Trickle Downers

The Prospect's ongoing exposé of the folly, dysfunctions, and sheer idiocy of feed-the-rich economic policies.

Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.

Trickle Downers

Trump’s Tax Cuts Incentivized Corporate Offshoring. These Dems Want to Reverse That.

Democrats have waffled on how, or if, they will repeal the new tax laws. This is a step in the right direction.

(Photo: AP/Alex Brandon) Sen. Sheldon Whitehouse, D-R.I., speaks during a Senate Judiciary Committee hearing in September 2017. trickle-downers.jpg E ver since President Trump and the GOP enacted their gargantuan tax cut, Democrats have done a pretty good job of highlighting how the plan disproportionately benefits the wealthiest few, how it sets the table for future cuts to the federal safety net, and how corporations’ newfound savings have generated more than $200 billion in stock buybacks and minimal increases in worker pay. But they haven’t done a good job of articulating an affirmative tax policy agenda of their own—let alone whether they even intend to push for a “repeal and replace” of the cuts, should they regain any semblance of political power. Earlier this month, Washington Post reporter David Weigel asked New York Representative Joe Crowley, who is part of the Democratic House Leadership team, whether the party would run in 2018 on repealing the tax cuts. He hedged,...

The Happiest Place On Earth? Not For Disney Employees

Disney employees in Florida and California cry foul as the entertainment giant uses promised one-time bonuses as a bargaining chip against higher pay raises.

spatuletai/Shutterstock The entrance to Disney World in Orlando, Florida trickle-downers_35.jpg F or a scenic view of America’s corporate-captured economy, just take a vacation to Disney World, where it appears that someone forgot to tell employees that they work at the Happiest Place On Earth. More than 35,000 Disney employees in Orlando had little to smile about on Monday as ongoing union contract negotiations with the entertainment giant took a turn for the worse. The Services Trade Council, a coalition of unions representing the Disney World Resorts workers, has accused Walt Disney Co. of throwing cold water on employee demands for higher wages, by turning a promised $1,000 one-time bonus into a bargaining chip. On Tuesday, nearly 2,500 miles away at the other “Happiest Place on Earth,” a union representing more than 2,700 Disneyland Resort employees in California filed their own federal charge to the National Labor Relations Board. The entertainment giant’s January announcement...

Reforming Welfare and Controlling the Poor

The president’s budget proposal punishes the poor for their poverty.

AP Photo/Seth Wenig
AP Photo/Seth Wenig A supermarket displays stickers indicating they accept food stamps in West New York, New Jersey trickle-downers_35.jpg A fter handing out $1.5 trillion in tax breaks to the wealthy, President Trump has followed up with a budget that eviscerates the social safety net. Though the budget only outlines the Trump administration’s priorities, and is unlikely to be largely implemented, it’s clear that the administration would like to further eviscerate the nation’s skimpy excuse for an economic security policy. The budget, after all, represents the administration’s ideal world. And what’s in this world? Little help for the poor with food, health care, and housing—and more poverty, disease, homelessness, and hunger. The budget proposes gutting the country’s largest anti-hunger program, the Supplemental Nutrition Assistance Program (commonly known as food stamps), cutting spending by $213.5 billion over ten years. This would be achieved not only by limiting who is eligible...

It’s Time to Ban Stock Buybacks

The Trump tax cuts have exposed how the Shareholder First economy benefits Wall Street investors and CEOs at the expense of everyone else. 

(Photo: AP/Richard Drew) The Charging Bull sculpture by Arturo Di Modica, in New York's Financial District, is shown in this photo, Wednesday, Feb. 7, 2018. The current bull market is set to turn nine years old in about a month. trickle-downers.jpg I n the aftermath of the Trump tax cuts, Republicans have endlessly crowed about how corporations are using their newfound savings to give their employees wage hikes and bonuses. Paul Ryan even boasted on Twitter about a high school secretary who was surprised to find an extra $1.50 in her weekly paycheck, which could more than cover her annual Costco membership fee. The tweet was quietly deleted a few hours later. But not before critics pounced on the absurdity of bragging about such meager benefits, considering that the entire tax cut came to roughly $1.5 trillion. As Vox’s Matt Yglesias tweeted: $1.50 a week times 52 weeks in a year times 330 million people only comes out to $25 billion or so. Where’d the rest of the money go? https://t...

Scott Walker Doubles Down on Foxconn-omics

(Gage Skidmore)
 

It was just a few months ago that Wisconsin Governor Scott Walker unveiled a massive deal that would give the Taiwanese manufacturing giant Foxconn $3 billion in tax subsidies to open a $10 billion LCD TV factory, promising to bring 13,000 jobs to southeastern Wisconsin.

That’s a public cost of $230,000 per job. Initial estimates found that the state wouldn’t break even on its investment until 2043. On top of the massive tax subsidies, Foxconn will benefit from a host of other goodies—lower electricity rates, state funding for road construction and worker training, exemptions from certain environmental regulations, and unprecedented special treatment in the state court systems.

In short, Walker handed a foreign corporation the keys to the government.

Now, with another major manufacturer threatening to cut hundreds of jobs in Wisconsin, Walker is doubling down on his corporate welfare program. Following the passage of the GOP tax cut, Kimberly-Clark (the company that makes Kleenex, Huggies diapers, and Cottonelle toilet paper) announced in January that it would deliver a dividend increase for its shareholders and a $2.3 billion share buyback. The company said it would then use the remainder of its tax cut savings to restructure its operations.

That apparently means cutting 5,000 jobs in the United States, including 600 positions from its operations in northeastern Wisconsin. The company turned a $3.3 billion profit in 2017.

In a last-ditch effort to save those jobs, Walker is falling back on his Foxconn playbook. On Monday, he proposed legislation that would give Kimberly-Clark the same deal as Foxconn: 17 percent tax credits on qualifying wages at the company’s two plants.

 

 

As the Milwaukee Journal-Sentinel points out, Wisconsin taxpayers would be on the hook for $8,500 in Kimberly-Clark tax credits for one $50,000 salaried job.

Walker is running for re-election in 2018 and he’s faced scrutiny over his failure to make good on a 2010 campaign promise to create 250,000 jobs in the state. He’s not only failed to meet that mark by nearly 65,000 jobs, but Wisconsin’s manufacturing industry has continued to wither away.

The conservative governor has failed to entice businesses to set up shop with his policies of union busting and deep budget cuts to everything from the public university system to infrastructure. 

As Walker has attacked public welfare programs (he’s pushed for drug-testing requirements for state welfare recipients and work requirements for Medicaid beneficiaries), he’s unabashedly set up a generous corporate welfare program that flies in the face of the GOP’s purported vision of free-market capitalism. 

After privatizing the state economic development agency in 2011, Walker has lavished companies with lucrative tax subsidies. In return, companies like Ashley Furniture have announced layoffs, offshored operations, or simply failed to meet job-creation promises.

The Foxconn deal may be the biggest, but, as Walker has shown, it will be far from the last. The governor has now invited any Wisconsin company to threaten to uproot unless it gets a sweet new tax subsidy.

Call it Foxconn-omics.

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