One of the main arguments for continuing the Bush tax cuts for the wealthy is the belief that the rich will use that money to create more jobs. It’s one of the principal myths handed down from the Reagan era’s faith in supply-side economics: Make life as easy as possible for the rich, and they will reward us all with jobs, money, flowers and ponies. Call it trickle-down economics, Reaganomics, or, as George H.W. Bush called it when he ran against Reagan for the GOP presidential nomination, “voodoo economics.” Whatever you call it — personally, I like the quaint term “bullshit” — it’s a myth, and it’s one that most Americans don’t buy anymore. That’s the message from poll after poll showing that a majority of Americans oppose extending tax cuts for the wealthy. As a friend argued last week, “They (the wealthy) have had these tax cuts nearly 10 years, so where are all these jobs they’re supposed to create?” Opinions differ on the wealthy, taxes and jobs, but luckily, there are hard numbers, facts and figures, to consult. Here are some to consider:
• A study by the Center on Budget and Policy Priorities of the numbers from the Congressional Budget Office — a non-partisan group generally recognized as the most reliable compiler of federal budget info — reveals interesting facts that the GOP doesn’t want to know about. The study shows that the vast majority of the federal deficit comes from three things: Iraq, Afghanistan and the Bush tax cuts — not the Wall St. bailouts (which conservatives tend to forget happened on Bush’s watch, in any case), not stimulus spending, and certainly not Social Security. Business Insider has a great, easy-to-read chart that illustrates the results of the study. As Reagan used to say, “You’re entitled to your own opinion, but you’re not entitled to your own facts” — a truism Reagan could have done a better job of living by, for sure, but a truism nonetheless.
• Research by Moody’s Analytics Inc. shows that the rich don’t spend their tax cuts, nor do they create jobs with them; they save the money. Now, saving money is good, but not when you’re expecting the money to be used for job creation. Putting more money into the hands of the middle and lower class is what will create more spending and more demand.
Today, there’s news that Obama will probably compromise by letting the tax cuts be extended for everyone, for two or three years, in exchange for GOP support of extending unemployment benefits for … who knows how long. Sigh. Another Obama “compromise,” which is White-Housespeak for caving in on one of your central campaign promises. I could go on about the “compromise,” but I’ll let economist/writer Paul Krugman’s commentary in today’s New York Times state the case:
Last but not least: if Democrats give in to the blackmailers now, they’ll just face more demands in the future. As long as Republicans believe that Mr. Obama will do anything to avoid short-term pain, they’ll have every incentive to keep taking hostages. If the president will endanger America’s fiscal future to avoid a tax increase, what will he give to avoid a government shutdown?
This article appears in Nov 30 – Dec 6, 2010.
Whose money is it? We’re talking about income taxes, not taxes on property or other vehicles of theft. Mr. Grooms, is your income yours or not?
Second, in the real world of real money before our fiat fiasco since the creation of the FED, escalating in the last couple of decadeds, SAVINGS were necessary for interest rates to come down, and banks to lend toward future production. SAVINGS are capital, which is somewhat integral to CAPITALISM. I know this sounds crazy to you aggregate demand folks, but savings are NOT bad for the economy, but are critical to the actual creation of wealth.
It doesn’t matter to me what the rich do or do not spend their money on. It’s THEIR money. Why do libs hate success so much?
@SLP. Actually its not their money. It’s the American Economy’s money. Over the years the percentage of money the CEO’s & top money makers take as salary out of each dollar has risen dramatically. They’ve used their money to influence legislation as well. Our nation’s founders saw the need for an 80% tax bracket. Greed is not the same thing as fairly earned wages. Incomes for the rich have risen to the highest they have been in our nations history while our economy has shrunk. In the 1930’s a CEO would make on average 4 to 5 times as much as the average employee at their company. Today that has changed to over 100 times as much as the average employee. I promise you they are not gods, they do not work 100 times harder than the average employee, they are simply greedy. Higher tax brackets will ensure they do not reward themselves with higher incomes, but rather choose lower more sustainable incomes allowing for the additional revenue from the company to be reinvested in the american economy.
PAR, what the hell are you talking about? Not their money? This is not yet a commune. It is income. Founders what? The income tax is less than 10 years old.
*less than 100 years old.
Your right BV shouldn’t have included that scentence. I re-researched the statistic I was thinking about and am re-evaluating my arguement. The income tax levels I was thinking about didn’t come about untill the 1930’s. The base arguement remains solid it seems. While the top 2% recieve 80% of the income in america they pay less than 80% of our governments tax revenue, a fact that republicans ignore. The bottom 47% or whatever it is that don’t pay any taxes don’t need to pay any taxes because the amount of income they recieve from the american economy is neglagable.