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"Trickle down" was meant to be a derogatory term for President Reagan's unwavering belief in capitalism.
Actually what happens though, if you look at a self-made wealthy person, say Steve Jobs, is that wealth doesn't trickle down from Steve Jobs, rather it bubbled up to Steve Jobs for his innovative thinking and can-do attitude. In other words, wealth bubbled up to Steve Jobs because of his practice of capitalism!
First let me observe that there is no such thing as trickle down economics. In the private economy, free exchange is the basis for wealth creation. If you want to increase the rate at which wealth is being created, you must do all you can to facilitate as much free exchange (either of goods or of workers) as possible.
The only role that government has is to protect the citizen from predation (whether from foreign or domestic sources) and to adjudicate disputes. Beyond that, government starts to act as a parasite on the host private economy.
There is only so much blood sucking that the host can withstand before its ability to function becomes debilitated. Private citizens also change their behavior, even if only subconsciously, to reduce the amount that parasitical government can extract. When the level of taxation starts to be greater than about 20%, people stop producing new marginal income. This was observed by economist Richard Rahn, and now can be vividly seen in what is now called the Rahn Curve.
see:
http://hotair.com/archives/2010/06/30/video-the-rahn-curve-and-the-albatross-of-too-much-government/
But as to the idea that we could have “trickle down” economics from government, here is how it works:
The median household income in the US in 2010 was $52,026 according the the Census Bureau. According to an article in USA Today [1], “Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis.”
The math is simple: for every $1 million that government wastes, it must consume or borrow the entire annual income of 20 households. For every bureaucrat we hire to shuffle papers, or to decide the exact wording of regulations, we will consume the entire income of two workers in the private sector.
So, even in the concept of “trickle down”, with government everything is inverted. We must destroy far more than one private sector job in order to fund the one job in government. The bigger that government gets, the greater the destruction. Given that bureaucrats cannot create wealth, what exactly do they create? Debt and inefficiency.
Happily, a lot of people are waking up to this fact. We need government to ensure basic rights and fairness. But beyond that, government consumes and destroys both liberty and prosperity.
[1] USA TODAY, April 13, 2010, Federal workers earning double their private counterparts. Link: http://www.usatoday.com/money/economy/income/2010-08-10-1Afedpay10_ST_N.htm#