Follow on Twitter“Job Creators” & “Investors”: The Disconnect Between Republican Policies & Economic Stimulus
The Republican Party’s latest economic policy proposals are nothing short of pure unadulterated neo-liberalism — the radical merciless ideology foisted upon the world by economist Milton Freedman. Recent events throughout the country have been playing out like a chapter straight out of Naomi Klein’s hugely important bestseller, The Shock Doctrine.
First the tax cuts for the wealthiest 2%, then the calls for deregulation, union-busting, and privatization; followed by — surprise! — severe austerity measures. These policies, if fully enacted, will accomplish little more than transferring trillions of dollars to the wealthiest individuals and corporations, and in doing so crushing the lives of average Americans.
Any ‘trickle down’ effects yielded from extending Bush tax cuts for the wealthy — which added nearly a trillion dollars to our national debt — would have been negligible at best. But they will literally be jack-hammered to oblivion if followed by the Republican-proposed Draconian measures.
Their calls for deep spending cuts in the public sector (both at Federal and State levels) will translate into whittling away all safety nets for America’s elderly and most vulnerable, while issuing pink slips for teachers, cops, firemen, postal employees, librarians, etc.
Instead of paying teachers to educate our children, and cops to fight crime, taxpayers will instead be writing their unemployment checks. That is, until Republicans can finally figure out a way to terminate unemployment insurance as well. Meanwhile, our national infrastructure continues to crumble beneath our feet.
And their proposals do absolutely nothing to stimulate the economy. Unless you believe that sacking public workers will magically reduce unemployment, and somehow stimulate consumer demand (the driver for economic expansion).
Rather than subjecting lower and middle-income Americans to severe austerity measures, our economy would be best served by doing the very opposite. Policies that help to improve the financial bottom-line for struggling Americans guarantees an economic spark, if only because these Americans have little choice, but to spend every last dollar they make on necessities (i.e. they put ALL of it right back into the economy).
Unlike lower and middle-income Americans, the wealthy have the luxury to hoard each and every penny netted from their tax cuts. And few of them will be enticed to invest in a recessionary environment where risks are abnormally high.
How many millionaires are out stimulating the economy right now by purchasing third or fourth homes here in the U.S., when economists are now forecasting a double dip in home prices? How many are considering starting up new businesses, dependent upon consumer spending, when consumer bankruptcies just hit a 5-year high?
For wealthy individuals who do choose to invest, many will wisely target foreign companies, foreign mutual funds, foreign real estate, and multinationals who do business where economies are still growing. In other words, the ‘trickle-down’ part of Republican economic policies will actually occur in China, India, and elsewhere.
The supply-side ideology is based upon a faulty and outdated model that conveniently ignores competition for investment dollars overseas, and is largely dependent upon exaggerating the discretionary spending behavior of the wealthy.
As for corporate tax laws, two-thirds of all U.S. corporations dodged paying a single penny in taxes between 1998 and 2005. And how did these corporations repay the favor? By shifting their labor investments overseas, to countries where the cost of labor is extremely low, and where few if any environmental protection laws exist.
Cisco just released their international salary report showing that the average annual salary of their technical professionals in India ($14,508) is just 1/4 of what their American counterparts make ($62,993). And yet their Indian employees work 56 hours per week, on average — that’s 25% more hours than their American counterparts (45 hrs).
To rub some serious salt into the wounds, the Wall Street Journal recently reported that U.S. corporations (not even including Wall Street Banks) were sitting on close to $2 trillion in cash — the highest corporate cash reserves in over 50 years! — and still refuse to hire in the United States:
Rather than pouring their money into building plants or hiring workers, nonfinancial companies in the U.S. were sitting on $1.93 trillion in cash and other liquid assets at the end of September, up from $1.8 trillion at the end of June, the Federal Reserve said Thursday. Cash accounted for 7.4% of the companies’ total assets—the largest share since 1959.
The cash buildup shows the deep caution many companies feel about investing in expansion while the economic recovery remains painfully slow and high unemployment and battered household finances continue to limit consumers’ ability to spend.
Yet, Republicans contend we must deregulate our industries further to help corporations cut their costs — at the expense of the environment and consumer protections — and desist from demanding they pay their fair share in taxes — all so that they will have the money they need to “create jobs”.
NO informed American — outside of wealthy individuals and corporate profiteers — could possibly support the Republican Party’s economic policies.
Which begs the question: how does a political party, which serves only the interests of its wealthiest contributors, continue to successfully legislate policies that work against the very interests of the American people?
Since their ideology is unsupported by the facts, they hire “word doctors” who coin misleading phrases to be repeated over and over again. Phrases that are both simplistic and somehow ‘intuitive’ to a non-discerning public.
This has remained their tried and true method for selling destructive economic policies to the American people. Take Frank Luntz, probably the most famous of all conservative “word doctors”. He coined the phrase “government takeover of healthcare”, which became the talking point for the Republican Party during the health care reform debate. It helped spur the Tea Party into storming Democratic town hall meetings during that period — terrified that “Marxists” were coming after their Medicare.
Their current economic play-script is inundated with two phrases: “job creators” and “investors” — to be used in place of “corporations” and “wealthy individuals”. These phrases — more or less the equivalents of “fair and balanced” being used to describe Fox News ‘reporting’ — are now the cornerstone of the entire Republican economic policy narrative.
Take Rep. Darrell Issa (R-CA), the Chairman of the House Committee on Oversight and Government Reform. Virtually every sentence that comes out of his mouth includes the phrase “job creators”. Check out his Twitter account and count the tweets where he reiterates the phrase “job creators”. In fact, he created a website called AmericanJobCreators.com where he asks “job creators” to tell him what kinds of consumer protection regulations he should dismantle on their behalf.
The guy is a corporate lobbyist’s wet dream.
And our obsequious President — instead of showing leadership on this issue and dismantling this fictitious narrative — first capitulated on extending Bush tax cuts for the wealthiest 2%, then capitulated to Issa back in January on the argument that deregulation helps create jobs. In doing so, he legitimized what he knows to be untrue, making it next to impossible for his party to now push for MORE regulation and RAISE taxes on wealthy corporations and individuals without immediately being branded as hostile to “job creators”.
The Conservative Party in Canada, having noticed the success their Republican counterparts across the border were having with this “job creators” phrase, quickly employed it as their own anti-tax slogan.
But make no mistake about it. Our current economic plight was created by:
- Bush’s deregulatory policies leading to a financial meltdown, and the ensuing AIG and TARP bailouts.
- Bush’s misleading us into unnecessary & expensive wars.
- Bush’s granting the wealthiest 2% nearly $3 trillion in tax cuts over the last decade.
- Two-thirds of all corporations having evaded paying a single penny in taxes from their trillions in profits over the last decade.
- Corporations having moved our higher paying jobs overseas to low-cost labor countries.
It is not due to a lack of investing capital by cash-hoarding, tax-evading corporations and the wealthiest 2% (the so called “job creators”) — which remains the Republican rationale for cutting taxes and deregulation.
Yet, somehow the lives of the rich and powerful keep getting easier — more comfortable — while the burden for the reckless calamity they unleashed on this country slowly, but surely — thanks to a combination of an emboldened right-wing and a compliant, timid President — gets shifted onto the backs of the American people in the form of harsh austerity measures.
Milton Friedman’s legacy continues to haunt us.
NY Times’ Paul Krugman: Supply Side Economics Creates Deficits
Nobel Prize winning economist, Paul Krugman, attempts to educate a largely ignorant Republican/Tea Party constituency on the documented failures of Supply Side economics. He focuses on the Carter and Reagan years (since Republican politicians tend to cite Reaganomics as their model for economic success), and he demonstrates that revenues actually dropped decisively with Reagan’s tax cuts:
… the revenue track under Reagan looks a lot like the track under Bush: a drop in revenues, then a resumption of growth, but no return to the previous trend:
Matt Yglesias contends that “the conservative movement in America doesn’t [actually] care about the budget deficit,” and the proof is in the policies for which they advocate:
1) There have been two presidents who were members of the modern conservative movement, Ronald Reagan and George W Bush, and they both presided over massive increases in both present and projected deficits.
2) The major deficit reduction packages of the modern era, in 1990 and 1993, were both uniformly opposed by the conservative movement.
3) When the deficit was temporarily eliminated in the late-1990s, the mainstream conservative view was that this showed that the deficit was too low and needed to be increased via large tax cuts.
4) Senator Mitch McConnell says it’s a uniform view in his caucus that tax cuts needn’t be offset by other changes in spending.
5) The deficit reduction commission is having trouble because they think conservative politicians won’t vote for any form of tax increase.
In sum, there are zero historical examples of conservatives mobilizing to make the deficit smaller.
Senate Republican Leader Mitch McConnell recently made the following assertion about George W. Bush’s tax cuts for the wealthy:
“There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.”
Here Ezra Klein of the Washington Post resoundingly slams McConnell’s fictitious allegations:
There’s an ontological question here about what, exactly, McConnell considers to be “evidence.” But how about the Congressional Budget Office’s estimations? “The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005. In the absence of such legislation, the nation would have a surplus this year. Tax cuts account for almost half — 48 percent — of this $539 billion in increased costs.” How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018. How about George W. Bush’s CEA chair, Greg Mankiw, who used the term “charlatans and cranks” for people who believed that “broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue.” He continued: “I did not find such a claim credible, based on the available evidence. I never have, and I still don’t.”
Of course, the Right rarely if ever lets factual evidence get in the way of their deep-seated, largely debunked, ideologies.
Still, it is good to see the Left finally doing a better job of educating the public about the real track record between the differing economic policies — something necessary if we are serious about promoting positive change in this country.
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