A "report" from Republican staff of the Joint Economic Committee says that the path to job creation is cutting ... the very things that create jobs. This is like saying that cutting taxes increases revenue. We know how that worked out, and the job-consequences of budget cuts are going to be just as disastrous.
Sometimes you can cut through ideology by looking at what actually happens in the real world. Reagan cut taxes: huge deficits resulted. Clinton raised taxes, the deficits went away. Bush cut taxes, we went back to huge deficits. And you can see the same thing when you look at government spending and jobs. England and Greece are trying austerity, and their economies are sinking as a result. In 1937 the United States learned this lesson, succumbing to deficit cutting which choked off the recovery from the depression. On the other hand, the "stimulus" boosted the economy, held off a depression and created millions of jobs -- but not enough jobs to overcome the Bush years. Here is the chart -- note the obvious effect of the stimulus and of the end of the stimulus on the jobs picture:
Cut Cut Cut To Grow Grow Grow?
Republicans say that cut cut cut leads to grow grow grow. Their prescription is to cut taxes to "reduce uncertainty" which they say will result in job creation. Never mind that Clinton raised taxes and then the economy boomed. Then Bush cut taxes and then gave us the worst job-creation record in decades, even before the recession started! From The Hill, GOP study backs 'cut and grow' but says new jobs could take time,
House Republican leaders on Tuesday released a study that they said shows their "cut and grow" strategy will boost the economy.
The study argues that reducing uncertainty about future taxes will increase household spending and business investment, spurring growth and hiring.
House Majority Leader Eric Cantor (R-Va.) said the report shows "less government spending means more private sector jobs."
Just how will "certainty" about tax cuts create jobs?
The study argues that "non-Keynesian effects" result from government budget cuts. It says households expecting future taxes to pay for government spending will purchase more homes and durable consumer goods once uncertainty about future taxes is erased.
Right, knowing that taxes will be lower, people will go out an "purchase more homes." The people funding the Republicans will just go buy an 8th house with their tax savings. And maybe a Maybach or two. Plutonomy in action!
No Path To Jobs
Laying off teachers and firefighters is not the path to jobs. Cutting government cuts the very things that nurture the soil in which business can thrive. We need a modern infrastructure to compete in world markets, but they are cutting back on infrastructure spending. We need a well-educated population to grow the economy, but they are cutting back on education.
Cutting is clearly not the path to more people having better-paying jobs: Congress takes aim at jobs program,
Becky Thompson of Sioux Falls turns 72 next month, and she is quietly grateful that she has a job working in the computer lab at Experience Works, an agency that helps older workers find employment.. . . But now she and other older workers are worried that all this - the training, the support, the camaraderie - will disappear in the next round of budget cuts.
That's because more than 60 percent of Experience Works' budget comes from the Senior Community Service Employment Program, the only federally funded job training program for low-income seniors - and one of many programs targeted for reduction in the Republican spending bill that passed the House last month.
Economists, Analysts, Everyone Says Budget Cuts Will Kill Growth
Isaiah Poole summed it up in, More Than 300 Economists Repudiate Right-Wing "So Be It" Economics,
Today the Economic Policy Institute and the Center for American Progress jointly released a statement signed by nearly 320 economists from around the country, including Nobel Prize winners Kenneth Arrow and Eric Maskin, former Vice Chairman of the Board of Governors of the Federal Reserve System Alan Blinder, and former Chair of the President's Council of Economic Advisers and Director of the National Economic Council Laura Tyson.That comes a day after Mark Zandi of Moody's Analytics released a report that estimated the House budget cuts would result in a loss of 700,000 jobs by 2012. That finding evoked a "so what?" from House Majority Leader Eric Cantor that was remarkably in line with the dismissive "so be it" comment that House Speaker John Boehner made earlier in February in response to concerns that budget cuts would result in job losses.
If people had good jobs that paid well the deficit would be a heck of a lot lower than it is. People would be paying taxes instead of collecting unemployment. Cutting the things that create jobs is certainly not a path to creating jobs. England is learning this, our Congress is not.
No Job Creation Programs At All
Republicans have held the Congress for months but have not introduced a single job-creation program. In GOP Bait And Switch On Jobs, Anne Thompson lays it out,
,
The House Republicans have developed a track record of bait and switch when it comes to their approach to job creation. Last week, House Republican leadership released a PowerPoint by Congressman Paul Ryan that they are using to educate the Republican Caucus on their top policy priorities. Ryan laid out the "Jobs Deficit" as the number one challenge facing America in his very first slide. Yet he failed to focus on jobs until the very last slide, which reads: "Keep taxes low; spur job creation and growth." Not quite the robust plan we need to put millions of Americans back to work.
Is There At Least A Secret Plan?
It appears -- and this kook "study" confirms -- there is no real plan for jobs. But is there at least a secret plan in operation?
Secret plan? When they said that cutting taxes increases revenue they knew it wouldn't -- they had a hidden agenda. They knew better than to actually believe that cutting taxes would actually increase revenue to fund the government. They said so. The resulting deficits were the agenda. The plan was to "cut their allowance" and "starve the beast" to create a debt crisis, then demand that government cut back the things it does to protect and empower We, the People.
What is the agenda behind this job-destruction agenda? If there is a secret agenda behind destroying so many American jobs -- and the ability to create new jobs that pay well -- then what is it? They can't be crazy enough to destroy the economy just to increase their 2012 electoral odds, can they? On the other hand, no one has ever finished the sentence, "Republicans aren't crazy enough to ..." without being proven wrong.
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This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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http://www.forbes.com/2011/03/18/deficit-cut-danger-budget-jobs-leadership-managing-employment.html
Let's see: Regan revamped the nearly defunct military while Congress went on an $8T spending spree. Clinton didn't raise taxes so much as he didn't cut taxes for the middle class. Instead he was forced to cut spending by Newt Gingrich and accidentally benefited from the largest bull market in history. Bush W. and Congress went on a spending spree both for military spending and for things like port security during a huge recession and a lackluster recovery.
Today we have Obama spending more on the economy than anyone in history yet our economy isn't surging. Per your beliefs, all job creation stems from taxation and government spending. So why hasn't it worked? If all it takes is ever higher taxes, then why do we continue to receive a paycheck?
Annualized Growth Rates, Before and After TAX CUTS
Clinton
1993 to 1996 Real GDP = 3.44%
1993 to 1996 Real GDP per capita = 2.22%
1997 to 2000 Real GDP = 4.44%
1997 to 2000 Real GDP per capita = 3.26%
1993 to 2000 Real GDP = 4.01%
1993 to 2000 Real GDP per capita = 2.81%
Bush
2001 to 2004 Real GDP = 2.62%
2001 to 2004 Real GDP per capita = 1.68%
2005 to 2008 Real GDP = 1.75%
2005 to 2008 Real GDP per capita = 0.79%
2001 to 2008 Real GDP = 2.31%
2001 to 2008 Real GDP per capita = 1.36%
The revenue boost came when the gians tax was cut and those owning overvalued stocks sold out, resulting in larger than normal tax revenues.
We had record high taxes during the 1960's till the end of the 70's, during this time the stock market remained virtually unchanged for almost 20 years...when you couple this with inlfation the economy shrank...maximum tax rates then ranged from 90% to 70%.
In his first minute he says the inital income tax rate was 90%....sorry it was 1% of the first 20K, then 2% of the next 30K and then 3% of the next 25K, and then 4% for the next 25K up to 100K a year...in 1913....
After that it rises in 150K increments to a maximum of 7% for those earning over 500K. Making 500K in 1913....was virtually unheard of ....in 1916 it was raised to 15% for those earning over 2 Million a year....
heres a link to the chart....
http://www.taxfoundation.org/publications/show/151.html
Before going around quoting nuts like Hudson..do your own homework, the guy is a laughing stock.
Yes, argumentum ad absurdum, but the logic still follows
Reagan expanded the size of the government's work force by 60,000 during his presidency, not counting the size of the armed forces.
Reagan raised taxes on gasoline by 5 cents/gallon. According to Douglas Hinkley, who edited Reagan's diaries, "He knew that it was necessary at times. And so there's a false mythology out there about Reagan as this conservative president who came in and just cut taxes and trimmed federal spending in a dramatic way. It didn't happen that way. It's false."
Many Americans, myself included, liked Reagan as an individual, without always agreeing with him about specific policy issues. He was incredibly different from today's Republicans. He was not mean-spirited and hate-filled, two qualities which pretty much define today's conservatives. He could sit down amicably with the leader of "the evil empire", while today's Republicans refuse to even be civil with the President of the United States.
He also fails to mention the economic boom period that lasted from 1983 (real qtrly GDP rates grew significantly from Q3 1983 to Q4 1984 all >5%) to roughly 2000, inspite of Clinton's marginal rate increases in 1993, which slowed growth, vs. the net tax cut in 1997 which propelled growth. Also, Clinton benefited from a republican congress that dramatically cut spending.
The charge that FDR prolonged the depression in 1937 by cutting spending is equally misleading, as FDR pushed through a massive tax hike to balance the budget, causing the economy to tank.
And yet today, the irrational Keynesian dream of incentivizing investors by raising their tax rates continues (please explain the logical connection between increases in tax rates, and increases in economic growth!).
The author conveniently ignores Bush 1's tax increases (read my lips, no new taxes - indeed!) that subsequently pummeled the economy as it entered recession, with negative real GDP rates from Q1 to Q3 of 1991, handing Clinton (it's the economy stupid) the 1992 election.
Cutting public spending leaves capital in the private sector to use to create wealth. Public sector spending always destroys wealth. Even when government is "only" taking from Peter to pay Paul, it takes its cut -
2) business people do not like depressions as they can't make money during them
3) every dollar government spends comes out of the private sector. Government spending to relieve unemployment is the same as taking a bucket of water out of the deep end of a pool, dumping it in the shallow end, and then expecting the water level to rise. The amount spilled out of the bucket between ends of the pool is the government's take. The less money in the private sector, the less money to invest and create jobs.
Cracking a few history books as well couldn't hurt.
Corporation (private, public and non-profit) boards, manipulated by management cabal (I scratch your back, you scratch mine) have allocated profits to themselves at the expense of workers, consumers, sharholders, govt (tax). Now, as in failed banks and auto, they allocate bonuses without profits; using an ingenious rationale "to retain talent."
CEOs and presidents spin their BS with 'exceptionalism words' (like 'ahead of the curve') thanks to training courses in corporate leadership. They are assisted by self-appointed consultants and creative accounting practices; that show huge short-term gains / profits and delusional long-term goals.
Corporations should distribute part of their capital (2T) to shareholders. Rather capital is wasted in artificial growth using buy-outs, M&A, etc. Huge sums are spent on consultants, bankers, brokers, lawyers, while allocating management a larger pay, severance packages, golden parachutes and bonus.
Paying dividends to shareholders pumps money into the economy and increases share prices. Share prices of the top 100 companies have hardly moved over last 5 years. This in turn left workers' 401k, savings and pension plans stagnant; adding to workers' and unions' woes.
Progressive economists (Krugman, Reich and others) would better serve if they constantly encouraged corporations to pay dividends or implement stock buy-backs instead of insisting federal and state govts spend money they don't have.
What we've been doing lately is tantamount to setting our home furnishings on fire and then patting ourselves on the back for our "resourcefulness." That we consider it profitable to behave this way is absurd; that we continue to deny that we need to entirely restructure our economic paradigm is tragic.
Good practice, observing reality and responding to it based on what it tells us.
Taxes go down, jobs go up. Never a miscommunication.