Reaganomics replay

When asked how the proposed reduction in corporate tax would be paid for, Treasury Secretary Steven Mnuchin said the increase in economic activity would take care of it. That is exactly what former President Ronald Reagan said in promoting his “trickle-down” (aka: Reaganomics) plan. That plan was an epic failure that nearly tripled the national debt (a 190 percent increase). The GOP not only denies science (global warming), but denies history, too.

The premise of Reagan’s plan was the wealthy would invest their newfound income. Even if they put it in American banks, it would eventually be invested. But, as Mitt Romney’s financial disclosure showed, it is deposited mostly in offshore banks where it does nothing for the U.S. economy.

Reduction in corporate tax will become higher management salaries and larger dividends to stockholders with effects similar to a reduction in personal income tax. The result will be the same as it was with Reagan’s plan unless an incentive is offered for local investment.

This story was originally published May 14, 2017 at 5:00 AM with the headline "Reaganomics replay."