Remember when people laughed at trickle-down economics?

posted at 9:30 am on August 2, 2010 by Ed Morrissey

For the last two years, Democrats have blamed one class of people for the nation’s woes — the rich.  Wall Street fat cats stole our money, big executives got bonuses,  bankers and investors gambled too much on their choices, and CEOs won’t unlock capital just because they’re great big meanies.  Barack Obama and his partners in Congress keep coming up with higher taxes and bigger penalties for the wealthy to punish them, but as the Associated Press belatedly discovers, that has an effect that has helped cripple the economy:

Wealthy Americans aren’t spending so freely anymore. And the rest of us are feeling the squeeze.

The question is whether the rich will cut back so much as to tip the economy back into recession — or if they will spend at least enough to sustain the recovery.

The answer may not be clear for months. But their cutbacks help explain why the rebound could be stalling. The economy grew at just a 2.4 percent rate in the April-June quarter, the government said Friday, much slower than the 3.7 percent rate for the first quarter.

Economists say overall consumer spending has slowed mainly because the richest 5 percent of Americans — those earning at least $207,000 — are buying less. They account for about 14 percent of total spending. These shoppers have retrenched as their investment values have sunk and home values have languished.

Keep in mind that everyone is buying less.  Thanks to high unemployment rates, no one feels very sanguine about spending lots of money unless they absolutely need to spend it.  The savings rate jumped to 6.2% in the second quarter, and that’s not just because the top 5% of the consumers in this nation have begun clipping coupons.

To the extent that those earning above $207K may have cut back their spending, it should come as no surprise.  A number of them may be overextended on their mortgages just as more middle-class families have become.  But increasingly, it’s become clear that the Obama administration and Democrats see them as piggy banks for funding their expansive and expensive social-engineering programs.  Democrats have shifted gears somewhat to keep the middle-class tax cuts from expiring, but plan to allow the higher-end tax rates to rise again at the end of the year. The administration has targeted them for other potential tax hikes, such as increasing the cap on Social Security taxes, as well.

They’re under siege. What do people under siege do?  They hunker down.  And when they hunker down, they stop spending their disposable income and start sheltering it instead.  That affects people in the primary and secondary consumer markets, costing jobs and closing businesses, and accelerates economic decline.

This is why it’s generally considered an idiotic idea to raise taxes in the middle of a recession, perhaps especially on the pool of people who have the most disposable income to spend.  Oddly enough, while we had deficits after these tax cuts, they had closed to less than $200 billion a year in FY2007, before Democrats gained control of Congress, started spending like mad, and increased the annual budget 38% in just three years.  The tax cuts aren’t the real problem anyway, but if Congress decides to kill them now, it’s going to make our existing problems a lot worse.

Update: King Banaian wonders where the AP got their data; according to his, upper-income spending has increased, not decreased.


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This is why it’s generally considered an idiotic idea to raise taxes in the middle of a recession

But . . . but . . . they’re not raising taxes, they are letting the “diastrous” and racist Booosshh tax cuts expire!

rebuzz on August 2, 2010 at 9:33 AM

Trickle up poverty, Savage nailed socialism.

maverick muse on August 2, 2010 at 9:33 AM

Bring on the barter system and the underground economy; if North Koreans can make it work then so can we.

Bishop on August 2, 2010 at 9:34 AM

They’re under siege. What do people under siege do? They hunker down.

Awwww, Ed. Come on. Not everyone that’s under siege hunkers down? We’re all reptiles now, didntcha hear? What do some reptiles do when they’re under siege?

heh

ted c on August 2, 2010 at 9:36 AM

Raising taxes on anyone in the midst of a recession is the absolute WRONG thing to do. Which is exactly why they will do it. The current administration simply cannot be this stupid; this has to be by design.

Deckard on August 2, 2010 at 9:36 AM

Logic does not apply to this administration…they figure that the “trickle down” is from the Government, down to the little people.
You miss the point, the Government is on top, and we are at the bottom, therefore you tax, so you can then “trickle” on the little people.
Which is what give Chrissie the trickle up, in response the governments trickle down.

right2bright on August 2, 2010 at 9:36 AM

Democrat economic policy: Don’t try to be rich. And if you are somehow, spend all your money.

Sound economic advice from very smart, educated people, isn’t it?

Good Lt on August 2, 2010 at 9:37 AM

D’oh

cmsinaz on August 2, 2010 at 9:38 AM

sustain the recovery

Keep playing that tune, AP.

mankai on August 2, 2010 at 9:39 AM

UNREAL.

These people are just so SHAMELESS!

blatantblue on August 2, 2010 at 9:39 AM

+1 right2bright
Excellent

cmsinaz on August 2, 2010 at 9:39 AM

Welcome to Obama’s,

Trickle-Up Theory!!

canopfor on August 2, 2010 at 9:40 AM

Recovery summer is transitioning into Hunker Down Fall

ted c on August 2, 2010 at 9:41 AM

Sound economic advice from very smart, educated people, isn’t it?

Good Lt on August 2, 2010 at 9:37 AM

As if they take their own advice, Buffett and Bill Gates saying “we want to pay more taxes!”

The Rangel, Kerry and Geithner Party of wealthy Democrats don’t even pay their own taxes.

maverick muse on August 2, 2010 at 9:41 AM

“trickle down” is from the Government, down to the little people.

touché

maverick muse on August 2, 2010 at 9:42 AM

Only one way to solve it. Take it away, girls!

RedRedRice on August 2, 2010 at 9:43 AM

Democrats have shifted gears somewhat to keep the middle-class tax cuts from expiring, but plan to allow the higher-end tax rates to rise again at the end of the year.

By shifted gears do you mean they have extended the Bush tax cuts to the middle class? Or are the Dems just saying they’d like to extend them? I don’t see Pelosi extending anything, except her middle finger to America.

txhsmom on August 2, 2010 at 9:43 AM

Only one way to solve it. Take it away, girls!

RedRedRice on August 2, 2010 at 9:43 AM

that lil’ ditty should be made into a comedy gold lampoon of all Dem policies. Failure has a new theme song….as well as a new set of wheels.

ted c on August 2, 2010 at 9:45 AM

ted c on August 2, 2010 at 9:41 AM

Recall those idiots at HotAir preaching desire for utter failure, to bring America utterly to our knees BEFORE any recovery be possible. It’s a good thing, NOT.

maverick muse on August 2, 2010 at 9:46 AM

belatedly discovers, that has an effect that has helped cripple the economy:
==========================

Yo,Obama…..ICEBERG DEAD AHEAD…….what are yout orders

Ah…I..I…we..ain’t ah…going back to ah…the policies
of ah… ah…Bush,so,full-speed ahead,

and pour more cash in the engines,will ram this berg’ out
of the way…. ………….

canopfor on August 2, 2010 at 9:46 AM

What the sad,strange,dumb part is, The RICH keep supporting the democrats.

BruceB on August 2, 2010 at 9:47 AM

But…..But….John Kerry just bought a new yacht,
and…and the economy is booming,no,I..I.. thought
if you bought in New Zealand,then in turn,it would
trickle from Down Under to on top of the US of A,
and…it would help the US economy…..

and, I…I…learned that in Barry Soetoro’s lecturing
class’s and…. ……(snark).

canopfor on August 2, 2010 at 9:53 AM

That’s the thing about aristocrats, they don’t want anyone else getting into the club.

What the sad,strange,dumb part is, The RICH keep supporting the democrats.

They have their money, they don’t want some peasants to be able to work hard and acheive wealth. These are also some of the same people who think that wealth is a fixed amount, and that somehow they have to keep anyone else from getting theirs. Adults.

reaganaut on August 2, 2010 at 9:55 AM

I haven’t read all the postings so if this hass already been pointed out sorry but our taxes are already going up with the new rules going into effect for Ocare in January. I have a family of 4 and have been participating in a Flexible Spending Account using pre tax dollars for copay’s and prescriptions. It’s my understanding that January 1 that goes away. That’s a tax hike and will affect millions of people with fsa/hsa. I wonder what other taxes are hidden in obama care and the new financial regulation bills?

New Patriot on August 2, 2010 at 9:57 AM

O/T
=======

Oh its on!!!!!!!!!!!!!!!!!!!

AZ SHERIFF: ‘OUR OWN GOVENMENT HAS BECOME OUR ENEMY’

http://www.drudgereport.com/

canopfor on August 2, 2010 at 9:57 AM

Wealthy Americans aren’t spending so freely anymore. And the rest of us are feeling the squeeze.

The question is whether the rich will cut back so much as to tip the economy back into recession — or if they will spend at least enough to sustain the recovery.

These evil fat cats. They are causing us harm. They are not spending enough. They are not even paying taxes. They are stashing the cash. They need to pay their fair share. Tax the rich.

antisocial on August 2, 2010 at 9:57 AM

tip the economy back into recession

The author of this piece is either mentally deficient or a libturd propagandist. We never left OBAMA’S DEPRESSION, and everyone knows it, despite the tireless work of his cheerleaders.

The economy will freefall under Bozo. This is only the beginning of the beginning. Look at California for example.

dogsoldier on August 2, 2010 at 9:58 AM

rebuzz on August 2, 2010 at 9:33 AM

Read the David Stockman article in today’s NYT. Maybe it aint such a bad idea to attack all fronts, not just spending.

saiga on August 2, 2010 at 10:01 AM

Wealthy Americans aren’t spending so freely anymore. And the rest of us are feeling the squeeze.

The question is whether the rich will cut back so much as to tip the economy back into recession — or if they will spend at least enough to sustain the recovery.

Translation: We are walking a tightrope by even implying that trickle down economics works, so we will blame the rich for not spending enough of their money in addition to not paying “their fair share” of taxes.

VibrioCocci on August 2, 2010 at 10:04 AM

They were even using trickle down with the unemployment extension…

Just don’t say trickle down… and it all works!

golfmann on August 2, 2010 at 10:05 AM

You know how Obama keeps saying that not so long ago, he and Michelle were in the same position as us, middle class, wondering how to fund college and retirement? Well — hmmmmm, in 2000 his family had an adjusted gross income of about $240,000. For all the years in between, (and before the books) the family was over $200,000. and NOW, in 2010, income of $207,000 puts you in the richest 5 percent category. They were making lots more than that 10 whole years ago.

So he’s been “rich” for at least 10 years. Or at least he’s been among the richest 5 percent.

And double so, if he had lots of credit card debt, that mostly means he (and she) couldn’t manage money very well. And we wonder why we’re in this mess.

lizzieillinois on August 2, 2010 at 10:07 AM

The question is whether the rich will cut back so much as to tip the economy back into recession — or if they will spend at least enough to sustain the recovery.

So now the rich are at fault for the double dip if when it happens??

PatriotRider on August 2, 2010 at 10:07 AM

With all the faux outrage at CEO pay, why is the name Raines and $6 MILLION never mentioned by Democrats?

GarandFan on August 2, 2010 at 10:08 AM

You ever wonder why the conversation isn’t about the Government cutting spending by massive amounts to get the amount they spend in line or under the amount they take in?

It’s always about taxing more, squeezing more, letting this credit expire, that write off die?

If you ran your checkbook like this, you’d be bankrupt. Oh, wait…

The common sense of the average American far surpasses those in congress. Now why is that? Does walking through the door to your new office in Congress immediately smack 80 IQ points from your head? It would seem so.

Thunderstorm129 on August 2, 2010 at 10:08 AM

Let all of the poisons that lurk in the swamp hatch out.

SurferDoc on August 2, 2010 at 10:09 AM

ED:

While true that Dems always support higher taxes to pay for their schemes, there’s a much more effective way for conservatives to argue against them.

Rather than always talke about Dems’ wanting “higher taxes” or “soak the rich”, I prefer to talk about it in terms of how much money is flowing to Washington. It may sound like the same thing, but people respond entirely differently to the two things. Tax hikes can be mentally brushed off as something that happens to others. But talk about the ever-expanding demand of Washington for more and more money and their anger flares. Every problem the Dems identify, the answer is more money for Washington: oil spill…more money. Financial reform…more money. Health Care…more money for Washington. And the same is true for state and local governments.

Conservatives should stop talking about taxes alone and emphasize the AMOUNT of money Washington is taking from us to fund their opulent lifestyles, enrich themselves and their connected friends, and to pay for “compassionate” schemes that they then pat themsevles on the back as if the money came out of their own pockets.

jeanneb on August 2, 2010 at 10:10 AM

Possible White House Oval Office conversation:
Obama: “I read The rich (and everyone else) aren’t spending.”
Rahm: “Got it covered.”
Obama: “More taxes?”
Rahm: “Yep, if they don’t spend it, we take it from them.”
Obama: “Then new Federal stimulus spending from taxed money targeted at Blue states and Unions!”
Obama and Rahm sing in chorus: “Wealth redistribution, baby!”

albill on August 2, 2010 at 10:13 AM

dogsoldier on August 2, 2010 at 9:58 AM

Keep in mind, the economy is no longer undergoing negative growth, so it is no longer receding/in Recession. Which is not to say that it has actually recovered, it’s just that it is puttering along at the new reduced level that socialist policy has condemned it to.

Count to 10 on August 2, 2010 at 10:15 AM

Recovery summer is transitioning into Hunker Down Fall

ted c on August 2, 2010 at 9:41 AM

nice one, hope ed or allah will use that :)

cmsinaz on August 2, 2010 at 10:21 AM

The question is whether the rich will cut back so much as to tip the economy back into recession — or if they will spend at least enough to sustain the recovery who is John Gault?

FIFY

PackerBronco on August 2, 2010 at 10:24 AM

Keep in mind, the economy is no longer undergoing negative growth, so it is no longer receding/in Recession.

Count to 10 on August 2, 2010 at 10:15 AM

How much of that growth is due to the growth of government? Is the private sector actually growing? That’s the question.

PackerBronco on August 2, 2010 at 10:25 AM

Playing the race card backfired on the liberals. Now comes the days of demagoguery and class warfare, the classic ploy democrats have used for decades. In these upcoming elections, conservatives will have to project their initiatives with the clear message that our current government policies are enslaving the middle class into a permanent dependency where individual rights are seeded to the policy-makers in Washington.

No other “class” is more dangerous to this Republic than an over-zealous government promoting the same failed socialist ideologies that have destroyed most of Europe economically.

Rovin on August 2, 2010 at 10:29 AM

When you argue with a liberal about capitalism and the economy you have to present your argument in a way that makes rich people look like fools. Liberals love that.

There are two examples I use depending on who I’m talking to. One is the story of Charm City Cakes in Baltimore. The Food Network show Ace of Cakes details the antics of Duff Goldman and his crew of losers and misfits. Here’s a bunch of creative people working in a shop that is the dream of most liberals. How cool is it to work in a place where you can be covered in tattoos, body piercings, and have pink hair, and get paid to do a job you love. And be on TV! It all depends on wealthy people willing to shell out several thousand dollars for a cake. A cake.

The other example is that notorious CEO who spent a million bucks to redecorate his office. How many people got that million bucks? How many carpenters, electricians, designers, painters, plumbers and other laborers got paid for that job? Not to mention all the materials and every worker who made them. So some rich guy spends his money and 500 people benefit from it.

Arguing that rich people are fools doesn’t really change a liberals mind about spreading the wealth, it just makes it harder for them to rationalize the idea of spreading the wealth.

Jaynie59 on August 2, 2010 at 10:30 AM

This is why it’s generally considered an idiotic idea to raise taxes in the middle of a recession, perhaps especially on the pool of people who have the most disposable income to spend.

Yet another sterling example of libtard thinking.

GrannyDee on August 2, 2010 at 10:32 AM

What page of ‘Atlas Shrugged’ are we now on?

scullymj on August 2, 2010 at 10:32 AM

Aristocrates don’t like “new” money, it cuts into the number of surfs that they have to do their lawns.

rgranger on August 2, 2010 at 10:33 AM

Recovery Hunker Summer.

juanito on August 2, 2010 at 10:44 AM

How much of that growth is due to the growth of government? Is the private sector actually growing? That’s the question.

PackerBronco on August 2, 2010 at 10:25 AM

AND…..who has contributed the trillions necessary to provide the “growth” in the public sector? (Hint: it’s not added revenue from the private sector) Extending unsustainable debt through the government printing presses has produced this false economy—with NO INVESTMENT from our government into the stagnant private sector.

Is the private sector actually growing?

Certainly not.

Rovin on August 2, 2010 at 10:44 AM

Abolish all forms of welfare for six months and you’ll see a scurry of activity from those that do nothing. Churches will take care of the ones that really need it.

mixplix on August 2, 2010 at 10:51 AM

Abolish all forms of welfare for six months and you’ll see a scurry of activity from those that do nothing.

What, cold turkey? You’ll see some ‘scurrying’ allright – as well as rioting and looting!

Churches will take care of the ones that really need it.

mixplix on August 2, 2010 at 10:51 AM

We’ll be lucky if we could care for a third of the total. Tithing rates were pathetic even in GOOD economic times, and they have not gotten much better.

Dark-Star on August 2, 2010 at 11:00 AM

I just got back from HomeDepot… It was almost empty. Not a single line at the checkouts, and 3 times in 5 minutes I was asked if I needed help. Monday morning should be back to work for the local contractors too…
-
I guess DIY, or don’t do it at all is setting in.

RalphyBoy on August 2, 2010 at 11:03 AM

Even the rich have to worry about surviving. If you had watched your investments lose half their value, saw your home’s value fall, and thought Uncle Sam was going to take more of your income, what would you do?

The rich didn’t become rich by being stupid. They try to make wise choices based on the available information. Many of them have had their bonuses eliminated, or their earnings restricted. So they’re living more frugally.

hawksruleva on August 2, 2010 at 11:05 AM

I never liked the phrase trickle-down economics. It implies that it is some form of economic policy. Like, “Reagan’s trickle-down economics ___(lib talking point)___ ”

Economics is always trickle down, that’s how it works.

It’s a no brainer.

-Evil rich guy Wall Street monopoly guy gets a bonus, restaurants, clothing stores, electronics stores, liquor stores, car dealers, etc… get more money, pay more sales tax, hire more workers – and that is just the retail end of it.

Retailers sell more, shipping company has more business, manufacturers have more sales, and on and on.

Why is that so difficult to understand?

Evil rich guy gives money to government ::flush::

reaganaut on August 2, 2010 at 11:06 AM

Recovery Hunker Summer.

juanito on August 2, 2010 at 10:44 AM

-
To be followed by The Fall Fizzle… Thank God November comes soon…

RalphyBoy on August 2, 2010 at 11:09 AM

Recovery summer is transitioning into Hunker Down Fall

ted c on August 2, 2010 at 9:41 AM

The downhunkerers will be out in force on November 2.

Then, when people who still have jobs in January see their Federal withholding go sky-high, if the Republicans take the House and start talking about reinstating the BUSH tax cuts, people will listen, and the idea could have 60% public support by March 2011 or so. Some Senate Democrats, especially those up for re-election in 2012, may even cave to the pressure and vote for tax cuts, but would Obama dare VETO them?

Steve Z on August 2, 2010 at 11:12 AM

albill on August 2, 2010 at 10:13 AM

I think the Dems are in a pickle on this one. Their only option may be to start taxing more wealth instead of just income.

This will turn the limosine lib trust fund types away from supporting their agenda.

They have been pretty intent on taxing the heck out of wealth creation, and have been getting support from those who are wealthy, yet have never created a damn thing. Also, the guilty types who started suffering from affluenza after they made their millions (which they have safely tucked away, free from the long reach of the IRS).

reaganaut on August 2, 2010 at 11:13 AM

Abolish all forms of welfare for six months and you’ll see a scurry of activity from those that do nothing.

They tried that (in part). Can you say SSDI “crazy” check?

reaganaut on August 2, 2010 at 11:15 AM

If you’re using Nancy Pelosi’s brain (and God help you if you are), than the logical answer to this is if the rich aren’t spending their money to create jobs, pass a new federal law to force them to spend money to create jobs (i.e., if the Dems somehow maintain control of the House in 2011, a tax on savings/long-term investments coming out of there wouldn’t be a major surprise as a reaction to the impending further decline in private investment, if the Bush tax cuts aren’t extended).

jon1979 on August 2, 2010 at 11:16 AM

I guess DIY, or don’t do it at all is setting in.

RalphyBoy on August 2, 2010 at 11:03 AM

More or less. Which will lead to more injuries, fires, and various kinds of personal/property damage as amateurs take up tools for tasks that require training.

Lose-lose situation.

Dark-Star on August 2, 2010 at 11:19 AM

I guess DIY, or don’t do it at all is setting in.

Is this Arizona? Even way up here in MA, it’s well known that most of the, errrr, undocumented types, get their supplies from the local Home Depot.

On the manufacturing side (tools), it’s been up from last year. Although I didn’t see the breakdown yet on how much of that was sales to China, India, Latin America, etc…

Maybe it’s just Home Depot, Lowe’s has been ordering a lot of product.

reaganaut on August 2, 2010 at 11:27 AM

Several people have made similar points, but I think it boils down to this: The Federal Government has control of too much money. Yes government is too big, but it’s all there to support the doling out of money to favored groups and individuals. It cannot help but become corrupt because it can never, ever, be neutral. Politicians and bureaucrats give the money out to “whomever” based on what the like. The more money, the more coercion, the more control, the more subjugation. Only the political class benefits. Rich liberals are often rich because of some artistic pursuit (music, performing arts, etc.) or placate their conscience by “investing” in the arts gratuitously. Nancy Pelosi said we should all be free to pursue our “artistic” side essentially. As an artist and musician as well as businessman, I find that shallow and immature. Art is good and even necessary, but we should never make its pursuit subject to the whims of a ruling class. So it isn’t about who pays for government (revenue), it’s about what government does with the money (spending).

And one final point: I don’t think there is a “design” to take down the American system. I do think the are, in fact, that stupid because they are blinded by their ideology. They really believe they are doing the right thing. Another sign of immaturity. The baby boomer generation in this country had it easy (I’m one of them) in large part. Many never grew up because they really didn’t need to. Adversity forces one to grow up and “put away childish things”. They all got to keep their toys even while they aged and raised families and did “adult” stuff like hold a job. But their heart was always going back to discover their “inner child”. So we are stuck with a bunch of adolescents who believe that if we just have good self esteem, all will be well. Ugh.

BillyWilly on August 2, 2010 at 12:06 PM

Looking on the bright side, trickle up poverty seems to be working out well.

Lily on August 2, 2010 at 12:08 PM

“The Rich” are in a difficult situation as they are likely the ones who can afford to make payments on a mortgage that is hundreds of thousands of dollars under water.

Their “net worth” has taken a major hit in many cases when that $6 million dollar home is now worth only $4 million. Their bookkeeper is telling them that they have gone from being millionaires to being millions in the hole.

crosspatch on August 2, 2010 at 12:10 PM

For the last two years century, Democrats have blamed one class of people for the nation’s woes — the rich.

Minor edit. Please carry on.

RINO in Name Only on August 2, 2010 at 12:10 PM

I feel like I’m stuck in a Dallas cliffhanger. I just want to wake up and have this all be a dream.

But, if McCain had won we would still be descending slowly into socialist hell. Obama just threw us off the cliff.

Mojave Mark on August 2, 2010 at 12:12 PM

Count to 10 on August 2, 2010 at 10:15 AM

Alas, I have it firmly in mind from the facts that the GDP numbers issued by the government a fraudulent and the actuall real GDP is either slightly negative or close to zero.

Further, every real economic indicator has cratered including housing starts, foreclosures, bankruptcies, company closings, actual food prices (dropped from inflation calculations by Mr Peanut) and have I mentioned the REAL unemployment situation?

Only a propagandist will accept and further spread the LIE that we were ever in a recovery. I apologize if this response comes across with a little heat. It burns me up when ignorance and propaganda trump REALITY.

dogsoldier on August 2, 2010 at 12:19 PM

They’re under siege. What do people under siege do? They hunker down. And when they hunker down, they stop spending their disposable income and start sheltering it instead.

Exactly, Ed. This was going to be my comment, but you beat me to it. Why can’t the AP figure it out too?

29Victor on August 2, 2010 at 1:04 PM

Only the super rich can save us!

ernesto on August 2, 2010 at 1:15 PM

Democrats have shifted gears somewhat to keep the middle-class tax cuts from expiring…

What? I thought the Bush tax cuts were only for the rich? That’s what I’ve heard for the past 7 years or so. You mean the middle class also paid lower taxes?

Crikey!

karl9000 on August 2, 2010 at 1:23 PM

Has anyone done an analysis on the spending habits of higher-income earners? By the simple virtue of them being wealthier, you would expect a higher proportion spent on higher-value goods and services–more of which originate from within the country. Lower-income earners, on the other hand, probably spent most of their money on cheap imports.

year_of_the_dingo on August 2, 2010 at 2:05 PM

Update: King Banaian wonders where the AP got their data; according to his, upper-income spending has increased, not decreased.

Perhaps they’re paying one-way fares for international flights.

Dr. Charles G. Waugh on August 2, 2010 at 2:51 PM

Several people have made similar points, but I think it boils down to this: The Federal Government has control of too much money. Yes government is too big, but it’s all there to support the doling out of money to favored groups and individuals. It cannot help but become corrupt because it can never, ever, be neutral. Politicians and bureaucrats give the money out to “whomever” based on what the like. The more money, the more coercion, the more control, the more subjugation. Only the political class benefits.

BillyWilly on August 2, 2010 at 12:06 PM

When you put the government in charge of charity, all charitable decisions become political decisions. When you put the government in charge of healthcare, all healthcare decisions become political decisions. When you put the government in charge of an automobile business, all their business decisions become political decisions.

Whether the government should be in charge of something may be as simple as asking if you’re comfortable with all decisions on that subject being made based on politics.

Of course, that would put the government out of the healthcare business, the education business, the automobile business, and the charity business. So much the better.

tom on August 2, 2010 at 3:04 PM

Unless I’m mistaken, FDR made the same claims back during the depression, i.e., the rich were hoarding their money. So he jacked tax rates up to confiscatory levels. As long as Obama and his ilk in congress are trying to duplicate FDR’s approach, I expect they’ll hike taxes on the rich as far as they can.

NNtrancer on August 2, 2010 at 3:39 PM

Keep in mind that everyone is buying less.

Lets see hum?

Shopping is Patriotic, Leaders Say

ST. JOHN’S – Western leaders, worried about the possibility of a recession fuelled by terrorist attacks in the United States, are urging their citizens to spend money, take vacations and buy new cars and home.

Mr. Blair used a news conference at 10 Downing St. to appeal to the British public to return to everyday life, including their usual spending habits, to fend off recession.

Bush said: When they struck, they wanted to create an atmosphere of fear. And
one of the great goals of this nation’s war is to restore public
confidence in the airline industry. It’s to tell the traveling
public: Get on board. Do your business around the country. Fly and
enjoy America’s great destination spots. Get down to Disney World in
Florida. Take your families and enjoy life, the way we want it to be
enjoyed.?

And it worked, so what happened?

Shopping is UN- Patriotic, Dem’s Say

By Andrew J. Bacevich
Sunday, October 5, 2008

From the very outset, the president described the “war on terror” as a vast undertaking of paramount importance. But he simultaneously urged Americans to carry on as if there were no war.

Bush certainly wanted citizens to support his war — he just wasn’t going to require them actually to do anything. The support he sought was not active but passive. It entailed not popular engagement but popular deference.

And it worked. Many people STOPPED buying “Stuff”, result? A recession!
Brilliant!

Now how can the Dem’s get out of this mess they created and save face?

Until there is an answer the economy will continue to tank.

DSchoen on August 2, 2010 at 4:47 PM

…have begun clipping coupons.

Yer showing your age Ed, I suspect many here have no idea what that means.

E9RET on August 2, 2010 at 5:21 PM

Hey Ed,

What’s up with the demand side argument? If the rich spent less but others spent an equal amount, cumulatively speaking would that be better or worse for the economy?

The answer is that it matters very little. The benefit of allowing people to keep more of their money, especially the rich who have been treated as an ATM by the donkeys is not that they will have more to spend, but that they will save and invest more! It is by making money available to growing businesses that we all benefit. Capitalism starts with capital. Before widget one rolls off of an assembly line, money is spent to produce the factory and the machines and all the rest that goes in to it. And those expenditures pay the people who will be the customers when those goods are made.

So-called “trickle down” is an intentional mis-characterization of the supply side argument. By playing in to it, you are adding legitimacy to a smear campaign and contributing to the class warfare that is destroying our economy.

MJBrutus on August 2, 2010 at 7:25 PM