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

Amazon Warehouses May Leave Cities Worse For Wear

A new report finds that localities with Amazon warehouses haven’t seen an overall boost in employment.

AP Photo/Patrick Semansky Myrtice Harris packages products for shipment at an Amazon fulfillment center in Baltimore. trickle-downers_35.jpg T he battle between cities to host Amazon’s second headquarters continues to dominate headlines, but the new HQ remains only the latest and largest prize in the tech giant’s long history of masterfully soliciting public subsidies. In Amazon’s quest to control same-day delivery, its network of almost 100 fulfillment centers—where products are sorted, packaged, and shipped—has now spread across 25 states. Lured by the prospect of hundreds or even thousands of new full-time warehouse jobs with competitive pay and benefits, local government officials crawl over each other to land the world’s largest online retailer in their backyard. But according to a new report by the Economic Policy Institute (EPI), many of these policymakers might really be selling their constituents short. The report found that, on average, counties that are home to Amazon...

ExxonMobil Plays Trump Like a Fiddle

President Donald Trump—the great dealmaker—has an ego fueled by flattery, which is allowing corporate America to play him like a fiddle. Since the passage of his massive tax cuts, Trump has trumpeted the news of one-time bonuses, wage hikes, capital investment projects, and job creation promises as affirmations of his genius.

His State of the Union Address Wednesday night was no different. As Trump proclaimed:

Since we passed tax cuts, roughly 3 million workers have already gotten tax-cut bonuses—many of them thousands and thousands of dollars per worker, and it’s getting more, every month, every week. Apple has just announced it plans to invest a total of $350 billion in America, and hire another 20,000 workers. And just a little while ago, Exxon Mobil announced a $50 billion investment in the United States. Just a little while ago.

This, in fact, is our new American moment. There has never been a better time to start living the American Dream.

So what about that ExxonMobil investment? ExxonMobil CEO Darren Woods, who took over for Rex Tillerson when he went to work for Trump, announced Monday that the company would be investing $50 billion in capital and exploration investments over the next five years—a move, he said, that is thanks in part to the corporate tax cuts. Trump repeated the news in his address to much applause, as Tillerson looked on from the front row.

It turns out the fossil fuel giant was, in all likelihood, going to make that investment anyway. As Americans for Tax Fairness point out, SEC filings show that ExxonMobil made about $53 billion in domestic investment in the five-year period between 2012-2016. This suggests that the company will continue to invest in capital spending at a similar (or even lower) pace.

The company was already paying an absurdly low rate in corporate taxes—just 13.6 percent on $60 billion in U.S. profits between 2008-2015. Lowering the statutory rate to 21 percent, then, doesn’t do much for its after-tax profits.

Of course, ExxonMobil is an incredibly powerful corporate actor—the third largest company in the world. It has a tremendous interest in currying favor with its regulator, the Trump administration.  Trump’s presidency could prove highly lucrative for the company, enhancing prospects for drilling along the U.S. coasts, in the Arctic National Wildlife Refuge, and potential for new fracking operations on public land.

It’s also absurd to assert that news of these bonuses is anything more than savvy public relations. And that money that Apple is “bringing back” from overseas is merely an accounting move on paper—and an affirmation that it was evading U.S. taxation by shifting its income into foreign accounts. Apple’s move is not any sort of tribute to the brilliance of Trump’s deal making on taxes.

Corporations like ExxonMobil and Apple will continue to misrepresent their typical business operations as all due to the brilliance of Trump. The flattery will work. But that does not mean the Trump tax cuts are working.  

Good Riddance, Sam Brownback

The governor may be (finally) leaving Kansas, but his trickle-down legacy has saddled us all. 

(Gage Skidmore) Governor Sam Brownback of Kansas speaking at the 2017 Conservative Political Action Conference (CPAC) in National Harbor, Maryland. trickle-downers_35.jpg U ltimately, it was Mike Pence who bailed Kansas out from its economic disaster. The vice president had to cast two tie-breaking votes in the Senate Wednesday to get Sam Brownback, his fellow conservative evangelical and GOP right-winger, confirmed as President Trump’s ambassador at-large for religious freedom—a position Brownback was nominated for nearly a year ago. Brownback has now officially announced that he’s resigning his position as Kansas governor next Thursday. The former U.S. senator was first elected governor in 2010, spearheading the Tea Party backlash against Barack Obama. He promptly turned his own state into a Petri dish for radical trickle-down economics , promising it would prompt a “shot of adrenaline” into the Kansas economy. The reckless cuts to income and business taxes didn’t work, as I...

Bank of Whose America?

By eliminating a popular free checking account, Bank of America only reminds us that traditional banking is for everyone—except the poor.

AP Photo/Mark Lennihan
AP Photo/Mark Lennihan Customers use an ATM outside a Bank of America branch in New York trickle-downers_35.jpg B ank of America has recently faced a backlash over the elimination of a basic checking account that required no monthly fee or minimum balance. The eBanking account, introduced in 2010, allowed customers to waive the monthly fee if they only used digital banking services. In 2013, Bank of America began slowly moving depositors from the eBanking account to a standard account that came with a $12 monthly fee (waived if a person has a monthly direct deposit of at least $250 or $1,500 in the account). That process was just completed, and the free eBanking account is no more. The elimination of the basic, no-fee account has sparked anger from people who see the move as pushing low-income people away from traditional banking services. A Change.org petition currently has over 50,000 signatures for Bank of America to bring the account back. Low-income people do tend to use...

For Banks, Double the Trickle-Down Delight

Trump’s tax cuts and deregulation are a bonanza for Wall Street.

(Sipa USA via AP) Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co., speaks at an Economic Club of Washington event in Washington, D.C., on September 12, 2016. trickle-downers.jpg C itigroup, one the country’s four mega-banks, is taking a $22 billion loss from President Trump’s tax plan. But the banking giant is not worried. In fact, its stock ticked up and its top executives are elated. That’s because the loss is a mere blip on the radar—a one-time cost for bringing back profits stashed overseas. The real bonanza is on the horizon. “Tax reform not only leads to higher net income and increased returns but also serves to strengthen our capital-generation capabilities going forward," CEO Michael Corbat pronounced . Citigroup is not the only bank projecting an even rosier future. As The New York Times reported , the country’s financial institutions are perhaps the biggest winners of all. JP Morgan Chase (the biggest bank behemoth of them all) and Wells Fargo both expect to pay...

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