It was President Reagan's budget director, David Stockman, who first spilled the beans about supply-side economics. He told a reporter that it was just a new name for the old trickle-down theory of prosperity.
Trickle-downers believe that the economy booms because the wealthiest families have a lot of money to throw around. Since these are the only people who cannot possibly spend all their income on the good things of life, they have a surplus that they can invest. It is only their abiliity to provide the financing that creates new factories, businesses, and jobs, so the best thing the government can do to stimulate the economy is to help the rich stay rich.
History has not been kind to the trickle-down theory. Now, after more than a year of implementing the updated Reagan version of trickle-down, the administration has demonstrated that it still brings the same results: bankruptcies, foreclosures, unemployment, widespread hardship.
I suggest we try trickle-up economics. This theory is similar to the President's in that it retains his huge tax cuts, it relies on the dynamism of the private sector, and it minimizes federal spending and direct intervention in economic affairs. It is different in that it stands the supply-sider's diagnosis on its head, and prescribes an opposite cure.
We trickle-uppers believe that what booms the economy is millions of ordinary people with money to spend. Experience shows that the United States has never had a period when most people were working at good wage rates and business was bad. When most of the work force is taking home fat paychecks, everybody else does well, too - the butcher, the baker, even the banker.