Democrats Embrace Tinkle Down Economics

I am old enough to remember when the Democratic Party scorned “trickle-down economics.” In fact, Democrats coined the phrase “trickle-down economics” as a term of derision describing free market economics. Free market economists argued that permitting risk takers and entrepreneurs to prosper created wealth that ultimately benefited everyone. The Democrats’ scorn survived abundant evidence that trickle-down economics worked. Their ideology so blinds them that they continue to insist, as candidate Obama argued during the presidential election, that high earners must have onerous taxes imposed upon them, even when it hurts the economy, to achieve their nebulous goal of “fairness.”

But now Democrats have embraced their own form of trickle-down economics, enriching one sector of the economy on the premise that so doing will redound to the benefit of other sectors of the economy. The problem with the Democrats’ version of trickle-down is that the sector of the economy they favor creates no wealth to spread and impedes productive areas of the economy.

Barack Hussein Obama is pushing for Stimulus II, a $100 billion plus spending package that will sustain and expand government payrolls. This perpetuates a pattern of bloating bureaucracies that has accelerated dramatically since Democrats took control of Congress in 2006. Today, there are more than two million federal civilian employees. The average federal employee is compensated for his or her remora-like contributions to the economy with a net pay that surpasses the private sector by 55%.

To see how well this works, we should look at the late, great state of California. Aside from overly burdensome environmental regulations, the single greatest contributor to California’s economic collapse has been the state employee. Politicians of both parties initiated and perpetuated a system in which government employees accepted lower pay than they would get in the private sector in exchange for the promise of superior retirement benefits. That was the politically expedient means of passing responsibility down to future legislatures. Let others worry about how to pay for it. As a consequence, California’s unfunded pension liability for present and future retirees is estimated at more than half a trillion dollars.

Private sector pensions and public sector pensions follow two entirely different paths. In the private sector, pensions may be described as defined contribution pensions. In the defined contribution pension, a portion of the worker’s income is set aside and usually matched by the employer and invested in a fund that matures upon the employee’s retirement age. This nest egg is then converted into an annuity that pays the retiree a fixed income based upon an estimate of his predicted lifespan. If the retiree outlives his annuity, then that’s just tough luck. In exchange for a small, inadequate contribution toward his retirement, the government employee is promised a comfortable lifetime pension calculated as a percentage of his pay at retirement. In addition the government employee is allowed to retire at a much younger age, sometimes as young as 50 years, and cannot ever outlive his retirement.

And if that weren’t bad enough, government employee unions have now exercised their political muscle to the point that government workers now make more money than do private sector employees. The total package of pay and benefits for federal government employees is about 55% higher than private sector workers earn for the same job responsibilities.

In large part this is the result of an unholy alliance between government employee unions and the Democratic Party. In the private sector, unions and management have an adversarial relationship. In the government sector, unions and Democrats have an alliance. In exchange for campaign cash contributions and in-kind contributions in the form of independent political advocacy advertisements and volunteer labor, Democrats reward government employees with ever higher pay and their unions with a swelling enrollment. The more overpaid government employees there are out there, then the more money that government employee unions can cycle back into Democrat campaign coffers.

Nevertheless, this is the sector of the economy that has benefited the most from Democrat stimulus packages. These payoffs continue even though the money supply continues to shrink at a rate not seen since the Great Depression and economic studies finding that government spending smothers the private economy.

As such, I would like to propose a new term to summarize Democratic Party economic theories – tinkle down. We enrich federal bureaucrats, and they show their appreciation by tinkling all over us.