Trickle Down Trickles Up

A scholar marshals evidence to support a tainted theory

When Budget Chief David Stockman was quoted in the Atlantic Monthly last year as saying that President Reagan's policies were a disguised form of "trickle-down" economics, Democrats and many Republicans were outraged. Stockman seemed to be advocating a conservative strategy that had long ago fallen into disrepute: stimulate economic growth by giving tax breaks to the rich and letting benefits trickle down to the poor.

Now Charles Murray, an M.I.T. educated political scientist who has delved into the statistics on poverty, has written an unflinching defense of trickle-down economics. In an essay distributed by the conservative Heritage Foundation, Murray argues that Stockman should never have been taken to the woodshed.

Murray, 39, spent six years studying the effectiveness of various Government spending programs for the American Institutes for Research, a nonpolitical Washington-based think tank. After leaving A.I.R. last year to become an independent consultant, Murray began to study the impact of Lyndon Johnson's Great Society on the level of poverty. To his surprise, Murray found that the prevalence of poverty in the U.S. had fallen just as rapidly during the Eisenhower years, when social spending was much lower.

In 1964, Johnson's first full year in office, 18% of Americans were classified as poor by standards set in Washington. By 1968 that figure had dropped to 12.8%, and the Great Society was called a success. Its supporters rarely noted, though, that the percentage of Americans in poverty had already plunged from 32.7% in 1949 to 19.5% in 1963.

In the 1970s, annual Government cash payments for public aid mushroomed 156%, to $21.8 billion. Despite this lavish spending, however, progress against poverty stalled. By 1980 there were 13% of Americans who were still poor, virtually the same percentage as in 1970.

Murray concludes that the level of poverty depends upon the performance of the economy rather than the rate of Government social spending. Increases in poverty in the past three decades were concentrated during the years in which the gross national product fell: 1954,1958, 1970, 1974 and 1975. During all other years, poverty declined.

Murray's research draws criticism from such liberal economists as Charles Schultze and Barry Bosworth of the Brookings Institution, who point out that the thesis ignores noncash aid from the Government, including food stamps and Medicaid. If such benefits are counted, they say, fewer Americans are poor than Murray's statistics indicate, and thus Government spending has been more beneficial than he acknowledges.

To Murray, however, food stamps are a feeble substitute for the jobs and cash income that are generated by a thriving economy. Says he: "The record clearly shows that measures to stimulate G.N.P. and create wealth at the top can do more good for people at the bottom than larger welfare payments. Conservatives just haven't done their homework and publicized the hard fact that trickle-down economics works."

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