Tax Cuts Won’t Trickle Down; Maybe Deficit Spending on Military Will?

Trickle-down economics won’t work for Trump any better than they worked for Reagan or Bush II.

Folks who claim tax cuts for the rich trickled down to broad benefit under Reagan forget another confounding factor that may have had much more to do with economic growth in the 1980s: Reagan’s massive deficit spending on the military… also known as economic stimulus:

…Jared Bernstein, former chief economist for Vice President Biden and a senior fellow at the Center on Budget and Policy Priorities… says, it’s not clear that tax cuts are what juiced the economy in the 1980s, noting Reagan spearheaded massive increases in defense spending — from $325 billion in 1980 to as much $456 billion in 1987 — that rippled across the economy [Paul Davidson, “Can Trump Make ‘Trickle-Down’ Economics Work?USA Today, 2016.11.13].

Trump used to want to cut the military budget. Now the exigencies of “populist” appeal (can we stop euphemizing? can we just say “fascist”?) demand pouring another $100 billion to $300 billion into guns and bombs and reckless adventurism that someone else will pay for.

Trump’s military plan is already stimulating the stock market:

…defense stocks spiked considerably the day after Trump’s election — with the stock value of some of the biggest defense contractors like Northrop Grumman, Raytheon and Lockheed jumping between more than 5 to 7.5 percent at the news [Karoun Demirjian, “Republicans May Get the Defense Spending They Dreamed of Under President Trump,” Washington Post, 2016.11.14].

And O! the masses cheer, since those populism-painted Trump voters all have Raytheon and Lockheed in their diversified stock portfolios….


10 Responses to Tax Cuts Won’t Trickle Down; Maybe Deficit Spending on Military Will?

  1. W R Old Guy

    Interesting article in today’s Wichita Eagle newspaper comparing Trump’s tax plan to the one adopted by Kansas under Governor Brownbeck. Kansas had to make drastic cuts last fiscal year to meet the budget because tax revenues and growth didn’t meet projections. It is now projected that the state will have to make up 391 million before June 30th 2017 to meet the budget. Brownbeck blames the problem on slumping energy and farm prices which is of course, Obama’s fault.

    http://www.kansas.com/news/politics-government/article114837818.html

  2. So then, who we gonna sell arms to? http://www.jpost.com/Middle-East/Iran-News/Iran-inks-China-military-pact-while-mulling-10-billion-Russian-arms-deal-472574
    We already loaded Israel with hardware, the Saudi’s as well. As cooperation deals come with Russia, the deal in Syria may come to an end with the refugees being able to come home. So then, now what? Lebanon is off limits as Israel dares not go any further into Lebanon than a couple meters. The West Bank is always good for some sorties of bombs but that ain’t gonna diminish the stockpiles we have already put in place in Israel. Probably the only way to make that 9.8% growth that NOem was talking about is to fund a civil war right here. The police are already militarized. We already have the guns so the sales would have to be in motorized walkers and the like to get to the level places that need to be held until nap time. The new vulcan walker, armed with 6 hellfire missles that must be fired by the end of the day, no matter what. This could be big for investors.

  3. Darin Larson

    Reagan also tripled the national debt with both military and non-military spending increases. That tends to juice the economy.

  4. mike from iowa

    Raygun also took America from the largest creditor nation to the largest debtor nation.

  5. Any self-respected conservative would know that we don’t need to spend billions more on the defense budget. Our defense spending is already an over bloated fat giant in the world compared to other nations.

  6. Wasn’t it Kristi that asked us to send her to Washington to cut the deficit and rebuild the military? Uhh, ryyyght!

  7. We may have a bit of a problem with Europe regarding climate issues. http://en.rfi.fr/france/20161114-sarkozy-proposes-carbon-tax-us-goods-if-trump-scraps-paris-climate-pact

    We may end up selling stuff to ourselves, but we are winning.

  8. Jerry, If we’re going to sell stuff to ourselves, we’re going to have to resume making stuff for ourselves… and our young workforce is going to be too busy providing health and assisted-living care to retirees to put in a shift at the factory making iPhones.

    Loren, if Kristi actually fixed problems, then what would she run on? Remember, in the SDGOP, a candidate’s job is to raise money and win elections, not actually do anything in the job one wins.

    Jenny, I don’t get it: Trump says other nations need to pay for their own defense, yet he advocates spending more money on guns and bombs so that we are equipped to defend everyone else. What’s the point? It’s as if he’s saying, “I want our allies to build up their own militaries, but then we’re going to need a bigger military in case our allies turn on us.”

  9. The Trumpsters may turn Amerika into Kansas. There are several thought pieces similar to this making the rounds: http://thereformedbroker.com/2016/11/14/qotd-no-one-has-ever-seen-anything-like-this/

  10. Kansas is in their own real life OZ. And their fake wizard is rambling on about the benefits of supply side economics.