loss to demagogue the public into believing that government is at fault for all their ills. In fact it was the lack of government oversight on the financial markets and financial institutions brought on by repeated less government is best for politics and business practice that brought us to this recession.

It seems to me that both Governor Gregoire and Senator Brown are missing the boat here regarding our state’s financial predicament with an additional $1 billion dollar shortfall being projected for next year. Whether or not there is a tax increase proposal will much more depend on the fate of Initiative 1033 than anything they say. And they are pretty much leaving the discussion to others.

Eyman’s simplistic approach to government and taxes is to do everything he can to eliminate them. He is only interested in pursuing trying to implement the long ago discredited trickle down economics theory that you reduce taxes on the rich and the public will benefit.

Eyman proposes to do this in several ways. One is to freeze the current budget under I-1033 at its current recession level and only allow adjustments for inflation and population. Unfortunately inflation adjustments at best only allow you to buy this year’s services next year at their inflated price. Any population adjustment for more people needing services isn’t really growth. It doesn’t increase the level of individual services, it only covers more people needing services.

But the real trickle down comes in his property tax rebate proposal which is really a wealth transfer scheme. Property tax rebates under I-1033 are not based on sales taxes or other fees one pays but only on the amount of property you own. Last year some 57% of state revenue came from sales taxes which everyone pays.

But not everyone owns property. Some 35% of households in the state are not owner occupied according to the US Census Bureau. So seniors and working families and other who rent will still pay sales taxes and other fees at the same level but will lose twice by not getting a tax rebate or see public services restored or increased when tax collections rise above the baseline.

Initiative 1033 only makes our current tax system more regressive by shifting the tax burden even more onto those who don’t own property who are usually also lower income. It takes an absurd position that somehow people who don’t own property should help pay the taxes of those who do.

Who benefits the most under I-1033 would be wealthy property owners because the rebate is not based on the sales taxes you pay but on the amount of property you own. The more property you own the more your rebate.

And in addition some 40% must go to commercial real estate. So large corporations, real estate developers, shopping mall owners and owners of apartment buildings benefit most. Most of the voting public is not aware yet that Eyman’s proposal commits them to paying the property taxes of Bellevue Square, Tacoma Mall, Bank of America, Boeing. Microsoft and Weyerhaeuser.

And the whole idea is based on trickle down economics, that somehow helping rich property owners pay their property taxes is a benefit to our society. Eyman says this is more important than paying for educating our children or providing health care for seniors and children, paying for additional police and firemen, cleaning up pollution, keeping Puget Sound healthy, keeping parks and libraries open, fixing our roads and bridges, more transit in urban areas, sidewalks and all the rest.

Initiative 1033 is a question of political philosophy and priorities. Eyman’s view is the selfish one, that all that matters is that people pay as few taxes as possible, regardless of their ability to pay or the need for public services. It involves no public commitment to the greater good but only to the philosophy that it’s everyone for themselves and the public be damned.

Hopefully the voting public will see the danger of Eyman’s lack of a caring public vision and his myopic of humanity that extends only as far as his pocketbook and no further.