Wealth doesn't "trickle down" from the rich to the poor
In this debate, I am going to be arguing that "trickle down" economics has been a failure to the poor and middle class.
Let's set some terms before we begin.
1) No trolling or insults.
2) If you forfeit, you automatically lose.
3) You don't have to cite sources for common knowledge, although it would be preferred. If something is not common knowledge, cite it. A general rule of thumb is that something is "common knowledge" if you can find it in three or more sources.
Round 1: Just greetings and acceptance.
Round 2: Main arguments (no rebuttals yet).
Round 3: More arguments, rebuttals, counterarguments.
Round 4: More arguments, rebuttals, counterarguments.
Round 5: Conclusion of argument.
Hi. I accept.
The theory of “trickle down” economics says that if we invest enough in the wealthy, it will benefit the poor and middle class. “Investing” in the rich involves giving large tax breaks to those at the top and deregulating large corporations. I’m not here to argue what the definition of supply side economics is, I’m here to debate whether or not it works, so I’m just going to leave the definition at that because that is a widely accepted definition of Reaganomics. By the way, I use “trickle down” economics, Reaganomics, and supply side economics synonymously.
Proponents of “trickle down” economics say that, because the wealthy will have so much money, they will inevitably spend that money in ways that benefit the economy. However, the facts show that this hasn’t happened. In fact, quite the opposite has happened. Those at the top have gotten richer while those at the bottom continue to fall further and further behind. This is because rich people don’t spend money just because they got more. Rich people already have a lot of money, so if they are given more money, they don’t think much of it other than the fact that they have more money. If you cut taxes on a rich person, he or she isn’t going to go out and spend it on something. He or she is just going to hold on to it. Why would he or she feel the need to go out and spend money? A rich person is typically happy with their current lifestyle. Proponents of Reaganomics also argue that they will create jobs with that money. But, if it isn’t being pumped back into the economy, how is it creating jobs? They are not going to use it to hire people just because they have extra money. In fact, one can be wealthy and not hire anybody. But, the “trickle down” theory goes for businesses too. That money won’t be invested back into the economy. It will just sit there. It won’t even be spent at a business that hires people to help increase demand. Let’s say that you are a restaurant owner who owns several restaurants and you were given a $5,000 tax break. Are you going to say “hey, I have an extra five thousand dollars, let me go spend it by hiring more employees?” I doubt it. You’re going to be happy you have that extra money, but you aren’t going to use it to create jobs. Depending on how much money you have (whether you are poor, middle class, or wealthy), you may invest it in another business that helps to create jobs. But, a lot of executives of large corporations won’t do that. Since Reaganomics was not aimed at small business owners, that money most likely will not be put back into the economy.
Reaganomics really is based on a flawed argument. The theory says that throwing money at rich people helps the economy. But, it fails to explain what happens if the rich choose not to invest the money. Reality has explained that it is a disaster if the rich don’t use that money to help the economy. When Ronald Reagan enacted “trickle down” economics in the 1980s, it tripled the national debt, made income inequality levels skyrocket, and caused stagflation. When Reagan first took office, the national debt was approximately $800 billion. When Reagan left office, the debt was about $3 trillion. This was because of the lost revenue through the tax cuts and high defense spending. In the process, the rich got richer while those at the bottom suffered. Republicans will argue that the tax cuts have paid for themselves, but this is not the case. They will also argue that the tax cuts have led to economic growth, but in reality quite the opposite has happened. The more money that the rich have, the less the economy grows. Again, this is because the rich don’t invest that money. That extra money they have is just sitting there, not being put back into the economy. Unlike what the politicians have told us, these tax cuts don’t stimulate the economy. That extra money the wealthy received in tax breaks would’ve been spent if it was given to someone who needed it. Unlike wealthy people, poor and middle class people actually need that extra money and will spend it. The poor and middle class could always use some extra money. Even $1,000 to a middle class family is a big deal. That extra $1,000 could be used to go out to eat at a restaurant, buy more food, or whatever. But, the point is, that money will not just sit there. This is why economic growth happens from the bottom up. Those at the bottom will actually spend the money, so the activity of the economy will increase. Because they are spending that money, demand for products from businesses will increase, so businesses will have to hire more people to keep up with the increase in demand. But, business owners will not do this just because they were given money. You can give a business owner money, but that doesn’t mean that demand for his or her products will increase. If you give it to the consumers, they will spend it at the business, which will increase demand, thus requiring the business to hire more workers.
In addition to the tax breaks for those at the top, eliminating regulations for large businesses and corporations is a part of the “trickle down” theory. Proponents will claim that the regulations get in the way of businesses doing their jobs. However, deregulating large corporations just allows them to get away with more things that help fuel their profits. When regulations are taken off of large corporations, they will look out for ways to make more in profits rather than look out for ways to create more jobs. A good example would be reducing regulations that protect the environment. Corporations that do activities that may cause harm to the environment will not care to help the environment on their own. They need regulations that require them to do so. They put short term profits ahead of the long term damage to the earth. Just because a business doesn’t have to put in as much effort in protecting the environment does not mean that that business will try to create more jobs. The business will just be happy with the regulation and have one less obstacle in making more profits. Although it’s important not to place too much regulation on businesses, not enough regulation can be a problem. This is not limited to environmental issues. This can also be applied to issues such as treatment of workers. If a business can get away with treating the workers like garbage, it will probably try to do so. Take a look at the Gilded Age. Wealth inequality was sky high. This was because there were almost no restrictions on business. The government took a lassiez-faire approach to the economy. Because of this, businesses weren’t required to provide their workers with safe working conditions. Republicans may argue that the free market will require them to do so, but if very few businesses are offering safe working conditions and they aren’t required to, the people are going to be out of luck. They can try to go on strike, but they tried that in the Gilded Age and it didn’t result in significant improves. It took government regulation to fix the problem. Theodore Roosevelt stepped in and placed regulations on business. This was a huge benefit to the workers and consumers (as businesses often took advantage of consumers at the time). Unfortunately, the Progressive era came to an end for the time being when Warren G. Harding was elected president and began to intentionally operate the “trickle down” theory. He stripped regulations and cut taxes on the rich. The presidents continued this until the Great Depression, when Franklin D. Roosevelt was elected and we went back to increasing the regulations. I could go on and on, but I’ll stop right here. I have two points I want to make. Slashing regulations on businesses does not help to create jobs, it just helps businesses and corporations get richer. There is no evidence that cutting regulations on businesses leads to job or GDP growth. The Republican Party is just the party of the rich. They are looking after the interests of the wealthy. That's why they continue these policies even though they have failed several times before.
If Reaganomics isn’t fantasy, then when can we expect to see a trickle? Wealth inequality has skyrocketed, the national debt is through the roof, and we still don’t have enough jobs. Don’t try telling me that we had an economic boom when “trickle down” policies were enacted. This economic boon was fake prosperity and a lot of the economic benefits went to the really rich. Average Americans didn’t get a huge share in all the prosperity that went on during the 1920s and 1980s. These time periods were basically a return to the Gilded Age. The poor and middle class have done better when “trickle down” economics was not in place. Take a look at the records of state governors who have held on to this failed economic approach. Let’s use Bobby Jindal as an example. Before he was elected into office, Louisiana was running budget surpluses. However, when he was elected, he cut taxes on the rich and ran budget deficits because there wasn’t enough revenue to pay the bills. Now, the Republicans in the state legislature propose cutting services to people who need them while continuing to give the rich large tax breaks. Louisiana is basically bankrupt due to “trickle down” economics.
Much of the rich give it back once their security is established.
-Lewis Field, home of the Oklahoma State football team, was officially renamed Boone Pickens Stadium. Why? Its name was changed to honor OSU alumnus T. Boone Pickens, a Texas oilman and who founded the Mesa Petroleum Company. Pickens donated $165 million overall to OSU.
-The Bill & Melinda Gates Foundation is the largest private foundation on planet Earth. The primary aims of the foundation are, "globally, to enhance healthcare and reduce extreme poverty, and in America, to expand educational opportunities and access to information technology."
The foundation had an endowment of $44.3 billion in 2014. The foundation and the way it applies to giving makes it one of the strongest philanthropist organizations on Earth.
-The exact amount of money Joe Paterno, Penn State Football Coach, donated and raised is not precisely known. According to sources, some at the university say it's well above $1 billion.
Warren Edward Buffett is an American business man, investor and philanthropist. He is known as one of the most successful investors in the world. Buffett is ranked among the wealthiest people on planet Earth. He was ranked as the world's wealthiest person in 2008.
Buffett is known for his sticking to value investing and for his personal philanthropy despite his immense wealth. Buffett made a pledge to give away 99 percent of his fortune to philanthropic causes.
"Trickle down” is a slanderous term invented by Liberal politics to block Conservative economic policies. It uses ommission of neccessary conceptd to imply the idea of "favoring the rich". It uses the terminology that doing so will “trickle down” to everyone else in an attempt to attach a false dichotomy by ommission of information and attach a dark connotation of words to Supply Side Economics. It's the creation of a strawman.
"Well, this is 'trickle down' economics. Maybe a little will spill over to the poor. Maybe it won't. This is the rich hoarding all of the wealth at the top. It's obviously not fair. What, they're going to 'trickle down' some bread crumbs to us?"
Aaaah...rally the economic bottom against the top. But why? It's a powerful weapon. What does it use?
-A feeling of discontented or resentful longing aroused by someone else's possessions, qualities, or luck.
Nevermind that many wealthy and successful people start with little or nothing and fight their way by hard work. Simply focus on them having more. Nevermind that many are poor by choice. Take from the worker. Give to the nonworker. Slavery?
Conservatives don’t care any differently for the rich than Liberals do. The point for Conservatives is not to "help the rich", but to minimize the harm done to incentives by tax policy so individuals have more opportunities to become better off.
If we tax the "rich" to death we cause? Insecurity for employers, which actually does "trickle down" with job cuts and lack of hiring.
Who opposes Supply Side Economics? Barrack Obama does, and it has worked beautifully to the tune of a national debt that surpasses $19,000,000,000,000.
Trickle down economics,“doesn’t work,” Obama says. “It has never worked,” Obama adds.
What the President, who is anti "Trickle Down Economics" has achieved is a very unimpressive accomplishment. One of the largest expansions of the federal government in U.S. history, accumulation of a mindlessly created and unsustainable federal debt, goliath tax increases and the bizzare intrusion of federal regulations in nearly all parts of the U.S. economy. (And all with minimal military personel and being a non-wartime President). Liberal "Obamanomics" may completely collapse the entire infrastructure of the American economy. It sounded nice, but does it work? For a minute it does. But after that minute is up?
Supply side economics
A supporter of Supply Side
Economics buys into the idea that manufacturers/producers and their desire to create goods and services sets the pace for economic growth.
Supply Side Creates Its Own Demand-
In economics we look at the supply vs. the demand. Demand and supply intersect somewhere to determine overall output and price levels. The real idea: an increase in supply will increase output and lower prices.
Supply side takes it further and says that demand is irrelevant, within reason. It says that over production and under production are not actually sustainable. Supply side supporters argue that when manufacturers temporarily over produce, too much inventory will be created, prices will then fall and consumers will increase their purchases. This will offset the excess of the supply.
I was not born in America, so I view this from a different perspective.
If you recieve welfare or better, you are already rich. Free food guaranteed each month with a magic card? You have an air conditioner, a heater, a refrigerator, a microwave, a stove, a tv, a video game system, a car, a check each month, and clean running water that comes right to your house? Wow! Water! You're rich. I've seen poor people. They don't look like that...
Reality 101 Part 2
If the anti "trickle down" economics supporters get their way, why should anyone try? Why go to medical school, law school, or try to push a business to a higher level? Why try to reach the next tax bracket? They'll just take it from you and give it to someone who has all of their basic needs taken care of for free already.
This is why "asylum seekers" are flooding to Europe. They want that welfare money. They want the "rich" Europeans to take care of them. Do they speak the language? No. Can they get a job? No. So what happens? Reverse slavery. Now they are the plantation owner in position, and the working class are the slaves. Aaaah...turn the working class into the slaves. There always have to be slaves.
The Liberal, anti "trickle down" economics people are blind to the madness. They keep pushing for more and more immigrants to come in with no idea what to do with them. They disconnect from its results. Give them welfare. Tax the wealthy even more! Is it the fault of the wealthy that more and more people are being pushed on them from out of nowhere?
The "trickle down" fallacy-
Most people on planet Earth see those on the U.S. welfare system or better as "rich". Will that free welfare "trickle down" to the real poor like the Ethiopians? No.
Give even more to those on welfare? So occasional trips to Taco Bell, McDonalds, and KFC, added to free food with free stocked shelves is not enough? What? The Mexicans eat beans and rice all the time. Why? That's all they have. It's all they can afford. They learned to live with it.
So the welfare or better folks need just a little bit more? For what? To buy a couple more Wii games? To go to Red Lobster once in a while? Is this bs or neccessity? It's not neccessity. It's a fairytale, and not a good one. It's a fairytale that says take from the working class and give to the nonworking class. We don't know how all of these people came to their wealth. We don't know what they do with it. We are guessing.
I heard Obama say,"You didn't get it on your own!" Who cares? And how does HE know? Based on what? What if they did? Who is he talking to, all of them? No one on Earth deserves to be wealthy? Well, that kills the dream...
But not for them. Why? It's all politics. The Democratic Party is notorious for pushing slavery. Why? It humors the masses on the left. Pander to them and keep power.
I didn't have enough room for all of my rebuttals, but here are the most important ones.
1. "Much of the rich give it back once their security is established."
I don"t deny that there are rich people out there who have given back to the community. However, not every rich person does so. There are many rich people who don"t give back to the community and keep their wealth to themselves. When we gave the rich a huge tax cut in the 1980s, wealth inequality skyrocketed. Why? Because a lot of the rich people just kept on to that extra money they had. It doesn"t necessarily make them evil human beings, but the point is that it didn"t "trickle down." Like I"ve said, the prosperity of the 1980s was basically a Gilded Age. A lot of the new wealth went to those at the top.
2. "It uses ommission of neccessary conceptd to imply the idea of "favoring the rich".
Reaganomics has favored the rich. Just look at how much wealth inequality has skyrocketed since the 1980s. It"s crazy!
3. "Nevermind that many wealthy and successful people start with little or nothing and fight their way by hard work. Simply focus on them having more. Nevermind that many are poor by choice. Take from the worker. Give to the nonworker. Slavery?"
Many poor people are not poor by choice. Not all rich people are rich because they earned their money. Some rich people got lucky and won a lot of money. Others may have inherited their money. Of course, a lot of rich people are hard workers and I don"t deny that. But, do they work so much harder than the average worker that it justifies the level of wealth inequality today? I don"t think so. The levels of inequality that we are experiencing today are way higher than they were during the mid-twentieth century, and the workers were not more productive during that time than they are today. In the mid-twentieth century, we had a balance. The poor and middle class were rewarded fairly for their efforts. The rich didn"t have too much. Nowadays, the poor and middle class have arguably gotten more productive and have a smaller share of the wealth than they did in the mid-twentieth century. There may be some abuse to the welfare system, but a lot of people on welfare are truly struggling to get by and a lot of these people are full time workers.
A lot of this can be explained by Reaganomics. For example, we stripped a lot of the regulations on the big banks since the 1980s. Because there were less regulations on the banks, the banks were able to make risky behaviors which enabled the 2008 recession. Let"s not forget that millions of Americans lost their jobs and homes during that recession. It wasn"t because they were lazy and chose not to work. It was because Wall Street was greedy and chose to get richer at the expense of the average man. People wanted jobs but just couldn"t get them. It wasn"t their fault.
Why don"t we find a happy medium like we did in the mid-twentieth century? The successful people can still be successful, but the poor and middle class shouldn"t be forgotten like they are today. I"m not for socialism. I"m for finding a balance between capitalism and socialism so the economy works for everybody. I agree with you in the sense that many wealthy people are hard workers, and they should be rewarded for it. But, from a moral standpoint, I think that they should pay their fair share in taxes. Rich people didn"t become successful on their own. There were several institutions that helped them along the way. They should have a moral obligation to help pay back for the resources that they benefited from. In the mid-twentieth century, levels of inequality weren"t nearly what they are today and the economy worked for everybody. The rich still got rewarded.
4. "Conservatives don"t care any differently for the rich than Liberals do. The point for Conservatives is not to "help the rich", but to minimize the harm done to incentives by tax policy so individuals have more opportunities to become better off."
Try telling that to the Republican politicians who continually try to give tax breaks to the rich and deregulate large corporations. They are trying to "help the rich." Reaganomics is basically socialism for the rich. It is obvious that the "trickle down" theory has been a disaster every time it is used. Look at the 1920s. Look at the 1980s. Look at how things are now. The poor and middle class have been pissed on during these time periods. Why do the politicians keep on trying Reaganomics even when it fails? Because they want to keep the rich in power. Look at the people donating to a lot of the politicians. Politicians accept a lot of donations from large corporations and the wealthy. Is it a surprise that the politicians are looking out for their interests? The politicians are doing this because they want to serve the interests of the rich.
Are people really going to not try to move ahead because they are going to have to pay a little more in taxes? No. Again, look at how things were in the mid-twentieth century. Yes, the rich had to pay their fair share in taxes. Did the economy not work because of this? No. If you raise taxes on a rich person a little bit, guess what? That person is still rich. With loopholes, many corporations essentially pay nothing in taxes. It won"t kill them to pay their fair share. They can still remain rich, but they should have a moral obligation to pay their fair share in taxes. They paid more in taxes in the mid-twentieth century and still chose to work hard. Asking them to pay a little more in taxes today will not ruin the incentive to work. They still have opportunities to become better off even if they have to pay a little more.
5. "If we tax the "rich" to death we cause? Insecurity for employers, which actually does "trickle down" with job cuts and lack of hiring."
I"m not advocating we tax them to death. I"m just asking that the rich pay their fair share in taxes. Many large corporations already pay nothing in taxes with all the loopholes. It won"t kill them to pay their fair share. There is no evidence that tax cuts for the rich have led to economic growth and there is no evidence that raising taxes on the rich harms the incentive to work. In fact, history shows that raising taxes on the rich does not make them less likely to want to work. They will just suck it up and deal with the higher rate. They make not like it, but that"s not what matters. Just because a rich person paid a couple thousand dollars less in taxes does not mean that that person is going to inevitably go out and there more people just because he or she has extra money. Why would a rich person do it just to do it? They hire people based on need. If rich people have more money, a lot of that money won"t be pumped back into the economy. So, if they have more money sitting around, there"s less money to be pumped back into the economy. However, if a poor or middle class person has more money, that person will probably spend that extra money, which increases demand for an employer, making them hire more people.
6. "Who opposes Supply Side Economics? Barrack Obama does, and it has worked beautifully to the tune of a national debt that surpasses $19,000,000,000,000."
Contrary to what many Republicans believe, Barack Obama is not a communist. In fact, he"s not even that liberal. He"s a moderate at best. Even though Obama wants you to think that he"s very liberal and is on the side of average Americans, he"s on the side of large corporations and the wealthy. Even though Obama has said that he opposed supply side economics, his actions say otherwise. Actions can speak louder than words. Obama renewed a lot of the Bush Tax Cuts. He had a Democrat controlled Congress at the beginning of his term, and he could"ve passed tax increases on the rich if he really wanted to. But, instead he chose to negotiate with the Republicans on taxes. My point? He wants to keep Reaganomics going to keep the rich in power but he does not want the American people to think that way. Taxes are lower under Barack Obama than they were under anti "trickle down" presidents in the mid-twentieth century and the debt problem wasn"t nearly as bad as it is today.
7. "If the anti "trickle down" economics supporters get their way, why should anyone try? Why go to medical school, law school, or try to push a business to a higher level? Why try to reach the next tax bracket? They'll just take it from you and give it to someone who has all of their basic needs taken care of for free already."
If we really did tax the high achievers to death, then they wouldn"t have an incentive to work. But, that's not what I"m advocating for and I"m sure that"s not what most anti "trickle down" people want either. We just want the rich to pay their fair share in taxes. It has worked in the past, and it would work today. There was a time when the rich paid their fair share in taxes, and the economy still grew. Again, we have to find that happy medium. Tax them enough so it is fair, but not too much so they decide not to bother with working hard. If you taxed 98% of their earnings, then yes they aren"t going to bother earning more. That"s why the balance is so important. If a system isn"t broken, then don"t try to break it. The higher taxes on the rich has worked before, so there wasn"t a reason to give the rich gigantic tax cuts like Reagan did.
8. "I heard Obama say,"You didn't get it on your own!" Who cares? And how does HE know? Based on what? What if they did? Who is he talking to, all of them?"
Rich people didn"t acquire all their wealth on their own. They may have been the ones who chose to go the extra mile to earn it, but there were still institutions that helped them to get there. Take schools for example. Don"t you think that they should have a moral obligation to help pay for the institutions that helped them be successful?
I'm not somebody who is a complete opponent of keynesian economics. I believe both models have their place depending on the exact flavor of the current economic atmosphere of the time. I think that if you get control of the insanity of student loan debt, you make the usage of Supply Side Economics more viable. I am a Moderate minded person. I believe both models can work effectively if not handcuffed by other irresonsible practices.
Schools purposefully took advantage of the Federal Student Loan programs. They did not look at a student's credit history. They did not look at a student's income. They did not look at a student's ability to repay the debt. They did not look at anything. They just started giving out free loans and money to anyone and everyone.
So guess what schools started doing. They started recruiting students in mass, signing them up for federal loans that these students couldn't even afford, but students with dreams of success signed the dotted line figuring they'd get a good job and pay it back. Later, many did not find good jobs, and these heavy loans that took advantage of this overly generous giving of loans of any amount(withinreason) to anyone killed the economy. Obama actually did a good thing on this one in my opinion by implementing student loan forgiveness. Once the balance becomes stable, I believe Supply Side economics can do fine.
The problem was that everyone had such heavy debt that they couldn't get loans for houses, spend extra on clothes, food, trips, etc. This effected the entire infrastructure of the economy. The schools got greedy and the government was too slow to act.
Here are some testimonials in a video simply explaining what the student loan crisis did to people.
They had went to school, tried to get an education and now are hundreds of thousands of dollars in debt, and they can never pay it back. Can they buy a house? No. Can they take trips? No. Can they buy stuff? No. So guess what. That money is not going back into the economy.
So if people were not loading up on unsermountable student loan debt, Supply Side would have been fine. It works as long as the people are not handcuffed by other legislation and/or policies.
In my opinion, if all of these people were free from this crazy debt, Supply Side works fine. But any "trickling down" that happens is pointless if those recieving it cando nothing with it.
Take for example, someone with $50,000 instudent loandebt. They are fighting to make it, they do their taxes, they get a tax return of $5,000. Guess what. It's taken and applied to the federal loan. What part of the sector made money? Some school made money that might go back into education, but the economy sees nothing. All that happened is the government trying to make up loan losses, and the civilian has $0 to spend.
Your argument doesn’t make a whole lot of sense to me. I fail to see the connection between the student loan crisis and supply side economics working? Even if there were no more student loans owned to the government, the rich would still keep most of that extra money. The student loan problem just means that the poor and middle class owe more money to the government and are further being harmed. Reaganomics is not ineffective because of the student loan crisis. It is just an ineffective policy from the start. There really isn’t a whole lot more to it. Like I’ve said, Reaganomics is based on a flawed argument. Give more to the rich and they will spend it in a way that benefits the economy as a whole. That hasn’t happened. We haven’t seen noticeable job growth. We have seen wealth inequality and the national debt skyrocket. I feel like I can’t hammer this point enough. “Trickle down” economics was just a big scam to enrich the already rich.
Here are some more rebuttals:
1. “But not for them. Why? It's all politics. The Democratic Party is notorious for pushing slavery. Why? It humors the masses on the left. Pander to them and keep power.”
Although I’m not a huge fan of either of our two major parties, look at how much the Republican Party does for the rich. “Trickle down” economics is basically socialism for the rich. The GOP has to sell “trickle down” economics. So, the Republican Party still has to promote propaganda to get support. Look at all the right wing propaganda out there. Fox News is perhaps the most notable, but there are others out there. They try to sell a lot of the Republican beliefs that are there to keep the rich in power. Why does the GOP support Reaganomics? To keep the rich in power. Why does the GOP support cutting entitlement programs? Because it’s a part of the interests of the wealthy. It’s not because of fiscal responsibility. I find it funny how the Republicans blast the Democrats for spending too much on entitlement programs when they cut taxes on the rich and expand the military to the point where they too run colossal budget deficits. They are trying to appeal to the masses so that why they don’t figure out that they are truly trying to keep the rich in power. Of course, I don’t see the Democrat Party as the big hero either. They too have gone corporate as well. But, the Republican Party does it to a much larger extent. Why else is Reaganomics one of the core Republican beliefs? As Thom Hartmann would say, there are two types of Republicans, rich people and suckers.
2. “I think that if you get control of the insanity of student loan debt, you make the usage of Supply Side Economics more viable."
3. “Once the balance becomes stable, I believe Supply Side economics can do fine.”
4. “They had went to school, tried to get an education and now are hundreds of thousands of dollars in debt, and they can never pay it back. Can they buy a house? No. Can they take trips? No. Can they buy stuff? No. So guess what. That money is not going back into the economy.”
I think that when you mention student loans, you are thinking of a separate issue. I would agree that the amount of loans that students need to take out for college is insane (being more liberal on the fiscal side of things) but I would not agree that this would allow supply side economics to work. How would it? I fail to see the connection. Tell me how this is related. The rich would still get richer regardless of if there was a student loan crisis or not. The student loan crisis only further hurts working class and middle class people. It is not the sole cause of the struggling poor and middle class we see today.
5. “But any "trickling down" that happens is pointless if those recieving it cando nothing with it.”
A lot of people who are poor and middle class don’t have any or much of any student loans. There are older adults out there who could use that extra money. They would probably spend it. They could use it. At least there’s a good chance it will be pumped back into the economy if you give it to a poor or middle class person. It’s a lot better than giving it to a rich person who will just let it sit there. Rich people already have a lot of the things they, so why do they need to spend more? There is no “trickling down” if a rich person just keeps onto that money.
6. “They are fighting to make it, they do their taxes, they get a tax return of $5,000.”
"The student loan problem just means that the poor and middle class owe more money to the government and are further being harmed."
Exactly. So any "trickle down" just evaporates into an abyss of nothingness. Give a trickle down to someone who is financially bombed, and your trickle down is meaningless. As a matter of fact, it makes all models useless, unless that model includes paying their debt off or giving them enough money to make a difference. If they owe $150,000 in useless debt and we give them $500, the government intercepts their money to help pay the federal student loan debt. They intercept tax refunds, parts of paychecks, and any money owed to them. So...now they owe $149,500. All of these peoples' money is intercepted before they can even see it. People making say, $17 an hour , are living like people making minimum wage or less. Are they contributing to the economy? No.
More than 25% of students who take on college debt are graduating with way too much of it, according to experts. And the repercussions could be lifelong. 25% of students are in the situation I described above. Fix this and you fix a giant heap of the economic unbalance in the U.S. today. Imagine if that 25% were not enslaved to the student loan system. How much money would then go directly into the economy? It would make a massive difference.
According to Sheila Bair, the chair of the Federal Deposit Insurance Corporation during the financial crisis, "There needs to be more accountability by schools who have been taking advantage of these kids, It makes me very angry.”
-The average student loan balance among people with bachelor's degrees has risen from $15,000 in the mid 1990s to about $27,000, according to the Fed.
"This is having a crippling effect on economic activity, says Barbara O'Neill, a specialist in financial resource management for Rutgers University."
"A lot of things are being postponed. You've got what you call a crowding out effect. People only have so much money," she said. "There’s a lot of business activity that isn’t taking place ... It’s a drag on everything."
"Fewer people are buying homes and cars, O'Neill says, because large portions of their income are being eaten up by student loans. They're also less likely to start the small businesses that provide jobs and services that drive the economy."
Students are having no luck finding jobs except in the service sector industry.
For the first time in history, student loan debt now exceeds the total national credit card debt. One in every five young adults between the ages of 18 to 34 are in poverty.
This has a horrible effect on the economy. If graduates are paying back student loans every month, they can’t save up for retirement or a mortgage, or pay off credit cards, financing on vehicles and other debts. They’re unable to spend money at stores, which has a devastating effect on the economy at all levels.
"Trickle down" theory holds that tax cuts for the wealthy will benefit the whole economy because new wealth at the top will circulate throughout the market and find its way into the pockets of the middle class.
It can't find its way to the middle class when it's intercepted to payoff student loan debt that can never be paid off in a lifetime anyway. It trickles down to...the government to try and recover their losses on irresponsible federal lending. The government caused a problem that no current economic model can overcome without the problem being removed or solved.
Supply Side Economics has worked and can work.
In the 30 years from the 1980s through the first decade of the new century, supply side economics contributed to the biggest boom in
U.S. history. According to the National Bureau of Economic Research, "1982-1999 was one continuous mega economic expansion." As it reached into 2007, this 25 Year Boom causef a tripling in the net wealth of U.S. families and businesses from $20 trillion in 1981 to $60 trillion in 2007. When an adjustment was made for inflation, more wealth was created in this 25 year stretch than in the previous 200 years combined.
I feel like this has been a discussion about student loans more so than Reaganomics. Both of us seem to agree that student loan debt is a big problem. But, where we disagree is supply side economics. What I’ve been trying to say is that more often than not, money given to poor and middle class people will be put back into the economy. Those who are defaulting on their student loans are a minority (although a noticeable one). Most of them would spend the money on something else since they are already paying off their student loans. If you give that money to a rich person, that money will just sit there and not be pumped back into the economy. The GOP claims that their platform will create jobs and opportunities for all. However, in reality, all it does is enrich the already rich. Look at all their corporate donors (I realize that Democrats have them too). Is it a surprise that they are trying to make them richer? You would expect them to serve those who are funding their campaigns first. If rich people are donating tons of money to their campaigns, then they are going to serve the interests of the rich. That’s why the GOP continues Reaganomics. Do you seriously believe that they are going to look out for the average person before their campaign donors? The Republican Party is the party of the rich.
A lot of what you see promoting Reaganomics is corporate propaganda. The myth that wealth “trickles down” has been debunked so many times. Why doesn’t it work? I feel like I can’t say this enough, but it fails because the more wealth that goes to the top (and stays there), the less wealth that’s available for the middle class so less demand is created. This actually harms job growth, and this makes sense given studies done on it. Please, tell me how fixing the student loan problem will enable supply side economics to work. I’m still waiting for an answer. Wouldn’t that wealth just stay at the top? Why would the rich spend it if the poor and middle class aren’t burdened by student loans? I don’t get it.
So, when can we expect to see a “trickle?” If the poor and middle class are supposed to benefit from supply side economics, then when will that happen? Why hasn’t it happened now? You’re telling me that supply side economics is supposed to benefit the economy as a whole. That hasn’t happened yet.
The rich just pocket that extra money and don’t spend it because they don’t need to. What creates jobs is demand, and that’s how we benefit the economy as a whole. Cutting taxes on the rich decreases demand due to an increase in wealth inequality. Give it to people that would actually need it and you would see it pumped back into the economy. You’ve been arguing that this won’t happen because many are burdened by student loans. Although a noticeable minority is drowning in their student loan debt, many people would still be able to pump it back into the economy because they would need to spend it on other things. Most graduates do end up finding a job and paying off their student loans in a timely manner.
1. “Exactly. So any "trickle down" just evaporates into an abyss of nothingness. Give a trickle down to someone who is financially bombed, and your trickle down is meaningless.”
But, as I’ve told you, a lot of people are already paying off their student loans in a timely manner, so if they were given extra money they would probably spend it on something else. There are also quite a bit of poor and middle class people that don’t even have student loans to pay back (either because they never got them or already paid them off). So, a lot of that money would actually be pumped back into the economy.
Don’t you think that student loans are a separate problem? If we elect someone like Bernie Sanders, maybe something will be done about the problem of sky high college costs. I would agree that college costs are out of control these days and that we must do something. High college costs further burden the poor and middle class. But, look at what Reaganomics has done to them. Wealth inequality and the national debt have exploded. GDP growth is said to have been slowed down. Like I’ve been saying, if you give a rich person money, he or she won’t have the urge to go out and spend it. Why? Because he or she will not need to. So, you won’t see a trickle giving the money to the rich people, so why do it? At least giving money to poor and middle class people actually help them. They need it given the conditions of the economy today.
2. “If they owe $150,000 in useless debt and we give them $500, the government intercepts their money to help pay the federal student loan debt. They intercept tax refunds, parts of paychecks, and any money owed to them. So...now they owe $149,500.”
What if that person is working on paying off the student loan debt? The government doesn’t just take any money they acquire to pay off the student loan if they are already paying on it. If one defaults on the loan, then that could happen. Although a considerable number of people are burdened by student loans and may never pay them off, a lot of people are successfully paying them off. Remember that most people who graduate college do end up getting jobs. Those that do get jobs and pay off student loans are pumping that money back into the economy.
3. “How much money would then go directly into the economy? It would make a massive difference.”
So, aren’t you admitting that giving money to poor and middle class people does go back into the economy (assuming they aren’t drowning in debt)? Then why not fix the student loan problem and give them more money? Or, at the very least, why not give them more money? It would help them and in many cases it would go back into the economy. More often than not it would be put back into the economy. It’s better than giving it to a rich person as it will not be pumped back into the economy.
This wasn’t intended to be an argument about student loans. It was intended to be an argument about Reaganomics. What I’m trying to say is that when you give more money to the rich, it doesn’t get invested back into the economy, so what is the point? To make them even richer? Isn’t wealth inequality high enough these days?
4. “This has a horrible effect on the economy. If graduates are paying back student loans every month, they can’t save up for retirement or a mortgage, or pay off credit cards, financing on vehicles and other debts. They’re unable to spend money at stores, which has a devastating effect on the economy at all levels.”
It does but remember we are debating Reaganomics, not student loans. If a graduate is paying off his or her student loans, don’t you think that he or she could use some extra money? Don’t you think that he or she would pump it back into the economy by saving up for a mortgage, car, or whatever? Wouldn’t that money be pumped back into the economy? Remember that most graduates are paying off their student loans, so any money would be beneficial.
5. "Trickle down" theory holds that tax cuts for the wealthy will benefit the whole economy because new wealth at the top will circulate throughout the market and find its way into the pockets of the middle class.
But that new wealth at the top doesn’t circulate throughout the market. It just stays concentrated at the top. Look at the increase in wealth inequality since the 1980s. You will see that the rich just continue to get richer. All that money that they are keeping is not helping the economy as a whole. Why? Because the rich don’t pump that money back into the economy. They have no need to. Do you see the connection?
6. “In the 30 years from the 1980s through the first decade of the new century, supply side economics contributed to the biggest boom in U.S. history.”
But that prosperity went to those at the top. Average Americans did not get a huge share of all the prosperity that was created.
Look at how that economic boon ended. It ended in a crash caused by the deregulation of Wall Street. Millions lost their jobs and homes. So, was all the economic growth for those at the top worth it considering it ended up being a disaster for the poor and middle class in the end?
"To make them even richer? Isn’t wealth inequality high enough these days?"
Wealth inequality has never not existed in the history of planet Earth or the history of America. That's just life. If I have a fine life compared to most of humanity, I don't whine about it or compare myself to Bill Gates. I'm simply statisfied and grateful for what I DO have.
"But that new wealth at the top doesn’t circulate throughout the market. It just stays concentrated at the top. Look at the increase in wealth inequality since the 1980s. You will see that the rich just continue to get richer."
Have the rich gotten richer? Perhaps. Have the poor and middle class gotten poorer? It doesn't appear so.
-Self storage ranks as the fastest growing segment of the commercial real estate industry since 1975. Self storage businesses brought in revenues of $24 billion dollars in 2013.
The average size of a new family home increased 57% from 1970 to the 2000s. That means Americans spent $24 billion to store the things that they can’t fit in their homes, and many of peoples' homes are bigger than ever in history.
Sure, the middle class, defined as households earning between $35,000 and $100,000, might be shrinking slightly, but through 2000, the New York Times reveals, “the shift was primarily caused by more Americans climbing the economic ladder into upper income brackets than ever before.”
According to the Mises Institute the poor in America are better off than the middle class in Europe.
The poverty income in the US is very close to matching the median income in Italy, Japan, Spain, and the UK.
According to Forbes, America's poor still live better than most of the rest of humanity. The bottom 10% in the US have better lives than the top 10% in Russia, the top 10% in Portugal, and the top 10% in Mexico.
The US bottom 10% have a living standard very similar to those of Finland and Denmark. Why this is relevant is these are the social democracies where they tell us they care more about the poor than most.
According to research, published at The Journal of Policy Analysis and Management, from Cornell economist Richard Burkhauser, Joint Committee on Taxation economist Jeff Larrimore, and Indiana University economist Kosali Simon, the rich have indeed been getting richer, for the last 30 years so too have the poor and middle class.
According to research from an economist at The Brookings Institution, it’s not just the rich who are getting richer; the poor are getting richer, too.
There was a time in America when only the wealthiest of Americans could afford to buy a cellphone, but today, 90 percent of American adults own a cellphone.
When Facebook went public, its creators did not lock their earnings in a vault. The move created over 1,000 new millionaires and 10 new billionaires.
Local restaurants such as Silicon Valley Watering Hole and local tech favorite Buck’s of Woodside, located just a few miles from Facebook’s headquarters and often considered the center of the local economy there have reported a boom in the local economy.
The point? Barack Obama, Hillary Clinton, Bernie Sanders and other such types are pandering to the poor, whether right or wrong. Barack Obama, in his book,"Dreams of my Father," took on a decisively anti white innitiative. He has used this bias to fuel anger from the poor and minorities, rather than actually sticking with facts and what is best overall for the country. It's revenge for him.
Hillary Clinton has pandered to the poor and minorities for political gain. While speaking ill of the rich, her fingers have been crossed behind her back receiving $250,000-$600,000 per "speech", and not even revealing the nature of these discussions. Her anti Supply Side rhetoric is exaggerated for political purposes and not reality.
According to public disclosures, by giving just 12 speeches to Wall Street banks, private equity firms, and other financial corporations, Clinton made $2,935,000 from 2013 to 2015.