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Biden Tax Proposal Provokes Right-Wing Defense Of 'Trickle-Down Economics'

Biden Tax Proposal Provokes Right-Wing Defense Of 'Trickle-Down Economics'

After President Joe Biden called for an end to “trickle-down economics” and promoted a vision of the U.S. in which the wealthy “pay their fair share” of taxes during his March 7 State of the Union address, conservative media figures defended the discredited economic model and decried the president's call to tax the rich.

But experts reacting to Biden's speech noted that the president was correct when he argued that tax cuts for the rich have been a policy failure. Multiple studies examining decades of “trickle-down economics” show that such policies have overwhelmingly benefited the rich.

Biden called for the end of “trickle-down economics” policies that don't help the middle class

During his State of the Union address, Biden laid out a vision of the future in which corporations and wealthy individuals pay “their fair share” of taxes and the U.S. abandons the myth of “trickle-down economics.”

“I want to talk about the future of possibilities that we can build together. A future where the days of trickle-down economics are over, and the wealthy and the biggest corporations no longer get all the tax breaks.”

Biden added: “I grew up in a home where trickle-down economics didn’t put much on my dad’s kitchen table. That’s why I determined to turn things around, so the middle class does well. When they do well, the poor have a way up, and the wealthy still do very well. We all do well.”

Later in the speech, Biden called on Congress to “make the tax code fair” by making “big corporations, the very wealthy, finally begin to pay their fair share.” Biden emphasized that making the wealthy and corporations pay their fair share of taxes is vital to “the question of fundamental fairness for all Americans.”

He called out the Trump administration, which “enacted a $2 trillion tax cut, overwhelmingly benefit[ing] the top 1% — the very wealthy and the biggest corporations — and exploded the federal deficit.”

Biden also called for raising the corporate minimum tax rate “to at least 21%” and for a “minimum tax for billionaires at 25%.”

Economic research backs up Biden's criticism of failed “trickle-down” policies

Experts at the Center on Budget and Policy Priorities validated the president’s critique of tax breaks for the wealthy — especially those created by Trump’s unpopular 2017 legislation, officially known as the Tax Cuts and Jobs Act.

Chuck Marr, CBPP's vice president of federal tax policy, noted: “As President Biden is highlighting, the Trump tax law was skewed to the rich, was extremely expensive, and failed to trickle-down.”

Marr added: “The corporate tax rate cut is Exhibit A: the benefits went to executives, not workers.”

CBPP President Sharon Parrott posted: “The President is right. We need to raise revenues on high income households and corporations to make high-value investments in people, communities, and the economy and to improve our fiscal outlook.”

Center for Economic and Policy Research senior economist Dean Baker noted during the speech that “Republicans are upset that Biden has made taxes mandatory for the rich, not just ordinary people.”

The official CEPR account on X also explained that the wealthiest Americans have already stopped paying taxes into Social Security for this year, because the payroll tax does not apply on income above $168,600.

“Millionaires stopped paying into #SocialSecurity 5 days ago,” the post read. “We’re glad @POTUS called out the rigged tax system, which puts the burden of paying for #SocialSecurity on working-class people. #ScrapTheCap so the rich pay their fair share.”

Melissa Boteach, vice president for income security and child care at the National Women’s Law Center, posted that Biden was “hitting it out of the park on tax fairness. Policies to #taxtherich are fundamental to investing in our families and are HUGELY popular across” political parties.

“Trickle-down economics” has further enriched the wealthy and increased national debt

  • A 2012 Congressional Research Service report, which analyzed tax cuts for the rich since 1945, concluded that tax cuts for the wealthy don’t stimulate economic growth. A September 2012 report from the nonpartisan Congressional Research Service determined that “changes over the past 65 years to the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth,” adding, “The top tax rates appear to have little or no relation to the size of the economic pie.” The report further concluded that these tax cuts served to exacerbate economic inequality, stating that ”top tax rate reductions appear to be associated with increasing concentrations of income at the top of the income distribution." The CRS report dealt such a heavy blow to trickle-down economic orthodoxy that Senate Republicans fought to suppress the report's findings. The report was eventually revised and re-released months later and featured most of the same conclusions. [Congressional Research Service, 9/14/12, 12/12/12; The New York Times, 11/1/12; NBC News, 12/13/12]
  • A 2020 study analyzed the effects of tax cuts for the rich spanning “five decades in 18 wealthy nations” and found that “the rich got richer and there was no meaningful effect on unemployment or economic growth.” Researchers at The London School of Economics and Political Science published a working paper in 2020 analyzing the tax regimes of 18 major developed economies that concluded that “major reforms reducing taxes on the rich lead to higher income inequality as measured by the top 1% share of pre-tax national income.” In a later interview with LSE’s economics blog, one of the researchers who conducted the study added: “Our results align pretty closely with some work from Thomas Piketty, that would suggest that what happens if you cut taxes on the rich is that they then bargain more aggressively for their own compensation at the direct expense of workers lower down the income distribution.” [LSE International Inequalities Institute, December 2020; The London School of Economics, 1/24/23]
  • A new study of Trump's 2017 tax cuts for the rich found it produced wage gains far below what was promised and that, instead of paying for itself as Republicans promised, it added “more than $100 billion a year” to the national debt. The New York Times reported that the study “found the cuts delivered wage gains that were ‘an order of magnitude below’ what Trump officials predicted: about $750 per worker per year on average over the long run, compared to promises of $4,000 to $9,000 per worker.” [The New York Times, 3/4/24; National Bureau of Economic Research, March 2024]
  • Economists predicted in 2016 that Trump's “nonsense … supply-side, trickle-down economics” would do nothing to help the economy. After Trump unveiled his tax and economic policy proposals in August 2016, economists and tax policy experts from across the political spectrum slammed his plan. Former Labor Secretary Robert Reich dismissed Trump's plan as the “normal nonsense of supply-side, trickle-down economics” characteristic of Republican politicians. Conservative tax analyst Ryan Ellis noted that Trump’s proposed deduction for child-care expenses “would provide no benefit to low income workers and single parents who are unlikely to have any tax liability to begin with.” University of Michigan economist Betsey Stevenson posted that “Trump's economic plan focuses in on those he thinks need the most help: the 540 billionaires in the U.S.” [Media Matters, 8/9/16]

Right-wing media responded by defending failed tax cut policies and rejecting Biden’s take

    • Fox & Friends First co-host Todd Piro: “The dirty little secret” is “if you tax corporations more, jobs will go away.” Pirro continued: “At the end of the day, corporations are going to hit that number … whether it comes through increased output or at the sake of you and our jobs.” Pirro also dismissed “the typical tropes of tax the rich, who, in reality, pay most if not close to all of the taxes in this country.” Fox financial contributor Cheryl Casone interjected, “50%.” [Fox News, Fox & Friends First, 3/8/24]
    • National Review senior writer Noah Rothman defended “trickle-down economics” from Biden’s critique. National Review posted on X (formerly known as Twitter): “@NoahCRothman: Biden indicts ‘trickle-down economics’ because it did little to help his family when he was growing up. But Biden grew up in the 1950s and early 60s, when the top marginal tax rates approached 50%. Which is to say that Joe Biden did not, in fact, grow up during a period typified by ‘trickle-down economics.’” [Twitter/X, 3/7/24]
    • National Review senior writer Dan McLaughlin: “Biden’s rants against ‘trickle down economics’ have not changed a whit since he was singing this tune throughout the Reagan years, railing against growth and prosperity.” [Twitter/X, 3/7/24]
    • Fox Business host Charles Payne: “The top 1.0% pay almost 50% of income taxes...what is fair? What is punitive? It’s all deflection from runaway spending.” [Twitter/X, 3/7/24]
    • Fox & Friends co-host Brian Kilmeade: “Love the class warfare…let’s simplify the tax code to make Americans hate rich people …what a unifier!!…lets make rich people pay more to taxes so they can stop hiring people and buying buildings, cars, planes and give to charities.” [Twitter/X, 3/7/24]
    • Committee to Unleash Prosperity President Phil Kerpen: “The tax share of the rich is by far the highest it has ever been under the Trump tax cuts. Biden's tax hikes will harm the economy and reduce the share paid by the rich. It happens every time.” [Twitter/X, 3/7/24]

    Reprinted with permission from Media Matters.

    Maria Bartiromo

    Fox Hosts Roar In Defense Of Credit Card 'Junk Fees'

    Some in right-wing media are criticizing the Biden administration for creating an interagency strike force to crack down on what it described as “unfair and illegal pricing” schemes, including enforcing a new federal rule that would cap credit card late fees for major credit card companies at $8 and save tens of millions of Americans billions of dollars annually.

    • The Biden administration is cracking down on “unfair and illegal” price gouging by major corporations
      • On March 5, President Biden launched a “Strike Force on Unfair and Illegal Pricing” co-chaired by the Federal Trade Commission and the Department of Justice. Biden launched an interagency strike force to tackle “unfair and illegal” price increases by large corporations, which according to CNBC “Biden sees as a major reason why consumers are not yet feeling the impact of cooling inflation rates and a strong economy.” FTC Chair Lina Khan announced to reporters that the strike force “builds on the FTC’s far-reaching work to promote competition and tackle unlawful business practices that are inflating costs for Americans.” [The White House, 3/5/24; CNBC, 3/5/24]
      • The strike force's launch coincides with a new CFPB restriction that caps credit card late fees at $8. Citing CFPB data, the New York Times reported that such late fees “have become a major profit source for credit card issuers, generating more than $14 billion in 2022.” According to the Times, the bureau also indicated that credit card issuers have been exploiting a loophole in a 2010 Federal Reserve rule that allowed credit card issuers to adjust late fees based on inflation and raised “their fees far beyond the actual costs they incur when payments arrive late." NPR noted that “by law, the fees are supposed to be tied to a credit card issuer's own costs associated with the late payment,” but the bureau “found that even as banks have adopted cheaper processes for dealing with late payments, the fees have continued to climb.” [The New York Times, 3/5/24; NPR, 3/5/24]
      • CFPB: An estimated 45 million Americans who incur late fees will save an average of $220 each year — a total savings of $10 billion annually — by capping credit card late fees. “For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said of the bureau’s move to cap late fees. “Today's rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.” The bureau's press release stated that the rule applies “to the largest credit card issuers, those with more than 1 million open accounts," which “account for more than 95% of total outstanding credit card balances.” [Consumer Financial Protection Bureau, 3/5/24]

      • A February 2023 poll found “overwhelming bipartisan support” for capping credit card late fees to $8. According to the poll conducted by progressive research group Navigator, 79% of registered voters supported the Biden administration “lowering the limit credit card companies can charge per late fee from $41 to $8.” Those numbers included 74% of independents and 68% of Republicans. [Navigator, 3/2/23]
      • Potential Trump VP pick Sen. Tim Scott (R-SC) is trying to block the rule capping credit card late fees. Bloomberg reported that “Senator Tim Scott, a potential Trump vice presidential pick and the top Republican on the Banking Committee, said Tuesday he would push the Senate to take action to block the new regulation” through a Senate vote via the Congressional Review Act. “It will decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board,” Scott argued in a public statement. [Bloomberg, 3/5/24]
    • Conservative media responded to Biden's efforts to save Americans money by attacking him and the new CFPB rule
      • Fox Business anchor Maria Bartiromo repeatedly accused Biden of prioritizing reducing credit card late fees over other issues. On March 5, Bartiromo criticized Biden for “what the president is spending his time doing.” Bartiromo said, “This morning he's [President Biden] talking about late fees, and he's talking about corporate America, and it's companies' fault that people are facing inflation.” The next day, Bartiromo continued this line of attack: “We have so many serious priorities,” she said. “I mean a woman is dead because she was murdered by an illegal migrant in Georgia and now we're talking about late fees.” [Fox Business, Mornings with Maria Bartiromo, 3/5/24, 3/6/24]
      • On Newsmax, conservative economist Peter Morici accused Biden of initiating the cap on late fees as a scheme to buy votes. At first, Morici downplayed the number of Americans the new rule would help, before adding: “Think about who's always paying late fees. They're probably the kind of folks that would vote for Democrats. This is a way of motivating them to go out and vote,” he said. “This administration is now getting desperate looking at the polls, and they're looking at every conceivable way to buy a vote.” Morici later compared the rule to Soviet-era price fixing. “If you want the government setting prices, then let’s resurrect the old Soviet Union," he said. [Newsmax, The National Report, 3/5/24]
      • Outkick host Tomi Lahren: “We have an invasion at our southern border that is costing our country billions, and your sleepy President is going after junk fees. Unbelievable.” [Twitter/X, 3/5/24]
    • WSJ editorial: “The Biden ‘Strike Force’ Is Coming for You.” Instead of blaming credit card companies for charging consumers exorbitant fees, The Wall Street Journal's editorial board characterized the CFPB rule as a “burdensome government regulation,” adding that “such fees have proliferated under Mr. Biden because business costs have increased.” Even though the new rule is expected to save consumers billions, the editorial board concluded that “The Biden Presidency is becoming more expensive for Americans by the day.” [The Wall Street Journal, 3/5/24]
    • Fox's The Five mockingly described the new initiative as Biden’s “shrinkflation” strike force. After The Five co-host Jeanine Pirro opened a segment by criticizing Biden for the new strike force, co-host Dana Perino piled on, saying, “This is a brainless decision.” She added: “The market is the strike force. But if Biden is interested in doing this, you could look at all of the issues that we're talking about in terms of where he is polling badly. Why is there no strike force to go after the border? How about, could we have a strike force to bring home hostages who are being held in Gaza? What about a strike force on fixing COVID learning loss? I mean we could go on and on.” [Fox News, The Five, 3/5/24]
    • Fox's The Story portrayed the Biden administration’s attempt to rein in illegal and unfair price increases as an attempt to “squash capitalism.” “I was reading a piece this morning about how capitalism is the defining characteristic that sets this country apart from all of our enemies,” Fox host Martha MacCallum said. “So if you squash capitalism, you're going to put that into remission.” Fox Business host Brian Brenberg added, “This is the anti-rich, anti-wealth crusade that they're [Democrats are] on.” [Fox News, The Story, 3/5/24]

    Reprinted with permission from Media Matters.

    Will Lara Trump Turn GOP Into 'GoFundMe' For Trump Defense Costs?

    Will Lara Trump Turn GOP Into 'GoFundMe' For Trump Defense Costs?

    As discussions around Republican National Committee (RNC) Chair Ronna McDaniel's ouster circulate among the party, former President Donald Trump has floated the idea of replacing the GOP leader with his daughter-in-law, Lara Trump — who's already starting to call the shots, according to a Thursday NBC News interview.

    During the interview, Lara Trump insisted MAGA voters wouldn't mind if their donations helped to fund the former president's piling legal bills amid his ongoing criminal cases.

    "It appears Lara Trump is already laying the groundwork for her family's next big grift," MSNBC's Deadline: White House guest host Alicia Menendez said, speaking with former Bush administration official Miles Taylor. "Last week on Newsmax she said all funds the organization raised would go straight to his re-election efforts. And those efforts could include his legal bills. The cash-low candidate, who just this year, has racked up financial penalties against him of over $400 million, is poised to spend 2024 trying to finance running for president, and staying out of prison for the 91 felony charges he currently faces."

    Menendez asked Taylor whether he thinks Lara Trump is right in saying Republican donors are fine with funding Trump's legal bills.

    "Here's the thing, Alicia. I would like to say the answer is no, and that most people will see through this and turn them off towards Donald Trump and this will mark the end of his reign over the GOP," the ex-Department of Homeland Security chief of staff said. "But I know better than that, and I actually think Lara Trump probably knows better than we do, which is that they've so fooled the GOP base that their future and the future of the country is tied to Donald Trump that they seem willing to do almost anything to support him.

    Taylor continued, "I think we all remember a few years ago the RNC solicitation that went out to help buy Donald Trump a new airplane. I mean it's that level of absurdity that they're tapping into in terms of the cult mentality around Donald Trump. But there's a couple things here that are significant about it. If the GOP turns into a GoFundMe for Donald Trump, it's likely to bankrupt candidates that are further down the ticket, that will probably result in those candidates losing their elections and bigger losses for the GOP. The thing that worries me, though, is it will, of course, help enable Donald Trump to continue his quixotic odyssey to run America. And I think that's the big concern, is that slush fund — that piggy bank, will increase his odds of winning back the White House, which is the danger."

    Watch the video below or at this link.

    Reprinted with permission from Alternet.

    Former Defense Secretary Mattis Throws Shade On Trump

    Former Defense Secretary Mattis Throws Shade On Trump

    In his first major comments since resigning from the Trump administration last year, former Secretary of Defense James Mattis took several veiled swings at his former boss for damaging many international relationships.

    In excerpts from his new book, obtained by The Wall Street Journal, Mattis reflects on his time under Trump and offers a warning that if the U.S. continues to show disrespect for its allies, it will “occupy an increasingly lonely position, one that puts us at increasing risk in the world.”

    “Using every skill I had learned during my decades as a Marine, I did as well as I could for as long as I could,” Mattis wrote. “When my concrete solutions and strategic advice, especially keeping faith with our allies, no longer resonated, it was time to resign, despite the limitless joy I felt serving alongside our troops in defense of our Constitution.”

    In December, Mattis quit the administration over Trump’s announcement that he was withdrawing U.S. troops from Syria despite his Cabinet secretary’s advice. Mattis was in favor of continuing America’s presence in the region, but Trump ultimately made a decision that was intended to please Russia.

    While the retired four-star general does not criticize his former boss directly in the excerpts, many of his comments are clearly directed at Trump.

    “Nations with allies thrive, and those without them wither,” Mattis wrote. “Alone, America cannot protect our people and our economy.” During the past two and a half years, Trump has alienated and attacked many U.S. allies, including threatening tariffs on German and Japanese cars and French wine. However, Trump’s most tumultuous relationship has been with Mexico, calling the country an “abuser” of the U.S. and demanding that it pay for his racist border wall. At the same time, he has cuddled up with hostile enemies, including Russia and North Korea.

    But Mattis also hit Trump where it hurts: his social media habits.

    “At this time, we can see storm clouds gathering. A polemicist’s role is not sufficient for a leader. A leader must display strategic acumen that incorporates respect for those nations that have stood with us when trouble loomed,” Mattis said in another excerpt, likely referring to Trump’s Twitter rants.

    Since Trump took office, the global opinion of the U.S. has free fallen and favorable views of the U.S. have hit historic lows, according to the Pew Research Center.

    Published with permission of The American Independent.