Welcome back to The Atlantic Signs of Dissent Project, where we bring economic context to some of the most provocative sings of the Occupy Wall Street movement. Yesterday we launched the project by explaining a sign about student loans, which have, astoundingly, quintupled in the last 12 years. Now let's get to one of the major themes of the movement: the runaway wealth of the top 1%.
"Trickle-down" theory holds that tax cuts for the wealthy will benefit the whole economy because new wealth at the top will circulate throughout the market and find its way into the pockets of the middle class. In the last ten years, Washington has cut taxes on income and investment, reducing the effective tax rate of the wealthiest one percent to its lowest rate in decades. (Every other percentile has gotten a big tax cut, too. Average federal income tax for a median family of four is lower than any point since the 1950s.)
Did the wealth trickle down? Well, it's impossible to know the true degree to which the Reagan and Bush tax cuts have stimulated, or not stimulated, the economy in the last decade. We can't run a control experiment on what the 2000s would have looked like without President Bush. But the evidence we have suggests the last ten years have been extremely disappointing. Book-ended by two recessions, Bush's tenure saw average GDP growth barely above 2%, below its 20th century average. For the median household, it was a lost decade. While Bush was in office, Ron Brownstein reported, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked. And to think: Bush left office before the recession reached its nadir in terms of income and employment losses.