Trickle-up economics and the bankruptcy of Republican economic policy
This blog tries to stay away from politics, but sometimes ideas are put forth that truly show the difference in how American liberals and conservatives differ in economic thinking, and the contrast is stark and dark. I have been politically active since 1988, and at least since that time it has been de rigeur in the United States to proclaim, “I’m a fiscal conservative, but a social liberal.” If you are one of the people who say that, then this blog post is aimed at you. Never mind that the last eight years has brought the global economy into a depression; instead, focus on one question that delves at the root of the difference in ideology: Who drives the economy? Is it the rich, or is it the working- and middle-class? I answer below.
I am asking my readers to consider that question because it goes to the heart of our economic problems, and because, readers, you are not the ones who will be helped out by any stimulus plan currently under consideration. I explain why below.
Recently, I wrote about Jon Stewart of The Daily Show raising a proposal that nobody in Washington is taking seriously: alleviate the debt burdens of working- and middle-class Americans via a stimulus package that pays down some of their debt. Here is how it would operate:
- Create a program to pay down debt of working- and middle-class Americans who meet particular criteria. This is not in the form of a stimulus check – the money would go directly to the financial institutions.
- By paying down debt of Americans, we are shoring up the liquidity of banks, but we are also improving the economic well-being of many of the consumers who are the engines of economic stimulation. We would be hitting two birds with one stone.
- With the banks in better shape, and average Americans in better shape, the economy would experience far greater stimulus than just handing tax cuts and money hand-over-fist to the same institutions who have encouraged us to take on the debt they hold, and that is endangering everyone’s financial well-being.
It is the simplest and most effective idea for stimulus that has been discussed in the public sphere. And it won’t happen. Why? Because Americans have been sold on this idea that the only ones who matter in this economy are the corporations and the rich. You know this terminology: Supply-side economics. It’s also called “Trickle-down” – give the rich more money, and it will eventually trickle down to the masses.
In response, Jon Stewart used the phrase “Trickle-up economics” to describe his idea of benefiting everyone with stimulus – the two birds with one stone idea. It has long been discussed that working- and working-class families who have voted for Republicans have voted against their own self-interests. If you have doubted this as “class warfare” claptrap, allow Michael J. Hurd of gaycation destination Rehoboth Beach, Delaware to spell it out to you: working- and middle-class America, you don’t matter in this economy.
Mr. Hurd spells it out to all the Joe the Plumbers: you don’t matter. Republicans back this idea up with policy, studies show, by making the rich richer. Thus, over the last eight years the gap between rich and poor has become a chasm.
Who drives the economy?
So who drives the economy? Is it the rich or the middle class? The answer is both, and it is Washington’s fundamental inability to see that the economic well-being of the working- and middle-class is integral to the success of our country that has gotten us into this mess. The Republicans win elections with the votes of people like Joe Wurzelbacher, who in 2006 made an income of $40,000 but who couldn’t pay his debts to taxes or his hospital bills in 2007.
Wurzelbacher was made famous because he is afraid of redistributing the wealth of the country to…people like himself. That is a respectable philosophical position. Until you realize it is typically only argued when the money might go to average Americans, as opposed to the rich in the form of tax cuts and bailouts.
Look at last year’s $700 billion TARP bailout. What happened to the money? We are now told, just today, that we overpaid the banks for their assets. We’re being told we were misled by Henry Paulson, Bush’s Treasury Secretary. We hear stories about Merrill Lynch, which received $10billion tax dollars, buying Merrill CEO John Thain a $35,000 “commode on legs” and a $37 million apartment; Bank of America, which received $45 billion in bailout money and is still on the brink of collapse, blew $10 million on a “carnival-like” SuperBowl party. On top of it, Wall Street dished out $20 billion in bonuses for last year, the 6th highest in history.
For the last eight years the Republican party has told Americans to spend their money (er, credit) to save the economy from a recession, even as they denied we were in one. Now many of us are so deeply in debt at the urging of our leaders, that many families are on the verge of financial disaster if they are not there already.
But who gets the money? The banks. They keep your debt, and so do you, but they also now get your tax money. When they are alive-and-kicking again after they were saved from their foolish and dangerous business practices, you’ll still be paying off that debt.
Adopt the Jon Stewart “Trickle-up” economic stimulus plan
Now that the entire economy, from the Joe the Plumbers to the Banks of America, is shattered by the Republicans sucking out money from the working- and middle-class (money that in the form of debt went to the banks), the banks are the ones receiving more of working- and middle-class money via federal tax dollars.
I started a Facebook group to demand implementation of the Jon Stewart stimulus plan to pay down the debt of Americans through the banks. Please join it. Listen to Stewart explain the idea, and listen to Republican supply-sider Lawrence Lindsey agree it would work. We are not talking the stupidity of the the Bush stimulus checks, but real debt reduction.
With any debt reduction should be a mandatory credit reduction for those accepting the help. If a person needs the help, he or she should not have had that much credit to begin with. In turn, we will increase the liquidity of the banks. Finally, end the sinful usury of astronomically high credit card interest rates that the banks are using to rape Americans pocketbooks.
Both Bob Herbert and Frank Rich have written eloquent, powerful columns about how we must stop listening to the old Republican ideas. The first step is to adopt a stimulus package that reduces the average American’s debt burden while at the same time fixing the liquidity of our banks, which is threatened by that very debt.
It’s time for trickle-up economics.