It Never Trickles Down To The Middle Class

Thanks to Right Democrat for this:

Writing in the February 15 edition of The Tennesseean, Professor Lewright Sikes refutes the Republican myths about the "success" of supply side economics.

http://www.tennessean.com/apps/pbcs.dll/article?AID=/20080215/OPINION03/802150406/1008/OPINION01

Quote:

President Bush incorrectly trumpeted the economic success of his administration's large tax cuts for the wealthiest Americans that have taken more than $75 billion a year of revenue out of government coffers since 2004, according to the Government Accountability Office.

Now, Bush correctly advocates $140 billion-plus tax rebate and stimulus package to bring America out of a probable recession that his economic and political policies helped create. http://gcirm.tennessean.gcion.com/RealMedia/ads/
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For the subprime lending housing market collapse and its growing peripheral effects that many Americans are now having to cope with, they are not the only culprits here. Rather, it was the Bush economic and regulatory policies over the past seven years that set the stage for this latest meltdown.

For generations, many serious-minded economists like John Kenneth Galbraith have warned against "trickle-down" economics — as it began to be called in the 1920s — particularly tax cuts, where the largest dollar amount of the cuts are given to the wealthiest Americans. This is especially true for the 5 percent that control 60 percent of the country's wealth today. Yet, Republicans keep beating this dead horse at the expense of impoverished Americans and the middle class, which is hemorrhaging material blood at a rate not seen since the 1930s.

Well-known congressional leaders and syndicated newspaper columnists like House Speaker Nancy Pelosi, Sen. Dianne Feinstein, D-Calif., and New York Times syndicated editorial writers Bob Herbert and Paul Krugman have repeatedly highlighted the dangerous injustices of the Bush II White House tax policies.

Historically, trickle-down economics and inept regulation of corporations have always hurt the middle class more than helped it, for these policies expand the incomes of the richest Americans at a much greater rate than the middle class. This is particularly true of the Bush II years, when incomes of the top 10 percent of U.S. citizens have grown more than 200 percent, while those of families making under $60,000 have increased less than 10 percent, according to the GAO.

As to regulatory policies, Bush himself has repeatedly stated that large banks and corporations are better off left to voluntarily regulate their affairs and/or follow the lead of his (imperial-minded) administration. Furthermore, poorly led and/or understaffed key federal regulatory agencies — particularly those overseeing the mortgage industry and inter-financial investments — have done less of what they are supposed to do during the Bush II years than at any time since many of them were established.

Recent congressional investigations, statements by former Federal Reserve Chairman Alan Greenspan downplaying the dangers of subprime lending, and reports in newspapers ranging from The Tennessean to The Washington Post bear witness to this fact.

Thus, is it any wonder that the subprime lending crisis occurred, especially given the poorly regulated financial sector that has been largely free to buy, sell and repeatedly repackage risky mortgage loans in a way that involves more and more of America's financial institutions?

Like the Iraq debacle, we have again been sold a "pig in a poke" — this time by self-serving political leaders and irresponsible financial and regulatory institutions.

Perhaps the title of Greenspan's new book, The Age of Turbulence , is far more prophetic than even he imagined!

Lewright B. Sikes of Antioch is professor of history emeritus at Middle Tennessee State University. http://www.tennessean.com/