You said, "I don't think that anyone argues that rich people don't spend money in the local economy," so we agree that trickle down happens. The question I think you're raising is who can best decide how to dispose of the money of the rich, the rich themselves or the government through tax and spend programs.
If we are focusing purely on economic growth, it doesn't matter how the government spends it, as long as they do spend it. In another thread a while back someone said that it would be sound economic policy for the government to take tax revenue and just dump it out of an airplane onto the population below.
The idea, if I understand it correctly, is that money accumulates at the top and then stays there. The wealthy are wealthy because they keep their money, not because they spend all of their money. For example, we could compare Bill Gates who makes 1 million a year and 20 people who make 50k a year. At the end of the year, who is probably going to have more money in the bank? Bill Gates or all of the money that those 20 people have left? Probably Bill Gates. From the statistics I have seen, more and more money is being concentrated at the top. Whatever down trickle there is it is not as fast as the rush of money upwards.
Or to put it another way, if a small business pulls in a large profit are they going to hire someone even if demand does not dictate it? No. That would be bad business. You don't purposefully increase your labor costs for the same demand. The idea that companies will just automatically start hiring people because they have more money after taxes doesn't make sense, at least to an economic tyro like myself.
Edited by Taq, : No reason given.