Posted by Herm on August 25, 2010 at 10:20:50:
In Reply to: Just a few facts pt 1 posted by Herm on August 25, 2010 at 10:19:42:
Most economists agree that the best way to close the "demand deficit" that is at the root of our economic problems is to put money into the hands of people who will spend it - because they need to. Mark Zandi, Chief Economist for Moody's who was economic adviser to former Republican presidential candidate John McCain, argues that the most efficient way to create immediate growth in demand are investments in food stamps and unemployment benefits. In fact he estimates that every dollar of spending on unemployment benefits increases overall economic growth by $1.61. That's because people who get unemployment benefits need to spend the money, and the people who receive it from them spend it as well, and so on.
You don't create more demand by giving money to rich people who don't spend it - or for that matter, to corporations who sit on huge sums of cash. And that is one of our current economic problems. Corporate bank accounts are bulging with cash. And remember, corporate profits have actually gone up in the last quarter - mostly by cutting back the costs - and especially cutting jobs.
But that approach is not sustainable over the long run - even for the corporations. To have sustainable growth, the economy needs consumers with money to spend - with rising income, not just credit cards in their pockets. Long-term growth requires widely spread prosperity - not ever-increasing concentration of income at the top of the income pyramid. One of the leading causes of the current economic disaster was the transfer of income from average middle class people to the very rich. Over the eight years of Bush, even when the overall economy grew, the incomes of working Americans actually dropped in real terms by $2,197 per year since 2000.
Eliminating the Bush tax breaks for the very rich would save the taxpayers more than two thirds of a trillion dollars over the next decade. That money would make a substantial dent into the long-term budget deficit. And it could be used to make the desperately needed public sector investments we need to assure long term economic success - investments in education, infrastructure, health care and new sources of energy.
The politics. If Republicans want to campaign this fall defending tax breaks for the rich - bring 'em on.
This is an issue that should be used to divide the sheep and the goats. There should be no question that Democrats support continuing tax relief for everyday people and eliminating Bush's outrageous tax breaks for millionaires.
Everyday voters are furious at wealthy special interests - and especially Wall Street. A huge portion of the Bush tax breaks went to the "geniuses" on Wall Street whose recklessness sunk the economy but even now continue to rake in multi-million dollar bonuses.
Then there is the inheritance tax. In a brilliant stroke, Bush guru Karl Rove managed to get the media to refer to the inheritance tax as the "death tax." Democrats need rebrand the attempt to eliminate or substantially cut the inheritance tax for what it is: an attempt to hand billions of dollars in tax savings to the sons and daughters of multi-millionaires.
By definition the sons and daughters of multi-millionares - the Paris Hiltons of the world - are the only people who would benefit by eliminating or cutting the inheritance tax since it only affects muti-millionaires. America is sick of bonuses and perks for multi-millionaires. Nobody wants to use precious tax dollars to provide tax breaks to help Paris Hilton jet around the world and go to more exclusive parties.
Right and Wrong. The elimination of the Bush tax cuts for the rich is good economics and good politics. But this is also about right and wrong.
It is just plain wrong for our government cut back on food programs for children to give Paris Hilton more money to buy another pair of $1,300 Manolo Blahnik shoes.
It's just wrong for Republicans to deny unemployment compensation to victims of the recession because they say we can't afford them, and then turn around and extend billions of tax breaks to multi-millionaires.
It's just wrong for us to lay off teachers - and deny our children the educations they need to have fulfilling productive lives in order to allow John McCain to add to his collection of seven homes.
It's wrong to propose cutting Social Security payments for seniors who get an average of $13,000 a year in benefits in order to make it easier for one of the "masters of the universe" on Wall Street to fly around the world in his Gulfstream VI private jet.
In the end, good politics and good economics are not about lists of policies and programs - they are about right and wrong.
People are not "inputs" in the economic process - their welfare is the goal of economic policy - and the products and services they create represent the sum total of everything that the economy is about.
And in the end, more than anything else, politics is about whether people believe that candidates are on their side and stand up forcefully for the values they hold dear.
President Obama, House Speaker Nancy Pelosi, and Senate President Harry Reid have all called on Congress to do what's right. Time for every Member of Congress to stand up straight and eliminate the Bush tax cuts for the rich that did so much to harm to our economy, our people and our sense of justice.
end of part 2 of 2