An Opportunity for President Bush to Exhibit Bottom-Up Economics
Mike Randle, Editor
Not unlike Ronald Reagan, George Bush incorporates a top-down economic development policy. It was called "trickle-down" economics in the Reagan era. Similar policies really haven't earned a name in the Bush, Jr. period. Cut taxes on those affluent Americans who own businesses, the trickle-down mantra maintains, and they will pass those savings down the line all the way to the dude or dudette working in the mailroom. I've owned this business for 23 years, but I chose not to pass my tax cut down to the dude in the mailroom. I'm sure I am not the only one who chose to pocket the cash and spend it on no one but me. Wait a minute; I am the dude in the mailroom. So, I guess I did pass it down to myself.
Warren Buffet has said it. Bill Gates has said it. In fact, a bunch of America's richest have said it publicly over the last five years as well. "We don't need a tax cut." Buffet said recently that he pays about half the amount of federal taxes he paid in the mid-1990s. How many middle-class Americans can say the same thing?
Top-down economics is an interesting theory; one that I believe could work in different economic environments than what we are smack-dab in the middle of today. Top-down economics might work when things are flush, like they were for much of the mid-and-late 1990s. Government and private concerns alike were flush with cash back then. It's not the same today. Tax cuts, war, disasters, terrorism, debt service, they've all contributed to a reduced federal coffer. And ever intensifying global competition has bitten into profit margins of many of this country's largest corporations.
If today isn't the right economic environment for top-down economics, then why not try something different? Of course, the converse of top-down economics would be bottom-up economics. That philosophy was used for much of the 1990s, even though some of those years might have been best suited for top-down policies, particularly years' 1997 and 1998.
The federal government has the opportunity right now to work a bottom-up economic strategy that makes so much sense. And at the same time, the opportunity can help make good on the failure of the fed's handling of the Hurricane Katrina disaster. President Bush could take the opportunity and run with it and I don't believe a single American would disagree with him if he did it.
The deal is this: the feds, particularly the President, should help steer big job deals to Louisiana and coastal Mississippi. Congress is already dabbling in economic development like never before, trying desperately to steer big deals to certain states. Why not then, in this time of dire need, steer some significant job-making deals to Louisiana and Mississippi? On a federal level that would be a perfect example of bottom-up economics -- take the jobs where they are needed the most and there isn't a place in the country right now that needs jobs more than areas hit by Katrina.
Everyone in economic development knows that Korean automaker Kia is looking to build a large assembly plant somewhere close to its parent, Hyundai, which operates its only U.S. facility in Montgomery, Ala. That plant would employ about 2,000 workers initially. Kia is known as a company that doesn't leave anything on the incentive table. Problem is, the incentive table was washed away in Louisiana. They don't have the money to turn deals of that magnitude right now. That being the case, the feds should step in and write the incentive check only if the facility is built in Louisiana. There's a great super site west of Monroe, La., that would be very suitable for Kia.
Mississippi and Alabama have worked for two years to locate Kia in Meridian, Miss. But I can tell you, from the information we've received, the leaders of both states wouldn't mind if the project went to Louisiana, where it is needed more.
Today, the federal government, specifically President Bush, has the clout to steer many other job generating deals to markets located near hurricane-affected areas in Louisiana and Mississippi. And when the time is right and the infrastructure is back in place, Congress should pass legislation that would make it extremely attractive financially to locate a business in the New Orleans region and on the Mississippi Gulf Coast.
There's a big difference between a handout and a job. It's called bottom-up economics.