‘Trickle Down’ Is for Hydrants, Not Taxes

Do you ever get the feeling that you’re watching an old “B” movie rerun? That’s the way I feel watching President Bush, his fellow Republicans and renegade Democrats trying to bring back the “trickle-down” theory with a capital gains tax cut.

I always thought trickle-down was fine theory for dogs and fire hydrants, but I never much liked it as a strategy for lifting the lot of working Americans.

When President Bush says that a capital gains tax cut will “stimulate investment,” I know we have been here before, and not that long ago.

Over the last decade, while the income and profits of the wealthy soared, the richest 1% of Americans received a 25% cut in the taxes they paid. the idea behind President Reagan’s “supply side” economics was to “stimulate investment.” The reality was that the super-rich did invest--in sports cars, diamond rings, beach houses, fine furs and other luxury items that did nothing to strengthen the economy or benefit working people.

Indeed, while profits rose, real wages dropped. Millions of working people fell below the poverty line and millions of others ended up homeless and destitute.

The “safety net” developed a gaping hole in it. The only thing that trickled down was debt and pain.

In January, the Bush Administration simply took over where the Reagan Administration left off. The President’s first major act was to veto an increase in the minimum wage. He said that it would hurt the economy to give an extra $1.20 an hour to the people who mop floors in office buildings and empty bedpans in hospitals and cook hamburgers in fast-food restaurants.

He evidently felt that the poor had too much money and couldn’t be trusted with more while the rich did not have enough and needed some more of everyone else’s.

The Bush Administration, in its second major move, promptly came up with a $2.5-billion parachute, paid for by the American taxpayer, to bail out the savings and loans, whose fast-buck operators shamelessly used public money to pay for private jets, lavish parties, prostitutes, condos in Miami, race horses and European vacations, not to mention bad investments in junk bonds and junk food.

Now Bush wants to use the tax system to throw another lavish party for the rich at the expense of America’s working people. They propose excluding from taxation 30% of the profit from the sale of an asset in order to “encourage investment.”

But what cutting the capital gains tax will do in reality is make the rich richer and rob tens of billions of dollars from the federal Treasury over the next ten years.

The congressional Joint Committee on Taxation has determined that 80% of all capital gains benefits go to the richest 5% and more than 60% of the benefits would go to the tiny percentage of Americans earning more than $200,000 a year. Their average tax saving under the Bush plan would be a staggering $30,820, or about what most working American families live on during a year.

Most taxpayers have no capital gains at all (except for what they receive from the sale of their own homes, which are treated differently under the tax code). For the four out of five American families that earn less than $50,000 a year, the average tax savings would be $20. This plan does nothing for postal workers or teachers or bus drivers or nurses or firefighters or family farmers.

The last round of capital gains tax cuts caused a huge wave of excessive office building construction that produced vacancy rates averaging close to 20% in big cities where the homeless roamed the streets looking for a place to lie down their heads.

The most surprising thing about the latest Republican welfare-for-the-wealthy tax scheme is that a number of Democrats on the House Ways and Means Committee collaborated with it. The wayward Democrats are Ed Jenkins of Georgia, Ronnie Flippo of Alabama, Beryl Anthony of Arkansas, Michael Andrews of Texas and Andy Jacobs of Indiana. Their votes are contrary to the interests of the poverty-stricken farmers and workers in their own districts.

It may be that the more than 100 millionaires in Congress have finally figured out a slick way to slip themselves the pay raise they never got last year.

President Bush has drawn a line in the sand, challenging the Democratic leadership’s control over Democratic members.

It is time for the real Democratic Party, and Republicans who care, to take a strong stand against Robin Hood-in-reverse economics. It is time to push for an economic program that invests in America’s people--instead of “trickling down” on them. We need a “first house” plan for working Americans before we have a “beach house” plan for the rich. There should be a straight up or down vote on the floor of the House on this welfare-for-the-wealthy plan.

The congressional representatives who believe in invest-in-America economics should be separated from those who believe in born-again, trickle-down “voodoo” economics--to borrow the 1980 phrase of that well-known social reformer, George Bush.

America is watching.