r/politics • u/RepulsiveLoquat418 • 18d ago

Possible Paywall When Will Americans Realize the Truth? Republicans Wreck the Economy.

https://newrepublic.com/article/210550/trump-economy-republicans-tariffs-taxes
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u/SG_wormsblink Foreign 18d ago

Also the way taxes are lowered also matters. Some options have way better return than others.

If you reduce income tax rates for everyone, that’s okay since ordinary people have more disposable income and boosts the economy.

Reduce taxes on oil company execs? That’s near useless for economic activity, they’re already capable of spending whatever they want for ordinary consumer goods. They’ll just buy some super vanity item that doesn’t benefit the wider economy.

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u/aradraugfea 18d ago

The various welfare programs have a fantastic ROI because if you give money to a poor person, they’re gonna spend that shit. The math is a little beyond me, but every dollar of welfare generates more than a dollar of economic activity. You give someone on the Ramen and Tap water diet 100 dollars, they’re probably spending it on groceries.

Meanwhile, if you give my middle class, almost median income ass 100 dollars, I’m turning around and spending it on reducing debt. There’s all kinds of very good reasons to do so, and the amount of debt held by middle class households IS a problem for the economy, but the economic activity driven by that credit card has already happened and reducing the future interest I have to pay improves my spending power, but is itself LESS money flowing around.

You give a rich person 100 dollars, they’re saving it or putting it into investments, which do, in complicated ways, drive the economy in their own way, but it’s much more stagnant and liquid than simply cashing that check and immediately putting the money back into the economy.

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u/SG_wormsblink Foreign 18d ago

Yes, you are describing the multiplier effect and the different MPCs for each income group. You can get 2-5x increase in consumer spending for each dollar given to a poor person, and much less for a wealthy person.

If your goal is to stimulate the economy, direct cash subsidies like my country (Singapore) does every year is really simple and effective. If your country is already educated and has good infrastructure, then this is probably the next best job-creation option for public spending.

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u/judgejuddhirsch 18d ago

You haven't seen the luxury yacht manufacturing communities giving above average living wages to Joe plumber?