How does trickle-down/supply side economics differ from Keynesian/bubble-up economics? Who benefits most from each practice?  

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larrygates | College Teacher | (Level 1) Educator Emeritus

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Keynesian Economics, a hallmark of Franklin Roosevelt's New Deal calls for massive government spending to stimulate the economy. The theory is that spending puts more money into the economy which then responds with increased spending. New Deal programs such as the Tennessee Valley Authority, WPA, etc. were pursuant to Keynesian economic theory. It generally favors blue collar workers who are most likely to be employed in construction projects, etc.

Supply side or trickle down economics, a favorite of the Reagan Administration, argues that the economy can be stimulated by reducing taxes. Reduced taxes means people have more money to spend, and the economy is thus stimulated. President George W. Bush's tax refunds were pursuant to this philosophy. The benefits accrue first to the wealthy and well to do. The belief is that as they benefit, the benefits will "trickle down" to everyone else.

It is somewhat obvious that Keynesian Economics is largely favored by Democratic Administrations and Supply Side Economics by Republicans.


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