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THURSDAY SEPTEMBER 1, 2005
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EDITORIAL

How long does it take money to trickle down?

In the controversial film "Fahrenheit 9/11," Texas Gov. George W. Bush is shown during a white-tie fund-raiser for his 2000 presidential campaign.

"This is an impressive crowd, the haves and the have-mores," Mr. Bush quips. "Some people call you the elites; I call you my base."

Mr. Bush has taken care of his base over the past five years. His economic-stimulus package included tax-bracket deductions, a reduction on tax rates for dividends and elimination of the estate tax. While his father referred to supply-side as "voodoo economics," when he first ran for president against Ronald Reagan, the current president has forged forward with the plan.

Supply-side economics is based on the idea that, if you provide tax breaks and incentives for businesses, they will expand and create new jobs.

Theoretically, the benefits will "trickle-down" to the workers. Those workers will in turn spend their money on more goods and services, providing more fuel for the economic engine.

Supply-side economics sounds good, but it has not benefited those in the lower-income brackets over the past five years. The gap between the haves and have-nots continues to grow.

U.S. Census figures released Tuesday show poverty grew to a record rate of 12.7 percent last year. When President Bush took office in 2001, 32.9 million Americans were living below the poverty line. Now that figure is 37 million, almost a third of them children. The average worker earns just under $30,000 annually, and the minimum wage has not changed since 1997.

Meanwhile, a recent study reports that the average compensation for chief executives of 179 large corporations was nearly $10 million in 2004. After-tax profits for all companies grew 18.2 percent last year and 14.3 percent in 2003.

So where does all the money go?

Instead of trickling down, it disappears into the profits of the wealthiest American corporations and their executives' portfolios.

And if the money doesn't trickle down to the workers, they are unable to spend it. This results in less demand for goods and services and the economic engine slows.

Without re-investment, Mr. Bush's economic incentives benefit only the wealthiest Americans.

And the gap continues to grow.

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