Trickle Downers

The Prospect's ongoing exposé of the folly, dysfunctions, and sheer idiocy of feed-the-rich economic policies.

Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.

Trickle Downers

Booze, Women, and Movies: Chuck Grassley Couldn’t Be More Wrong about Taxpayers

Grassley’s characterizations of ordinary Americans are not only callous, but also patently false.

AP Photo/J. Scott Applewhite
AP Photo/J. Scott Applewhite Senate Judiciary Committee Chairman Chuck Grassley speaks with reporters on Capitol Hill trickle-downers_35.jpg I f the Senate Republican tax bill could talk, it would probably sound a lot like Chuck Grassley. During a week already rife with Republican skullduggery, the Iowa Senator did his best Scrooge impression while defending the recently passed legislation’s weakening of the estate tax: “I think not having the estate tax recognizes the people that are investing,” Grassley told reporters last week . “As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.” The senator’s words were callous, elitist, and, worse still, completely inaccurate. In 2015, consumers with pre-tax incomes between $15,000 and $30,000 spent nearly eight-and-a-half times less on alcohol than consumers who made $200,000 or more, according to a Bureau of Labor Statistics survey . Consumers that made between $50,000 and $70,000...

Republicans Have Exposed Themselves

Ron Sachs/picture-alliance/dpa/AP Images
Ron Sachs/picture-alliance/dpa/AP Images The Speaker of the United States House Paul Ryan speaks at the Capitol as Senate Majority Leader Mitch McConnell looks on at right trickle-downers.jpg T he Republicans’ disdain for America has been laid bare by their tax plan. Progressives must take advantage of this moment. As you surely know, the versions of the bill passed by the House and Senate are beyond terrible, and they just gets worse with each cover-of-night iteration. Simply put, they accomplish four goals, which I outline below. The evidence behind these assertions is overwhelming and has been made repeatedly, so rather than repeat it, I’ll provide links to the facts. But if facts were actually in play, we wouldn’t still be arguing about the offsetting growth effects of trickle-down economics, and Treasury Secretary Steven Mnuchin and Senate Majority Leader Mitch McConnell wouldn’t be blithely asserting that the growth effects will more than pay for the revenues lost by this plan...

Simplifying the Tax Code, or Simply Trickle-Down Economics?

The Senate’s tax bill drives up the deficit, which could enable the same tax-cutting Republicans to inflict drastic cuts to the social safety net.

(Tom Williams/CQ Roll Call via AP Images)
(Tom Williams/CQ Roll Call via AP Images) From left, Republican Senators John Thune, Johnny Isakson, Charles Grassley, Mitch McConnell, Orrin Hatch, Treasury Secretary Steve Mnuchin, and National Economic Council Director Gary Cohn at a meeting in the Capitol on November 9, 2017 trickle-downers.jpg S enate Republicans may try to quickly move their tax proposal to a vote this week, attempting to score the GOP’s first legislative victory before the opposition can thoroughly mobilize. It’s a nightmare bill, and most Americans don’t support the tax reform proposal (though of course, wealthy Republican donors do). This isn’t surprising, since the tax plan is a tax cut for the rich, and stands to hurt the poor by threatening their health care as well as essential social programs. Back when Trump revealed the original GOP plan, he said he wanted to “make the tax code simple, fair, and easy to understand.” To simplify the tax code, Republicans have trumped up their ( not quite ) doubled...

Tax Cuts Won’t Go to Job Creation -- Just Listen to the CEOs

It’s becoming increasingly clear that the Republican tax scheme is going to pass. And already, corporate executives are undermining the GOP’s claim that their gigantic corporate tax cuts will be funneled directly into job-creating investments in the United States.

Some of the country’s largest and most profitable companies are saying that they’ll be sending tax savings straight to the shareholders. Pfizer, Coca-Cola, and IT giant Cisco have all said that they intend to reward shareholders with increased dividends and lucrative share buybacks, Bloomberg reported Wednesday.

“We’ll be able to get much more aggressive on the share buyback,” once the tax plan is passed, Cisco CFO Kelly Kramer told Bloomberg.

Of course, this shouldn’t surprise anyone. The Trump administration and GOP leaders have been going on and on about how their tax cuts and the tax repatriation holiday that allows companies to bring their trillions in offshore cash back at a bargain rate will spur unprecedented rates of economic growth and job creation.

But CEOs have been telegraphing their true intentions for a long time.

On an earnings call a year ago, Cisco, which has $58 billion stashed abroad, was already talking about how corporate tax cuts would allow the company to hand out buybacks and ramp up mergers and acquisitions, The Intercept reported in January. Hewlett Packard, with $47 billion in overseas profits, was also boasting about how any tax savings would go straight to shareholders.

The last time Republicans passed a tax holiday for overseas profits, the 15 companies that benefited most ended up cutting more than 20,000 net jobs and curtailing research investment. Instead, they pushed their cash piles into their shareholders’ pockets.

Earlier this month, at a Wall Street Journal event for corporate CEOs featuring Trump’s top economic advisor (and former Goldman Sachs executive) Gary Cohn, the moderator asked the high-powered audience: “If the tax reform bill goes through, do you plan to increase investment—your company’s investment, capital investment?”

Just a few hands went up. A flummoxed Cohn asked, “Why aren’t the other hands up?”

CEOs are so emboldened these days that they don’t even feel compelled to offer the typical obligatory bromides about job creation and investment.

The GOP tax plan is already a naked redistribution of wealth to the upper class—a ploy that will ultimately be funded on the backs of the middle and working classes.  A share buyback bonanza will only further enrich those who can afford to invest in the stock market—the wealthy and upper middle class.

The modern corporate strategy is to immediately maximize profits by any means available—be it through cutting labor costs or limiting long-term investments or securing tax cuts in Congress—and then funnel those profits to the shareholders, who will reward the CEO with a hefty bonus. It is not, as Republicans would have you believe, to build new U.S. factories or lift up wages for employees.

Just listen to the CEOs. 

Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.

The First Thanksgiving, Trickle-Down Version

(AP Photo/Evan Vucci)
(AP Photo/Evan Vucci) Donald Trump pardons Drumstick during the National Thanksgiving Turkey Pardoning Ceremony at the White House on November 21, 2017. trickle-downers.jpg A nd it came to pass that in their second year in the New Land, the Pilgrims enjoyed a bountiful harvest. Some said that it was the Savage Indians who taught the Pilgrims which crops would flourish in the New Land’s Strange Soil, though others disputed that (see-eth below). And it came to pass that to celebrate the harvest, the Leader of the Pilgrims, Venerable Donald, also known to his Pilgrim Brothers as “the Shining Hairpiece on the Hill,” decreed a Feast of Thanksgiving. And both the Pilgrims and the Savage Indians brought heaping portions of food to Venerable Donald to distribute for the Feast. “Cook it well,” Venerable Donald commanded. “When I eat-eth turkey, I like it well cooked.” “And when thou grab-eth pussy, thou likest it rare?” piped up Goody Wiseacre, whom the Pilgrims burned for her Witchery the...

Pages