United States President Joe Biden has presented his plan to repair the country’s economy through tax hikes. And when he says “trickle down economics has never worked”, he’s right.
On Wednesday, President Biden presented his plan to use tax hikes in order to fix the broken US economy, devastated by the Covid-19 pandemic. To date, the United States has had 32,230,011 Covid-19 cases and 574,329 deaths, according to Johns Hopkins University.
Impressively, the Biden administration has overseen the delivery of 234.6 million doses of various vaccines, which means that 71 out of every 100 people in the United States has received at least one jab.
The next challenge for Biden and America’s healthcare system is to convince anti-vaxxers to actually, willingly receive the vaccine and ensure herd immunity, particularly in the Southern States.
However, Biden’s other challenge may actually be more complicated… fixing the US economy, a problem that has foundations in the country that are far deeper than the healthcare crisis it faces. And a privatized, financially crippling healthcare system certainly isn’t helping.
Primarily, the economic challenges that the majority of the country are facing are a consequence of Donald Trump‘s $1.5 trillion GOP tax cuts in 2017. The majority of those tax cuts benefitted the country’s ultra-wealthy elites, expanding the deficit substantially.
I’m rather pleasantly surprised, however, that Biden – a major establishment figure for almost 50 years on the US political scene – spoke out against the myth of trickle down economics.
“Trickle-down economics has never worked,” the President said during his first address to a joint session of Congress, according to The Hill. “We’re going to reform corporate taxes so they pay their fair share and help pay for the public investments their businesses will benefit from as well,” he said. “And we’re going to reward work, not just wealth.
“It’s time for corporate America and the wealthiest 1 percent of Americans to just begin to pay their fair share. Just their fair share.”
The President has proposed that his $2.25 trillion infrastructure plan will be paid for by tax increases on corporations, and his new $1.8 trillion plan focuses on helping families through tax hikes on high-income individuals.
The tax cuts made in the Trump administration created a sugar high, an inflated stock market which has no real world value. The shaky ground upon which Trump’s “successful” economy was built led to pure devastation in 2020.
More than 20 million nonfarm payroll jobs have been lost during March and April 2020 alone, while more than 8 million of the leisure and hospitality industries’ 17 million jobs were lost. In the first half of the year, Real GDP growth shrank by only 12%, but was able to recover with gains of 5% and 2.5% in the second and third quarters respectively.
And yet, the wealthiest individuals in the country saw their net worth’s increase by billions. One THIRD (!!!) of the wealth gains from billionaires since 1990 have been made during the pandemic. Regardless of your political affiliations, the numbers are what they are and trickle down economics has never done anything for any country other than inflate stock markets and concentrate wealth into an ever-shrinking echelon of the populace. Republicans and conservative Democrats are all arguing that it will hurt the economy, but there is a long history of using tax increases and federal government programs to create jobs. The United States emerged a far better country after the Great Depression as a consequence of FDR’s style of social democracy, the New Deal and a genuine commitment to uplifting the poor.
If you want a 21st Century example, Lula’s Bolsa Familia and Fome Zero social programs in Brazil brought millions of people out of poverty, alleviated the country’s credit rating after a credit downrating when he took office in 2002 and stimulating the fastest growing developing economy of the first decade of the 21st Century.
Furthermore, if you want to see what building an economy from the ground-up, not top-down can do in the midst of the pandemic, take a look at the GDP growth rate of Austria, which declined by 2.7% quarter-on-quarter in Q4 2020 and actually grew by 11% in the third quarter. Why? Austria, among many other European nations who’ve managed to weather the worst of the pandemic’s fiscal devastation, has been sending direct cash payments to employees in the country who’ve lost their income in the midst of the pandemic.
Frankly, it astounds me that there are still people out there who continue to tout the unsustainable practice of tax cuts for the rich, grounded purely in the flawed, widely disproven theoretical concept of trickle-down economics. But, I’m also taken aback and impressed by Biden when he says that he wants to grow the struggling economy “from the bottom and middle out”.
It’s called demand-side economics. If more people have more money to spend in an economy (as opposed to a few wealthy individuals who are keeping ridiculous sums of money off-shore or in an interest-yielding investment, offering no real-world value), there will be more economic activity. More economic activity + higher spending = more jobs. It really is that simple. Even a UBI can take the country a very long way and anyone that earns above $400,000 a year – the only people who will be affected by the Biden tax hikes – can take the hit, I’m sure.