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Joe Biden may have coined a phrase earlier, or tried to coin one at this late stage in the midterms race, when he said Republican economic policy amounted to “Maga-mega trickle down”.
Trickle down economics is the idea that slashed taxes on the wealthy mean benefits for all those below them. Liz Truss was a devotee. She was also British prime minister for all of 45 days before announcing her resignation yesterday, after crashing the markets and cratering the UK economy.
Biden may have been seeking to remind any Americans even vaguely aware of events across the pond when he told reporters: “If Republicans get their way, the deficit is going to soar, the burden is going to fall on the middle-class … They’re not going to stop there. “It’s Maga-mega trickle down.”
For the avoidance of doubt, here’s how Larry Elliott, the Guardian’s economics editor, defines “trickle down”:
The theory is simple. Governments should cut taxes for the better off and for corporations because that is the key to securing faster growth. Entrepreneurs are more likely to start and expand businesses, companies are more inclined to invest and banks will tend to increase lending if they are paying less in tax.
Initially, the beneficiaries are the rich, but gradually everyone gains because as the economy gets bigger well-paid jobs are created for working people. Governments should stop focusing on how the economic pie is distributed and focus on growing the pie instead.
Supporters of trickle down often cite the work of the US economist Arthur Laffer as proof that the theory works. Laffer said tax cuts for the wealthy had a powerful multiplier effect and any revenues lost by governments from reducing tax rates would be more than compensated for by the fruits of higher growth.
For the further avoidance of doubt, Maga, written like that here because of Guardian style rules on acronyms, stands for “Make America great again”, aka Donald Trump’s campaign slogan in 2016.
Biden was speaking at the White House, about the US deficit and efforts to reduce it. He said: “The federal deficit went up every year in the Trump administration – every single year he was president. On my watch, things have been different. The deficit has come down both years I’ve been in office, and I’ve just signed legislation that will reduce it even more in the decades to come.”
Republicans will counter that Biden has passed a lot of legislation increasing government spending. And so the dance toward election day goes on.