Hillary Clinton Warns Against Myth That Trickle-Down Economics Creates Jobs

Hillary Clinton Criticized Failed Theory Of Trickle-Down Economics At Martha Coakley Campaign Event. Hillary Clinton appeared at a campaign event for Massachusetts Democratic gubernatorial candidate Martha Coakley on October 24, where she pushed for a minimum wage increase and warned against the myth that businesses create jobs through trickle-down economics (emphasis added):

CLINTON: Don't let anybody tell you that raising the minimum wage will kill jobs. They always say that. I've been through this. My husband gave working families a raise in the 1990s. I voted to raise the minimum wage and guess what? Millions of jobs were created or paid better and more families were more secure. That's what we want to see here, and that's what we want to see across the country.

And don't let anybody tell you, that, you know, it's corporations and businesses that create jobs. You know, that old theory, trickle-down economics. That has been tried. That has failed. That has failed rather spectacularly.

One of the things my husband says, when people say, what did you bring to Washington? He says, well I brought arithmetic. And part of it was he demonstrated why trickle down should be consigned to the trash bin of history. More tax cuts for the top and for companies that ship jobs over seas while taxpayers and voters are stuck paying the freight just doesn't add up. Now that kind of thinking might win you an award for outsourcing excellence, but Massachusetts can do better than that. Martha understands it. She knows you have to create jobs from everyone working together and taking the advantages of this great state and putting them to work. [Associated Press, 10/24/14]

Right-Wing Media Hail Trickle-Down Economics, Lash Out At Clinton For “Stupid” Remarks

Washington Free Beacon: Clinton Will Likely Be Attacked “As Another Big Government Democrat” For Criticism Of Trickle-Down Economics. In an October 24 blog post, the Washington Free Beacon claimed that Clinton's criticism of trickle-down economic theory “will likely be used to attack her as another big government Democrat,” writing that the soundbite could follow her into a “widely assumed presidential bid.” [Washington Free Beacon, 10/24/14]

Rush Limbaugh: Belief That Trickle-Down Economics Doesn't Work Is “Genuinely Stupid.” On the October 27 edition of his radio show, Rush Limbaugh declared that despite Clinton's remarks, trickle-down economics “works,” and “if it weren't for trickle-down, [Bill Clinton] would not have had a roaring economy in the 1990s.” Later in the show, Limbaugh claimed Clinton is part of a “marauding band aiming at every private sector business they can get their hands on.” [Premiere Radio Networks, The Rush Limbaugh Show, 10/27/14, 10/27/14]

Fox Business' Bartiromo: Trickle-Down Economics Works, “Business And Corporations Do In Fact Create Jobs.” On the October 27 edition of Fox News' Fox & Friends, Fox Business host Maria Bartiromo claimed that trickle-down economic principles work because “business and corporations do, in fact, create jobs. That is where the job creation comes from.” Bartiromo argued that Clinton was merely making a divisive “political statement.” [Fox News, Fox & Friends, 10/27/14]

Fox Business Host: Clinton's “Outrageous” Criticism Of Trickle-Down Theory “Sound[s] Like The Mafia.” On the October 27 edition of Fox News' America's Newsroom, Fox Business host Melissa Francis alleged that Clinton's criticism of the conservative economic theory sounded “like the mafia” before claiming that the remarks were “outrageous.” [Fox News, America's Newsroom, 10/27/14]

Outnumbered Hosts Deemed Clinton's Criticism Of Trickle-Down “Factually Incorrect” And “Stupid, Idiotic.” The hosts of the October 27 edition of Outnumbered mocked and attacked Clinton for her condemnation of trickle-down economics. Co-host Sandra Smith said Clinton's comments were “barely worth a response,” and “factually incorrect,” while guest co-host Bo Dietl called Clinton a “disgrace.” Co-host Jedediah Bila blasted Clinton's remark as a “dumb, stupid, idiotic statement.” [Fox News, Outnumbered, 10/27/14]

Economists Back Clinton: Job Growth Tied To Economic Security Of Middle Class, Not Trickle-Down Economics

Nobel Prize Winning Economist: Middle Class Consumers Are The “True Job Creators.” In The New York Times, Nobel Prize winning economist Joseph Stiglitz explained how middle class consumer spending has “historically driven our economic growth”:

There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle -- who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators -- have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable -- it was reliant on the bottom 80 percent consuming about 110 percent of their income. [The New York Times, 1/19/13]

Economist Heather Boushey: Consumer Demand Drives Economic Growth. In testimony before the Senate Committee on Health, Education, Labor, and Pensions, economist Heather Boushey pointed out that, “It is demand for goods and services, backed up by an ability to pay for them, which drives economic growth.” Boushey noted that, “The hollowing out of our middle class limits our nation's capacity to grow unless firms can find new customers.” [Center for American Progress, 5/12/11]

UC Berkeley Economist Robert Reich: “Businesses Don't Need More Financial Incentives.” Robert Reich, professor at UC Berkeley and former Secretary of Labor, wrote that economically “the problem isn't on the supply side. It's on the demand side”:

Can we get real for a moment? Businesses don't need more financial incentives. They're already sitting on a vast cash horde estimated to be upwards of $1.6 trillion. Besides, large and middle-sized companies are having no difficulty getting loans at bargain-basement rates, courtesy of the Fed.

In consequence, businesses are already spending as much as they can justify economically. Almost two-thirds of the measly growth in the economy so far this year has come from businesses rebuilding their inventories. But without more consumer spending, there's they won't spend more. A robust economy can't be built on inventory replacements.

The problem isn't on the supply side. It's on the demand side. Businesses are reluctant to spend more and create more jobs because there aren't enough consumers out there able and willing to buy what businesses have to sell.

The reason consumers aren't buying is because consumers' paychecks are dropping, adjusted for inflation. [Huffington Post, 6/9/11]