The Failure of Supply-Side Economics
by Scott Shields, Sat Sep 03, 2005 at 09:40:35 AM EDT
As we all know, the Bush administration has taken supply-side/trickle-down economics to heights unimagined by Reagan. This week, as Congress gets back into session, even with issues of disaster response facing them, the Senate Republicans have made ending the estate tax their number one priority. This is how important supply-side economics has become to the GOP; pushing their economic agenda now trumps all other matters.
Rising corporate profits and dividend payments clearly haven't trickled down into gains for people who don't own companies or stock, says Dean Baker, co-director at the Center for Economic and Policy Research, in Washington. "The wage gains," Mr. Baker said, "are concentrated in the upper-income level, just as they were in the 1980's."Nor have the reduced taxes on capital and income stimulated significant job growth. A central tenet of the supply-side creed holds that lowering taxes increases the incentives for people to work. But Mr. Baker notes that the employment-to-population ratio - the percentage of adults who are working - is still lower than it was in 2001. Mr. Baker does not predict that things will improve anytime soon.
In my opinion, if you want proof that supply-side economics have completely failed, look to the poor of New Orleans. Their economic situation is so tenuous that one natural disaster, one hurricane, one flood and their lives are completely torn apart. The supposed benefits of trickle-down never made it to them.
And as Kos has pointed out repeatedly, the supply-siders' agenda has been to shrink the size of government until "we can be drown it in the bathtub". We're seeing the true cost of these policies in New Orleans right now. Spending on priorities like fixing the city's levees was ignored while supply-side tax cuts were pushed to the fore. From large scale economic data to the horrific impact of federal budget cuts on one city, these are the costs of supply-side economics writ large.









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