[Moneyguy1]

Matt:

You are indeed correct about the trickle down and there is one other, called the multiplier effect. THe second works, the first is sporadic at best.

Where the problem comes in is not so much that the CEO will kill off a few jobs on the manufacturing floor or get rid of the upstairs maid. The problem is that, for the very many, the tax cuts are so small as to be of little consequce. Let me try to explain in as simple a manner as possible. When buying a house, you have the option of a conventional mortgage, a "smart choice" scam, or an interest only with a refinancing /balloon arrangement. Now the prudent buyer may opt for the conventional mortgage since it will, in the long run, result in actual ownership of the property. Another buyer may opt for the interest only because he (or she) does not plan to stay in that residence that long OR they cannot swing the deal without the few bucks a month they are "saving" in payments. The small amount they save in taxes may make the difference but they will wind up with no equity in their original loan amount. Sort of like the Government, spending more than they bring in and either borrowing or doing what our hypothetical buyer cannot do, printing money. The future impact is bad for the entire citizenry because the amount owed by the government to creditors must some day be paid. I would rather take a small hit today than pass the debt down to my kids and their kids for a few years of "feel good". Voodo economics is still voodoo economics.


Not all rich people employ that many people, nor do they actually create wealth. They clip their coupons, buy and sell their stocks and bonds, adding little (except some commissions) to the economy. Most jobs are created at the middle and small cap companies. Large companies, unfortunately, increase their net rather than invest in infrastructure (read energy companies here) and once again, add little to the overall economy. As for Wal MArt...There is no greater drag on the American economy than that. How many small businesses have been forced out of the marketplace and what percent of Wal Mart employees have no medical coverage, the bill being footed by all of us? The average net value of the 9 family members is 18 billion apiece!! The argument for Wal MArt is it allows individuals to increase their lifestyle by making formerly luxury goods affordable. It also has contributed to the overall debt load of the lower middle and low income elements in society. Don't get me going on Wal Mart.

I really do wish that cuts for the rich and for businesses did create wealth for the rest of us, but as Porgy and Bess' devil said, "It ain't necessarily so..." Yes, there are isolated instances where something "works out right", but not for the majority.

Just as an aside, since the infrastructure and research/exploration have been so curtailed in recent decades, what effect did that have obn the cost of energy here in the US of A? Had the businesses "grown" and did their homework, would we all be paying in round figures over twice what we were paying two years or so back?

Respectfully....We are not that far apart in our thinking, it's just that finance is my stock and trade and I have "seen too much" to believe that Adam Smith is still alive and well.