2010 Midterms – Are We Going to Continue Our National Legalized Trickle-up Ponzi Scheme?

This posting was inspired by an article at Rational Revolution. It takes another look at the disproportionate shift in income to the mega and ultra rich, the disproportionate tax breaks for the mega and ultra rich, and the creation of national and personal debt not seen since the Great Depression.

The similarities of the Great Depression of the last century to this century’s Great Recession on certain key measurements are critical to our future. Come the midterm elections and beyond, we can continue the destruction of the American middle class or continue the hard changes that have only just begun to rebuild the middle class.

Remember the trickle down theory of supply side economics that was supposed to result from tax breaks for the rich? Well, here’s a recent example of how trickle down works decades after it was started and has since been amplified: LeBron is promised $125,000,000.00 while 30 of the teams’ support employees are fired.

No matter how much LeBron makes or how little he pays in income taxes, those 30 former employees are screwed. This is exactly what has happened to many more Americans since the right-wing authoritarians (RWA) have been running our economy and giving disproportionate and extreme advantages to the really rich. There are now more mega and ultra rich people in this nation, but there are many, many more middle class households that have gone into debt with easy credit, lost their jobs, lost their homes, and declared bankruptcy. Middle class America is being replaced by a plutocracy. I’d call this a legalized Ponzi Scheme, which is trickle-up economics.

Didn’t the course change started in November 2008 mean stop and fix what’s wrong!


“The Voodoo That You Do”


Let’s review the situation created by the RWAs. Instead of continuing to grow the income of everyone, as was done after WWII, we are now only helping the rich become the mega and ultra rich. While most of us, the Bottom 90 Percent, have seen our income gains drop more than 50 percent, the Top 1 Percent have seen their income gains grow by more than 50 percent. Notice in the chart below how today’s share of income growth for the mega rich is just as high as it was before the Great Depression.

(Note the slight recovery in income gains for the middle class during the Clinton years.)


In terms of income growth by income group for before and after the RWAs took over, this shift is even more dramatic for the mega rich vs everyone else. Prior to Voodoo Economics, 1947 to 1979, income growth was fairly even – then the legalized trickle-up Ponzi Scheme started.

The Trickle Up Truth
Household income shifts to the rich


As shown in an earlier posting and to highlight the current effect of trickle-up, the average income of the top 1 percent in 2005, as reported to the the IRS, was $1,200,000.00 and the average for the bottom 99 percent was $45,000.00.

Let’s take a closer look at some of those in that top 1 percent. The chart below compares the income growth of corporate executives. These mega rich are rich, not because they produce something, but because they are mostly accountable to fund managers who, as share holders, vote for excessive salaries to get the ‘best’ CEOs money can buy who will then protect the fund’s value. Notice the only metric doing worse than the average worker is the minimum wage.

CEO income growth - Earned and Other


Then there are the ultra rich hedge fund managers, who, unlike the middle class, have mostly investment income which is taxed at rates far less than the marginal income tax rate for earned income. Can you imagine making billions of dollars and only paying 15 percent to the government? And they still want more tax breaks? To be clear, the top salary for 2007 was $3,700,000,000.00. That’s 177 times more income than Lebron James 6 year contract. That must correlate to thousands of more unemployed middle class Americans?

Income for the top hedge fund managers in 2007


Now add to these lopsided gains in income growth the increased tax breaks for major corporations and you see another reason for this shift in wealth to the rich. Their METRs have dropped by more than 30 percent while their contribution to our federal revenue has been cut in half:

Historical corporate tax rates
This chart only applies to corporations who have stayed in America for tax purposes.


Tax revenue from Corps cut while individual revenues stay the same.
(And now thanks to our “activist” Supreme Court, more corporate profits can go to PACs for controlling our government.)


Then, as shown below, there are the increased tax breaks on earned income. They have also been disproportionately reduced for the wealthy who are still mostly ‘earning’ their income. (Without this reduction it’s harder for the wealthy to become mega rich and move to unearned income.) The second chart below shows the marginal tax for any earned income and the growth in income for the ultra rich, the top 0.1 percent.


60 Years of Republican Tax Breaks for the Wealthy
Top marginal US income tax rates since 1920


Top 0.1 % and marginal tax rate for earned income.


The above earned income tax rates for the wealthy do not account for the even greater advantages that the mega and ultra rich have with even lower capital gains taxes for unearned income. For the top 400 taxpayers, less than 10 percent of their income is “earned” and subject to the marginal tax rates. Most of their income is taxed at the lower capital gains tax rate.


As the charts above show, the mega and ultra rich are getting disproportionately richer – their income growth is far outpacing that of the middle class – and their tax breaks are much more favorable! Most of us were fooled into believing there was trickle down – that’s what the RWA have told us. In reality, we have trickle-up and there is only the perception of income growth for the middle class from households with two incomes and going into debt up to our collective eyeballs. There is no trickle down when income growth and tax breaks have become so lopsided. Millions have lost their jobs as a few hundred have made billions without producing anything. These mega and ultra rich are sitting at the top of our legalized Ponzi Scheme and the middle class is disappearing.

Unlike the situation in WWII where everyone helped pay the nation’s bills, the RWA have reduced taxes, especially for the rich, and borrowed from other nations to pay for our wars and other expenses. The result of decades of tax breaks for the rich, the rich keeping too much of their excessive income, and enormous expenses for our military on top of our other federal expenditures, our national deficit has grown over 55 percent under the rule of RWAs and their Great Recession.


National debt has grown while our government was controlled by RWAs


Not only has the nation’s debt escalated for decades, so has our personal debt. Citizens have borrowed like never before and we feel richer and believe that it’s trickling down from the rich that were given all those tax breaks. In addition, the government encouraged borrowing, corporations took advantage of lower rates, and the mega rich investors created innovative methods to maximize their unearned, under-taxed, income by encouraging the middle class to go into debt.



Household debt: Credit card debt, car loans, personal loans and home mortgages


How unfair is all this? Under the rule of the RWAs, most citizen’s personal debt has more than doubled and is near the levels that preceded the Great Depression, while at the same time income for the mega rich is as high as it was prior to the Great Depression.

Income of top 1 percent near pre Great Depression levels


This has to stop!!!

But if you don’t agree and if you want more disproportionate tax breaks for the mega and ultra rich, and for the corporations that make unlimited political contributions, if you want more national and personal debt, and if you want others to pay our debt so we can continue shopping, vote for RWA in November.

Remember, RWA are also known as “Conservatives without Conscience” and they are mostly common to the Republican and Libertarian party. A few, Blue Dogs, exist in the Democratic party.

Vote Republican? – Vote Ponzi.




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About Andy Hailey

Vietnam Vet, UT El Paso Grad, Retired Aerospace Engineer, former union rep, 60's Republican now progressive, web admin, blogger.

4 Responses to 2010 Midterms – Are We Going to Continue Our National Legalized Trickle-up Ponzi Scheme?

  1. Serginho says:

    Soon we will have favelas and skyscrapers next to each other. What, we already have that? Who would have imagined?

  2. There’s a soundtrack here? I never heard a peep; need to check my settings. On something. Somewhere. anyway…

    The second graph, Percentage Change in Family Incomes, was difficult for me to understand, and that made me half-tune-out most of the rest. Dubya’s tax policies WERE his economic policies and they were the most irresponsible policies sinc… Reagan’s. Aitch Dub had it right when he called Reaganomics “Voodoo Economics” but true to family form, sociopathic lust for power and position, he sold what was left of his soul by renouncing reality, suspending disbelief and common sense and embracing the fantasy.

    When a person “sells” something that they don’t believe, that IS evil.

    Obama has his finger in the dike. He’s temporarily slowed the hemorrhaging of jobs, but has failed to reverse the ongoing trend of another Voodoo invention, The Jobless Recovery. Jobs are not creted out of thin air. They aren’t created by rich people bored with sitting on their money. They are created by demend. Most of all though, no matter how many might be created, they must be retained, and this is done by underlying economic policy, not tax policy or “stimulus packages.”

    The economic policies of the conservatards, especially since Reagan, do not inject money into the economy, they draw money out. Wall Street is a DRAIN with their “financial innovations” that go far beyond stocks and bonds. We have an economy where money does not chase goods as in previous times — too much money chasing too few goods equals inflation — we have an economy where money chases money: a Paper Chase, unlike the movie. Nothing is created; nothing is left behind; when the value of the paper disappears, there is no collateral beyond more paper. THAT is why “they” need our social security trust fund.

    Unless Obama can change this fundamental policy, this Paper Chase, and I see no evidence that ha desires to do so, nothing else he does will matter. We WILL have a depression.

  3. Karl Kelley says:

    I like the information. The sound seemed like it was too low.(It’s also a little noisy here.) No one from the right will read this,or if they do believe it. I however feel it to certainly, be true. They do not want a black man to be a successful President as that will challenge a cherished belief,(prejudice),that white people are superior. They do not want a Democratic President to be successful,as that would prove their economic theory to be wrong,and their leadership to be ineffective. In their collective mind,(Rush Limbaugh), even in these desperate,and difficult times,(not for him),it would be better for the country to flounder,than for a Black Democratic President to succeed. The President gave us hope and promised change. If your rich and getting richer that’s exactly wrong. They want an uneducated fearful population,docile and accepting of their lot. (if your not rich, it’s your fault) Willing to take any job, at any wage,and without any expectation of it improving. This is what we must overcome. This is why we must DEMAND BETTER.

  4. John Hoffman says:

    I have known and understood about how the top tier is ripping us off for some while. Reading about it with a cool soundtrack and colorful graphs is bonus!