Republicans have tried to make the case that taxing wealthy people, and corporations that are making hundreds of billions of dollars in profits, would be bad for the American economy. They claim that corporations would not be able to hire workers because they would not have enough money left to do so.
However, their argument that lower taxes would stimulate job growth fails to acknowledge three facts: (1) Because of technology, there are fewer corporate job openings. (2) There are lower demands for good and services because of uncertain and unemployed consumers. And (3) there is no evidence in the recent past that lower taxes on either wealthy people or wealthy corporations produced more jobs.
If lower taxes for corporations and wealthy people meant more jobs, one might reasonably assume that job growth would be maximized by reducing corporate taxes and taxes on wealthy people to zero. And if that is the case, would not the functioning of the economy be maximized if nobody paid taxes? Certainly people would have more money to spend. That would create a greater demand for goods and services and, hence, a greater need for corporations to employ more workers to satisfy the demand, enabling businesses to more money. Having no taxes would be Utopia for the American economy. Wouldn't it?
However, Republicans have yet to show that lower corporate taxes produce more jobs and not just more profits for stock holders. Republicans claim with certainty that taxes cuts for businesses and wealthy individuals would increase the number of jobs, but have not explained why they would, nor have they explained occasions when they haven't. Have we, for example, gotten the job increases Republicans promised when the Bush tax cuts were extended? And what about the jobs promised through the other tax deals made during this year's Lam Duck session? Were all of these promised job increases supposed to occur next year?These should be able to explain at levels average Americans understand--if they can be.
Small businesses and corporations do not make profits by selling goods and services only to their workers. They might be able to do that if they produced and served all of the needs of consumers they hire, but they don't. An economy involves consumers who buy goods and services from different enterprises, which also receive goods and services from other enterprises, many of whom are their own consumers.
The economy is a complicated matrix of competing interactions, including political influences, distributions of wealth, and other self interests such as market manipulations which allow savvy investors to make money both as markets go up and as they come down. These interactions are not easily predictable by such simple-minded suggestions as lower taxes enhance job creation and higher taxes inhibit them. They only sound right because they are said so often and too often are not effectively refuted.
The American economy needs consumers to spend, but economists say consumers needs to save and invest more. But when consumers save more, they lose their jobs for not spending enough. Business profits decrease, and jobs seek cheaper labor overseas. A solution would be workers being paid enough so they can save, invest and spend. But how can that be made to happen? Republicans pretend to be certain about things about which even expert economists fail to agree.
One reason low and no taxes are bad ideas is that we need governmental services: an adequate military, police and firefighters, safe food and water, safe medicine, and many others such as the need to educate our children with the essential knowledge and skills necessary to maximize the development of their academic potentials. How much government is needed is an appropriate question. But does government only become too big only when it addresses the needs of others but too small when it fails to address our own?
Can wealthy people be trusted to identify and provide for the needs of the poor and powerless? The answer is debatable. Poor and middle class people are part of "We the people." They are the one's whose children (and often themselves) are defending this country. Certainly Christianity and the Constitution provide protections for the powerless and less powerful. Shouldn't they?
Republicans should be required to explain why they feel that allowing the country to default in the payments of its bills is better for the American economy and job production than raising taxes on the wealthy. If they can explain--and make me understand--I'll support default, too. But their brand of economics is hard to understand for the same reason that Einstein's Theory of Relativity if hard: Both operate outside the realm of common sense. The difference is that Relativity is understood by people who are well-versed in the field of physics. No person who is well-versed in the field of economics, whether conservative or liberal, understands the logic of Republicanomics.
Just as there is a point where taxes are too low to sustain an economic system, there is a point where taxes are too high: paying taxes at the 100% level, for example. Government, with the help of independent economic experts, must be the final arbiters of what constitutes the proper taxing levels, and maybe even what constitute optimum wealth distribution and opportunities for employment within a viable society.
But when Wall Street, Congress and the Supreme Court form a politico-economic team, democracy is at a risk level that Americans would not permit were the president not Barack Obama. Time will tell whether the present team uses or abuses this once in a lifetime opportunity that Obama's unique leadership qualities provide.
Ronald
Email: rcspoon@earthlink.net
Blog: ronaldcspooner.blogspot.com
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