A headline in today’s New York Times read: “Cheap debt for corporations fails to spur the economy.” A line in this story goes on to explain: “The situation underscores the limits of Washington policy makers’ power to stimulate the economy.”
Not true. What is underscored here is these policy makers’ endless and mindless commitment to trickle down economics.
Cheap debt based on record low Fed-generated rates is only accessible to large corporations. Not to consumers who today are paying higher rates on their credit cards. Not to small businesses that more and more can’t get loans at any rates.
The borrowing being made by large corporations that can borrow cheaply is being hoarded against the worse times large corporations know are still on the horizon. It isn’t trickling down in the form of jobs. It isn’t trickling down!
Just the way the bailouts of big commercial banks didn’t trickle down. Didn’t trickle down!
Just the way bailouts of investment banks on Wall Street didn’t trickle down. Didn’t trickle down!
Extending post-2001 lower tax rates for the wealthiest Americans won’t translate into more jobs either. Tax money saved will be invested in foreign instruments with better returns, or put with hedge funds that play take-over-and-trash-for short-term-profit games. It won’t trickle down. It won’t trickle down!
Direct government employment would trickle down and reanimate the economy.
A Payroll Tax holiday for those individuals paying this tax (those making less than about $106,000 a year) and small businesses would trickle down.
If government policy directed public money to Main Street the economy would recover quickly. Giving it to organizations dedicated — ferociously dedicated — to feathering the nests of their own people, will not reanimate the economy.
Washington policy makers of both parties are trying to engineer a recovery with variants of the same old tried but never true trickle down economics. It doesn’t work. But they keep doing it anyway. Over, and over, and…
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