COMMENTARY: Trickle-down arises from the dust heap

Critics of the plan note that projected revenues fall far short of expenses, adding $1.4 trillion to the deficit over 10 years. Supporters, though, cheerily assert the economy will grow enormously, thus magically increasing revenues and canceling the added deficit.

If this sounds familiar, it should. It’s been tried before, twice in the 20th century, alternatively branded “laissez-faire,” “supply-side,” “trickle-down” and “voodoo economics,” as Americans over age 50 can recall.

Under presidents Coolidge and Hoover during the 1920s, it gave rise to an era of madcap speculation and transient windfalls against a backdrop of grinding poverty. Under presidents Reagan and Bush I during the 1980s, it traded double-digit inflation for double-digit unemployment, followed by a decade of rolling crises, recessions and layoffs, coupled with the steady decline of middle-class purchasing power.

In both cases, tax cuts were accompanied by large-scale deregulation of business and banking, creating hazards and hardships for consumers and working people, and precipitating large-scale failures in markets left to “self-regulation” by the very ones profiteering from the mischief.

In neither case did the scheme perform as hoped. Granted, giveaways to the rich prompted spikes in market prices, creating an illusion of prosperity at the top end for a few years. But it never trickled down from the wealthy tycoons to the laboring masses, and thus failed to generate the broad prosperity upon which advocates had too hopefully relied to bolster tax revenues and pay for the initial tax cuts. Instead, deficits skyrocketed, and the economy stagnated. In the 1920s, the artificial boom ended in the Great Depression. In the 1980s, bloated market prices masked the steady erosion of the working middle class, on which post-WWII prosperity had been built.

This time, however, the schemers have a sure-fire plan to fix the rising deficit, when (not if) the predicted prosperity and tax revenues once again fail to materialize. Cancel the giveaway to corporations and the wealthy? No, too obvious. Besides, the donors expect a return on their “investment.” Instead, the middle-class tax cuts will disappear in 10 years (but don’t expect the deductions to reappear). The remainder of the deficit increase can be paid off simply by raiding Medicaid, Medicare and Social Security. What could possibly go wrong?

Happy holidays, America!