In the face of the remarkable early success of President Biden’s signature public investments in infrastructure, clean energy, and high-tech manufacturing, Jeff Stein reports in the Washington Post that the trickle-down dead-enders giving economic advice to Donald Trump are cooking up an economic plan that consists largely of… cutting the corporate tax rate from 21% down to 15%. One supposed benefit of further reducing corporate tax rates, according to Stein, is that “the sharp new tax cuts would help offset higher consumer costs” caused by Trump’s proposal to impose a 10% tax on all imports. 

OK, sure, there’s certainly a neoliberal economic model or two that assumes lowering corporate taxes or reducing marginal rates for the richest people leads to lower consumer prices, but is there any evidence of that happening in the real world? The corporate tax cut Trump previously engineered reduced the standard rate from 35% to 21% and certainly didn’t seem to keep prices down over the past few years…  so what exactly is the rationale for asserting that lowering taxes results in lower prices rather than higher profits? It’s been more than four decades since the arrival of trickle-down economics, but somehow reporters continue to write stuff like this, and apparently they still expect us to pretend it adds up. 

Make it make sense.

The federal government responded with remarkable speed and vigor to the economic crisis brought on by COVID, providing substantial stimulus to consumers, significant support for small businesses, extensive relief to local governments, and other critical investments. This was a sharp change from the response to the Great Financial Crisis of 2008, which fell well short of what was necessary to return the economy to vigorous growth.

The difference is immediately apparent in the chart below, which was recently highlighted by Paul Krugman: after the 2008 crash, what’s called “prime-age employment” — the share of working-age people 25-54 who have jobs — remained depressed for many years. In other words: fewer people were able to get jobs for a long time. But today, just a few years after COVID completely disrupted the economy and caused a far sharper initial reduction in jobs than the 2008 crisis, we’re not only back — we’ve reached a higher level of prime-wage employment than before the crisis began. This is a testament to the power of the trillions of dollars of relief funds that were provided and public investments that have been made since 2020. And it’s also evidence that something truly remarkable happened between 2008 and 2020 — economic policymakers actually learned something.

Just out on our YouTube channel this week, Civic Action founder Nick Hanauer digs into an incredibly consequential new academic study on the minimum wage. The study looks at large increases in several dozen counties that raised the minimum wage to $15 an hour and finds that raising the minimum wage doesn't kill jobs — it creates them.

This is a groundbreaking analysis that defies the assumptions of conventional economic thinkers, who have long simply assumed that raising wages must reduce jobs, because that’s what their models show. Now for the first time we have actually have a study that focuses on a large increase to the minimum wage, and it finds that higher the wage was raised, the more jobs were created. Take three minutes to watch Nick step through the study and explain why it’s so important.

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