The economy does better than it would otherwise when the rich have control of the money

I would like to remind Pro that this is not a debate on supply-side economics per se, but strictly on a comment that he made in our last debate: that we should promote policies that place the vast majority of money into the hands of wealthy people, because that produces the best economic benefit. This is not a debate on inflation or regulation, per se, those I can see how those topics may make their way into our discussion. Before I move into countering the resolution at hand, I would like to point out the factual inaccuracies in Pro's initial arguments. One, he claims that "if you give a bunch of poor people money all you will see is inflation, not real growth. That is why the US has been seeing high inflation since the war on poverty." This comment is inaccurate. In fact, the current inflation rate is about 1.6 percent [1]. This rate is below the Federal Reserve's target of 2 percent [2]. However, even now the Federal Reserve has began tapering asset purchases, reducing them by $10 billion per month [3] in light of an improving economy. Moreover, with interest rates in the zero lower bound, we are in a situation comparable to Japan [4]: it isn't possible to reduce interest rates any further and receive from that a stimulative effect, and even under current policy, it is extremely difficult to inflate because banks are not loaning, investors are holding cash, et al. We're in this situation right now [5], so may the records show that runaway inflation is not a looming threat. The fundamental distinction that I would like to highlight is that inflation is an increase in prices relative to a base year [6], not an increase in the monetary base. It is possible for the monetary base to increase, but inflation to stay low and stable, as it has [7]. The next comment from my opponent that I would like to disprove is his notion that giving poor people money will not generate real growth. First, we have not been doing this. Has Pro forgotten about 1996 welfare reform passed by Bill Clinton, which included harsh work requirements, limits on the amount of years beneficiaries could be on the program, and allowed states to initiate "family caps" that would significantly harm mothers [8]? Although poverty fell during Clinton's term, largely as a result of a growing economy and growing labor force participation rate, extreme poverty -- defined as households living on $2 per person per day -- grew [9]. Here's an illustration from this same paper: Next, is my opponent forgetting about the attacks on social programs under Ronald Reagan's term -- including efforts to define ketchup as a vegetable in order to cut school lunch programs [10]? How about Republican efforts to cut food stamps recently? They've made several attempts to this end, at one point demanding a 5 percent cut in the farm bill legislation [11], while at the same time supporting subsidies to affluent corporate farmers? How about the sequester started which booted 57,000 children off Head Start [12]? My point is that it is a lie that the federal government has simply been throwing money at anti-poverty programs. To the contrary, the federal government subsidies affluent farmers, the Big Five oil companies, and affluent investors, such as Mitt Romney, who was able to pay about 14% of his income in taxes on millions of dollars in income. The system is inherently rigged in such a way that it allows the truly affluent -- many of whom made it there themselves, but still some by a rigged system -- to avoid taxation, whether it be by offshore tax havens or inordinate tax breaks, and slams the poor and those struggling to make ends meet. But let's move back to the premise of our last debate that you challenged me to. For those who don't know, the debate was on the impact of Reaganomics over the past 30 years [13]. My opponent chose the title, which meant that he accepts that the core principles of Reaganomics [14] -- lower taxes, less regulation, lower inflation, less spending on social programs, more spending on the military -- have been policy for this period of time. And to a large extent they have, as I have just shown you. Therefore, we have a case study on whether these policies of ensuring that the very rich do well, with the aim that their wealth will "trickle down" have been effective. Here are our results: 1. Productivity has nearly doubled, while wages have stagnated and, since the Great Recession, fallen. Here's a chart from the Bureau of Labor Statistics [15]: 2. Tax rates are near historic lows for affluent people -- thus we have in fact had policies where the rich had most of the money -- yet people are still very poorly-off [16] -- largely because of the ability to ship jobs overseas to avoid taxes, or to hide one's money in offshore bank accounts: 3. While median wages have fallen, 95% of the gains since the recovery have gone to the top 1 percent [17]. 4. Beginning around the late 1970s -- and from thereon spiraling out of control after Ronald Reagan took office -- distribution of income thoroughly refutes trickle-down. Let's look at another graph from the Stanford Center on Poverty and Inequality [18]: What we learn from this graph is that the top 20% of income earners have done better, while the bottom 60% have not. It demonstrates that we already have the system that Pro has been advocating, and yet it has not made everyone better off. Let me now offer my alternative. Following WWII, we had tax rates between 70 and 91% [19], including in the 1950s under Republican Dwight D. Eisenhower, and yet the economy boomed--growing 37% [20], which can be attributed to investments in the Interstate Highway, science and technology, and the G.I. Bill. The point that I'm going to introduce now, and expound on later, is that my opponent's gravest misconception is not in his world view. I have no doubt that he wants most people to prosper and views his proposed economic system as the most utilitarian. However, he is overvaluing supply and underestimating demand. Corporations and high-income individuals are not suffering from a lack of productivity, and thus due not need tax cuts. Rather, they are suffering from a lack of demand for their goods and services. We know that because studies, such as this one from the EPI that I encourage you to read [21], tell us that the issue is lack of sales, not lack of "regulatory certainty." Even business surveys (chart shown below), the Wall Street Journal, Ben Bernanke, the National Bureau of Economic Research, and Bruce Bartlett agree with this view [22]. As for the business surveys, here is the chart I spoke of [23]: Here's another one [24]: And I have another one, this one from the National Federation of Independent Businesses [25]: And I'm out of characters. Back to you, Pro. 1. http://www.usinflationcalculator.com... 2. http://www.federalreserve.gov... 3. http://money.cnn.com... 4. http://www.princeton.edu... 5. http://krugman.blogs.nytimes.com... 6. http://www.investopedia.com... 7. http://krugman.blogs.nytimes.com... 8. http://usgovinfo.about.com... 9. http://www.npc.umich.edu... 10. http://abcnews.go.com... 11. http://www.slate.com... 12. http://www.washingtonpost.com... 13. http://www.debate.org... 14. http://www.investopedia.com... 15. http://thecurrentmoment.files.wordpress.com... 16. http://static5.businessinsider.com... 17. http://money.cnn.com... 18. http://www.stanford.edu... 19. http://www.salon.com... 20. http://www.shmoop.com... 21. http://www.epi.org... 22. http://mediamatters.org... 23. http://cloudfront.mediamatters.org... 24. http://mediamatters.org... 25. http://cloudfront.mediamatters.org...