Was Hillary Advocating Trickle Down Economics?

The Presidential debate in the United States was centered on economic policies in 2016. Donald Trump was representing the culture of flamboyant billionaire capitalists that Republican parties seem to support. On the other hand, Hillary Clinton seemed to be more connected to the grass root American who lives in poverty and economic stagnation. This demographic has always been staunch supporters of the Democratic Party.

The policies suggested by them also seemed to very different. For instance, Donald Trump was vehemently advocating tax cuts. Hillary seemed to dislike the idea. She called it trumped up trickle-down economics. On the other hand, Hillary was advocating an economic policy where the government would increase spending on the poor. She made the audience believe that her policies were different than the trickle-down policies being advocated by Trump.

In this article, we will analyze these policies in more detail. We will also understand how Hillary was also advocating the same trickle-down economic policy.

What Is Trickle Down Economics?

The term trickle-down economics was first coined by critics to describe Ronald Reagan’s economic policies. According to him, a tax cut on the richest people in the country is what promotes economic growth. This is because when rich people pay fewer taxes, they buy more stuff. This stuff needs to be manufactured. An increased demand for goods will create an increased demand for labor and services as well. Hence, the economic benefit will flow from the richest people to the poor and middle class automatically. Since the theory claimed that the economic benefit would move down the social strata, it was called trickle-down economics. The effectiveness of trickle-down economics has been questioned several times. However, it seemed to have worked since economic growth during the Reagan regime was much higher than during the reign of Clinton which followed it.

Can Trump’s Policies Be Called Trickle-Down Economics?

Describing Trump’s policies as trickle-down economics may not be completely accurate. Instead, Trump’s policies can be seen as adhering to supply-side economics. The focus is to stop penalizing the people of United States for being productive. If productive people are rewarded instead of being penalized, it changes the incentive to work, save and even spend. The fact of the matter is that Trump has cut taxes across all income levels. It is true that the rich may record more gains. However, the rich have also been paying more taxes throughout. The policy is therefore aimed at incentivizing people from all classes to indulge in more economic activity. The money isn’t really being trickled down from the higher-ups. Therefore, the description of these policies as “trickle-down” economics is inaccurate.

Aren’t Hillary’s Policies the Same as Trickle-Down Economics?

On the other hands, Hillary’s policies can be considered to be more closely associated with trickle-down economics. The central tenet of Hillary’s policies is called government spending. The underlying belief is that the total spending in the economy, i.e., the aggregate demand must not fall. It is the government’s job to not let this demand fall. If the money were in private hands, people would stop spending it, and the economy would go into a downward spiral. Hence, the government must take this money from the people and then spend all of it back!

The problem with this belief is that government can no longer raise taxes in America without being too unpopular Hence if money has to be raised for economic spending, it can only be raised via debt. Here the government will first take money from the super-rich. However, later they will collect money from the poor in the form of taxes to give it to the rich in the form of interest. Contrary to the popular belief, Hillary’s policies will actually benefit the rich and will have a negative impact on economic activity.

Also, the government spending is done by making payments to contractors who build roads and bridges. None of the people that receive this money from the government are really poor. In fact the contracts are won by organizations that have the most clout in Washington D.C. These companies spend millions of dollars lobbying to get government contracts.

The Comparison

On the one hand, Donald Trump’s policies were meant to increase economic activity in the nation. On the other hand, Hillary Clinton’s activities would reduce economic activity since they would drain money out of the economy in the form of interest payments.

Trump’s policies give companies a level playing field to compete with international players. The benefits will be apportioned by the market. On the other hand, Hillary’s policies are dependent on corruption and cronyism. The market mechanism is not used to allocate the gains. Instead, the government selects who the beneficiary should be?

It is no surprise that the people chose Donald Trump’s policies. It is the media and Democrats that are trying to paint this false image of Trump’s policies being pro-rich and anti-poor. The fact of the matter is that Hillary’s policies would have caused much more corruption and the interests of the working class Americans would have been compromised even further. A reduction in taxation is great for the economy if spending is also reduced proportionately.

❮❮   Previous Next   ❯❯

Authorship/Referencing - About the Author(s)

The article is Written and Reviewed by Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.