October 4, 2010
To: The Editor
Everybody knows that needed progress on the economy has not been achieved primarily because businesses are not hiring, banks are not lending and too many consumers are choosing to save more and spend less. Consumers are trying to offset their declining incomes by excessively using credit cards and home-equity loans. If businesses hire consumers and if they stay hired and are paid equitably with higher salaried employees, these consumers will buy. And if businesses promise to keep workers hired so long as profits increase, then workers will gradually consume more goods and services if they stay hired and paid equitably with higher salaried employees. even as they pay off debt and save.
Also, if people have secure jobs and equitable incomes, banks will be more willing to lend to such people. If economic conditions warrant them companies would be expected to reduce the number of workers--or reduce the hours worked--and banks would be expected to reduce the number of loans they will approve in light of such declining incomes. Renters would have an incentives to save so they can make the kinds of down payments that make them better risks in both good and tough times.
Some degree of certainly about the job market is necessary, but that certainty should have little to do with extending tax cuts for the wealthy. When the workforce increases, increased purchasing power increases profits that offset the costs of doing business. Wealthy investors benefits from rising stock markets and business profits. Businesses and the wealthy have known for ten years that the tax cuts would expire in January. Where was the uncertainty? If our economy system has degenerated to the point where uncertainty renders that system no longer able to tolerate and eventually overcome reasonable risk, then its time to find out why.
Republicans say all the economy needs to reestablish that certainty is an extension of tax cuts for the wealthy for at least two more years. But if those tax cuts can do that much to help the economy during the next two years, why have the cuts not achieved that during the past two years, or for that matter, the past eight years? What would wealthy do with their money the next two years that would generate jobs? And if low taxes for the wealthy is so good for middle-class American workers, why not reduce their taxes for the wealthy to zero?
When Barack Obama campaigned about retaining the tax cuts for people earning less than $250 thousand per year, but allowing them to expire for those earning more, Republicans didn't complain. Obama continued to express that intention after being elected president. Republicans still didn't complain. Republicans didn't argue against allowing the tax breaks for the wealthy to expire, even as they criticized all of the President's other attempts to end the Great Recession and establish for the long term a stable, energy independent economy.
If Republican really believed that Obama's plans would not revive the economy, and that extending the tax cuts for the wealthy was necessary for that recovery, why were they not suggesting that tax-cut remedy much sooner?
The fact is that, if Republicans had requested as extenuation of tax cuts for the wealthy too soon, the President would have required Republicans to give Democrats something in return, such as support for a larger economic stimulus package, health-care reform with a public option, and more rigorous legislations on climate change, financial regulations, comprehensive immigration, education reform initiatives, etc. And the President might have demanded passage of his legislative agenda before the November elections.
There had been indications that some kind of tax-cut compromise might be worked out between Democrats and Republicans before the November elections. But significant political damage had already been inflicted on Democrats by Republicans, who criticized and refused to support Obama's initiatives despite most having had bipartisan input. When they were not watering down Obama's plans, they were blocking them. Now they want to compromise.
One form of compromise would be to make the extension of the Bush tax cuts for the wealthy contingent (1) on Democrats retaining control of the House and a filibuster proof majority in the Senate, (2) on businesses showing good faith by increasing hiring prior to the November elections, (3) on banks promising to lend if businesses hire and (4) on extensions being limited to three-months intervals, consistent with some prior established bench marks showing more banks lending, more businesses hiring, and more people working more hours with all workers receiving equitable pay rates. Meeting benchmarks would merit other three- months extension of the tax cuts.
Democrats' decision to delay votes on the Bush tax cuts for those making less than $250 thousand per year until after the November elections should have the benefit of getting the base of the Democratic party out to vote. The base will realize that if Democrats don't win in November with sufficient majority in the Senate, then Democrats, Republicans, nor Independents earning less than $250 thousand a year all will have their taxes go up in January. And if tax cuts for the wealthy are as vital to economic recovery as Republican claim, then all Republican--even wealthy Republicans--should prove it by supporting and voting for Democrats,
At hand is another chance for Democrats and Republicans to work together, this time to establish time frames and benchmarks with banks and businesses that can enhance their confidence in the other, and to allow each to show that such reassurances can actually increase jobs and lending, and hasten economic recovery.
Middle-class Republicans and Independents who had thoughts of voting for Republicans, and middle-class Democrats who had plans to not vote all but just sit back and continue enjoying their tax-cut extensions should consider changing their election-day plans.
Ronald
No comments:
Post a Comment