page_title: Trickle-down economics
section_title: History and usage
hierarchical_section_title: Trickle-down economics / History and usage
caption_attribution_description: English: William Jennings Bryan
context_page_description: Trickle-down economics, also called trickle-down theory, refers to the economic proposition that taxes on businesses and the wealthy in society should be reduced as a means to stimulate business investment in the short term and benefit society at large in the long term. In recent history, the term has been used by critics of supply-side economic policies, such as "Reaganomics". Whereas general supply-side theory favors lowering taxes overall, trickle-down theory more specifically targets taxes on the upper end of the economic spectrum.
  The term "trickle-down" originated as a joke by humorist Will Rogers and today is often used to criticize economic policies that favor the wealthy or privileged while being framed as good for the average citizen. David Stockman, who as Ronald Reagan's budget director championed Reagan's tax cuts at first, later became critical of them and told journalist William Greider that "supply-side economics" is the trickle-down idea:
  It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory.
  — David Stockman, The Atlantic
context_section_description: In 1896, Democratic presidential candidate William Jennings Bryan described the concept using the metaphor of a "leak" in his Cross of Gold speech:
  "There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it."
  
  Humorist Will Rogers jokingly advised in a column in 1932: 
  This election was lost four and six years ago, not this year. They [Republicans] didn’t start thinking of the old common fellow till just as they started out on the election tour. The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellow's hands. They saved the big banks, but the little ones went up the flue.
  William J. Bennett wrote:
  Humorist Will Rogers referred to the theory that cutting taxes for higher earners and businesses was a "trickle-down" policy, a term that has stuck over the years.
  
  Presidential speechwriter Samuel Rosenman wrote:
  The philosophy that had prevailed in Washington since 1921, that the object of government was to provide prosperity for those who lived and worked at the top of the economic pyramid, in the belief that prosperity would trickle down to the bottom of the heap and benefit all.
  The Merriam-Webster Dictionary notes that the first known use of "trickle-down" as an adjective meaning "relating to or working on the principle of trickle-down theory" was in 1944 while the first known use of "trickle-down theory" was in 1954.
  After leaving the presidency, Democrat Lyndon B. Johnson alleged "Republicans [...] simply don't know how to manage the economy. They're so busy operating the trickle-down theory, giving the richest corporations the biggest break, that the whole thing goes to hell in a handbasket."
  Although "trickle-down" is commonly mentioned in reference to income, it has been used by economist Arthur Okun to refer to the flow of the benefits of innovation, which do not accrue entirely to the "great entrepreneurs and inventors," but trickle down to the masses. More precisely, Nobel prize economist William Nordhaus estimates that innovators are able to capture only an extremely low 2.2 percent of the total surplus from innovation. Circling back to income "trickle-down," the surplus from innovation can take the form of gains in real wages, which are spread throughout the economy, according to Nobel prize economist Paul Romer. In particular, economist William Baumol argues that "the bulk of the unprecedented and widespread rise in the developed world’s living standards since the Industrial Revolution could not have occurred without the revolution’s innovations."
  Speaking on the Senate floor in 1992, Senator Hank Brown (R-Colorado) said: "Mr. President, the trickle-down theory attributed to the Republican Party has never been articulated by President Reagan and has never been articulated by President Bush and has never been advocated by either one of them. One might argue whether trickle-down makes any sense or not. To attribute to people who have advocated the opposite in policies is not only inaccurate but poisons the debate on public issues."
  Economist Thomas Sowell has written extensively on trickle-down economics and loathes its characterization, citing that supply-side economics has never claimed to work in a "trickle-down" fashion. Rather, the economic theory of reducing marginal tax rates works in precisely the opposite direction: "Workers are always paid first and then profits flow upward later – if at all."
caption: William Jennings Bryan, who criticized trickle-down theory in his Cross of Gold speech in 1896
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