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January 17, 2008 at 15:36:25 | Bush Tax Cuts Made Sub-Prime Fiasco Possible | by SDrobny

The Bush tax cuts have created a scenario in which the lions's share of the benefit have gone to rich individuals furthering the gap between the rich and the other economic classes. The reduction and elimination of the estate tax puts even more wealth into the upper 1% of families. As a result, rich individuals have increased their wealth geometrically. However, Bush did not give any rate cuts to corporations. Let's analyze this.

Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created using incentives for people to produce (supply) goods and services, such as adjusting income tax and capital gains tax rates. This can be contrasted with the classic Keynesian economics (or "demand side economics"), which argues that growth can be most effectively managed by controlling total demand for goods and services, typically by adjusting the level of Government spending. Supply-side economics is often conflated with trickle-down economics, a derogatory term given to right leaning economist's views by political opponents (source: Wikipedia). The key phrase is: using incentives for people to produce (supply) goods and services. The people who produce goods and services are businesses most of which are corporations. Labor produces goods and services with the oversight of corporate executives.

If Bush were to be true to supply side theory, the tax incentives would have been given to the corporations and unincorporated businesses. Tax cuts could have been easily targeted to businesses. The big lie in all of this is that there was only a giveaway to rich individuals and not businesses. One could argue that a reduction in business taxation coupled with a reduction in middle class taxation could stimulate the economy. That concept is neither supply side or Keynesian economics. I would label this as a hybrid so let's call this concurrent tax cut Drobnyian economics. In this economic climate, businesses and the consuming classes need help and this measure would be a reasonable approach coupled with an increase of taxes for the rich.

There was no intent to provide economic substance to the giveaways to the rich authorized by Bush. As demonstrated above, there is no supply side benefit to these tax cuts. Bush falsely gives the argument that the wealthy families will somehow reinvest their tax savings into business ventures. The fact is that the increase in family wealth afforded by these tax cuts were put primarily into securitzed funds. In the 90's, excess wealth was put mostly into venture capital funds. ....