GOP Deficits Transfer Wealth from Working Class to Rich Americans

Since 1980 the GOP has been in the thrall of supply side economics, aka, trickle down economics. What this theory holds is that if you cut taxes on the rich, they will invest the money in ways that will help create jobs. Proponents of the theory hold that not only will this create jobs, it will grow revenue since more people will be employed and therefore will pay more into the government in the form of taxes.

Now there are several problems with this idea. The first is that the money that the rich save may not be invested in ways that create jobs. Rich people may decide that the best thing to do is loan the money to the Federal government by buying Treasury bonds. It is probably the safest investment out there since such bonds are backed by the Federal Government. In fact, under Republican presidents who have cut taxes, Reagan and Bush, the Federal Government had to dramatically increase its indebtness to pay for the Federal Government. Under Bubble-Boy Bush, for example, the national debt went from around four trillion dollars to around nine trillion dollars.

This debt is not being financed by selling $25.00 savings bonds to grandmothers to give to their grandchildren for presents. No, this debt is being financed by selling $10,000.00 Treasury bonds to rich Americans and rich foreigners. This means that rich Americans can take their savings from Bush's tax cuts, and use the money to buy Treasury bonds, which pay a guaranteed rate of return.

Meanwhile, of course, under this plan the debt service charge for the Federal government keeps increasing. This means that an increasing share of your tax dollar is being used to make interest payments to rich Americans and foreigners, instead of being used to finance government spending on infrastructure, defense, education, and healthcare.

What is suprising isn't that Republicans do this stuff, what is surprising is that Democrats don't call them on it. When the Federal government runs a deficit, it has to engage in wealth transfer to pay for it by taking money from working class people in the form of taxes and giving it to the rich in the form of interest payments. Republicans like to rail against government programs that transfer wealth, except, of course, when the wealth is being transferred upwards. Then, they like it such programs just fine.