On Friday, presumptive 2016 White House candidate Hillary Clinton attended a rally for Massachusetts’ Martha Coakley. While there, she decided to take aim at the Republican ideal of supply-side economics.
Don’t let anybody tell you that, you know, it’s corporations and businesses that create jobs. You know, that old theory – trickle down economics. That has been tried, that has failed. It has failed rather spectacularly.
Clinton, of course, isn’t saying anything new; liberals have decried “trickle-down” economics since before there was such a term. But it remains fascinating in this day and age that a smart, educated, experienced woman like Mrs. Clinton would buy into the concept that businesses don’t create jobs. While there are conservatives who take the concept too far – denying that government spending also creates jobs, for instance – they have a much better grasp of the situation than Clinton.
The principle behind trickle-down economics is that you cut taxes at the highest levels. This gives business owners and capital investors more cash with which to invest in the private sector. That in turn creates jobs. It assumes that the power in a thriving economy lies with the successful. The business owners, the investors, and even those that horde their money away in a vault. Depending on how your define “trickle-down” economics, it might be restricted to describe certain kinds of tax cuts, such as those for corporations and capital gains.
Failure? Not Really…
Though Clinton claims that this economic theory has “failed spectacularly,” the history books tell a different story. They show the successes of the Reagan tax cuts, where he brought the top tax rate down from 70% to 28%. He also took aim at corporate tax rates. These cuts dragged us out of a recession in 1980, and they did so much faster than anything our current president has done to get the economy going again.
You don’t even have to go back that far. Consider Bush’s tax cuts, which he rolled out in 2001, just after 9/11. These also worked wonders, proving to be just the kind of stimulus the country needed to get out of its post-terrorism malaise.
Now, this isn’t to say that Bush and Reagan were economic wizards. There were extenuating circumstances; for instance, the wars in Iraq and Afghanistan undoubtedly played an important role in improving the economy. Some have even credited the Federal Reserve’s lowered rates for the quick end to the recession. These ideas and theories aren’t cut and dry.
But to stand there and say that trickle-down economics is a failed theory is ignorant and untrue. There is more evidence that Keynesian economics has “failed spectacularly.”
In a way, she’s got a point. As long as we insist on undermining the principles of supply-side economics with slashed interest rates and welfare, the theory doesn’t get a chance to work the way it’s supposed to. Perhaps if we had a president with the gumption to cut some entitlements and regulations, we could see what the free market is capable of. Just guessing here, but that president is unlikely to be Hillary Clinton.