The vice-presidential debate goes tonight in Kentucky, and Ohio senator Sherrod Brown gave us a sneak preview of the line of attack Vice-President Joe Biden is likely to use against Republican veep nominee—Ryan, charges Brown has “dressed up trickle-down economics and wrapped it in an Ayn Rand novel.”
It’s admittedly a snappy soundbite although I have absolutely no idea what Brown means, and given that Rand’s most notable novel—Atlas Shrugged—is long enough to make the unabridged version The Count of Monte Cristo look like Cliff’s Notes, I highly doubt Brown has read it, and therefore he probably doesn’t know what his own soundbite means either.
Perhaps the mystery lies in this question—when we use the term trickle-down economics, what exactly does that mean? Again, I don’t think liberal politicians have the foggiest idea—they toss it about as a soundbite, something that conservative politicians have regrettably started imitating in their recent abuse of the word “socialist.” But let’s take a crack at what trickle-down economics might mean.
The theory first came into vogue during the Great Depression, and was attributed to the policies of Republican president Herbert Hoover. Although Hoover also believed in tax increases to try and balance the budget. And since this latter idea is abhorred by Ryan and his philosophical soulmates, it’s clear that attributing the term’s original intention to them is inaccurate.
We could also try the face value explanation—which would presumably be the belief that government policy should focus exclusively on benefitting the upper classes, and count on prosperity to trickle down to the rest. This is clearly the interpretation President Obama and his campaign strategists hope the American voters believe.
Although again, while Ryan does undeniably advance tax policies that benefit the wealthy, he doesn’t do so at the expense of the middle class. One might reasonably argue that the country can’t afford cutting taxes across the board. One might argue that doing so would accelerate the income gap. Both would be reasonable cases to make, but it certainly doesn’t mean Ryan thinks the middle class should do nothing but sit around and wait for a few crumbs to trickle down.
Finally, we come to the deeper explanation, which is that political Left really believes that there are only two choices in economic policy—one is to soak the rich, play the envy card and whip up class anger, and the other is trickle-down economics. And since Ryan isn’t the former, he must naturally be the latter. This theory has a simplistic quality to it that plays well in political debate although its relationship to fact is somewhat tenuous (that’s a long-winded of saying this theory is a bunch of B.S.).
I don’t believe that strengthening the wealthy and the merchant class will magically solve our economic problems. There are too many people like David Siegel, the CEO of Westgate Resorts, who told his employees that any further tax increases meant he would undertake substantial layoffs—this, while he continues to install an elevator in his mansion and continue construction of the 20-plus bathrooms.
Siegel’s attitude over what amounts to few percentage points on taxes (the top rate would rise from 35 percent to 39 percent if Obama allows the Bush tax cuts to expire, as promised) is worthy of contempt and a good example of why Republican coziness with the economic elite meets with reasonable skepticism.
But at the same time, an all-out attack on the wealthy and the merchant class is completely counterproductive. They might not be the sole cause for economic growth, but all but the most hardened left-wingers would acknowledge that a vibrant investing class is at least a component of a successful economy.
Democrats who call the above paragraph trickle-down economics have neglected the history of their own party. When John F. Kennedy decided the top marginal tax rate of 91 percent was suffocating incentives for the wealthy to invest, and pushed a plan to cut it to 70 percent (it passed after his death) was he advocating trickle-down theory?
When a large coalition of conservative Democrats cooperated with Ronald Reagan to further take the rate down to 50 percent, were they all trickle-down acolytes?
And when a Democratic House, led by liberal stalwart Tip O’Neill, along with Dan Rostenkowski, further worked with Reagan to get both a lower top rate (28 percent) and an elimination of a large chunk of tax loopholes in 1986, were they sudden converts to trickle-downism?
No they weren’t. What they essentially figured out was that, while strengthening the wealthy is not some magic elixir to economic problems, attacking them doesn’t get you anywhere either.
I would suggest a discussion along these lines would be a healthy way to use the 90 minutes allocated for Ryan and Biden to debate. Ryan could be invited to talk further on the ideas he has that are specific to the middle class. Biden could be invited to clarify his thoughts on whether there is a point where marginal tax rates become too high.
Although that would actually be a productive use of 90 minutes, and our political class has created a “debate” culture where each candidate will be instructed to just get through the time by reciting poll-tested answers more rigged than a WWE wrestling match. I think I’ll pass and watch the baseball postseason, which is at least unpredictable.
Dan Flaherty is the author of Fulcrum, an Irish Catholic novel set in postwar Boston with a traditional Democratic mayoral campaign at its heart, and he is the editor-in-chief of TheSportsNotebook.com