Why Trickle Down Economics Doesn’t Work

Why+Trickle+Down+Economics+Doesn%27t+Work

Grace Norris, Contributor

   Trickle-down economics is an economic system created by the Reagan Administration in which the top 1% get tax cuts, then they use that money to make more jobs. However, this theory rests upon the idea that once people have the money, they willingly give it away. The top 1% maintain their wealth because they hold on to most of that wealth and don’t really distribute it as it was meant. 

   In 1993 President Bill Clinton raised taxes from 31% to 39.6% on America’s richest. Republicans claimed this would ruin the economy because they believed that trickle-down economics really did work. Clinton’s tax income helped create 23 million jobs, it also gave the federal budget a surplus. Then in 2003 the George W. Bush Administration cut the tax rate for the richest to 35%, slowing the economic growth, and was a leading factor in the economic collapse of 2008.  

   In 2017 the Trump Administration proposed a tax cut that he said was to help the middle and lower classes. The average low income person would only save about $300 a year while the average one percenter would save about $129,000 a year – 430 times what the average lower income person would save. These tax cuts will shrink in the coming years for everyone but the top 1%These tax cuts led to a dip in federal funds, so cutting funding for social programs like Medicare and Medicaid has been proposed. The Tax Policy Center predicted that this tax cut would decrease the federal revenue by $2.4 trillion over the following 10 years. 

  9.2% of Americans are impoverished, which may not seem like a lot, but that’s 29.5 million people. The Biden Administration just got a new 1.9 trillion dollar Covid relief bill passed in Congress, which will get more money directly into the hands of the American people as they try to dig out from the effects of the pandemic.  The extended unemployment insurance also gives people security while they look for jobs. Rather than relying on the top 1% to create more jobs, the government is helping Americans get back to some semblance of normalcy by allowing bottom up economic help rather than trickle down.