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Monday, July 12, 2010

GOP: Tax Cuts Forever

Debt is bad for the economy and tax cuts are good. We know this because a lot of very serious people in ties keep saying it on the teevee machine. Never mind that these two positions are somewhat contradictory -- tax cuts make it difficult to reduce debt -- that's just the way things are. If we give tax cuts to the "job creators," we're told they'll go all crazy with the job creating and everything will be perfect forever.

Not surprisingly, this isn't really very true. For one thing, the "job creators" aren't job creators at all, consumers are job creators since consumption spurs demand. The "job creators" are actually job providers. If the wealthy suddenly have a bunch more money, they aren't going to use it to provide more jobs -- they aren't in the job providing business. If they don't need workers, they won't hire workers, no matter how many new people they can afford to employ. It just doesn't work that way. No one will hire workers they don't need and the number of workers they need is dictated by demand -- i.e., consumers -- not by how much money they have to spend. The next time you hear someone talk about titans of industry as "the job creators," go ahead and laugh.

If you need some evidence that tax cuts for the wealthy don't create jobs, then I direct you to the fact that we just tried it and it didn't work. George W. Bush's entire economic policy could almost be boiled down to two words; "tax" and "cut." Yet job creation under Bush's two terms was anemic. As Bush was leaving office, the Wall Street Journal took a look at his record on the issue and found that he had "the worst track record for job creation since the government began keeping records." Conservatives like to pretend that Jimmy Carter couldn't do anything right, but with 10.5 million new jobs, Carter's one term was over three times as successful as Bush's two, when George created just 3 million even. Compared to his predecessor Bill Clinton, Bush's record looks even worse. Clinton created 23.1 million jobs -- nearly eight times as many jobs in the same amount of time. And keep in mind that the US population was smaller under both Carter and Clinton, so taken as a percentage, those numbers would be even higher. If Bush accomplished one positive thing during his eight years of failure, it was in proving conclusively that tax cuts don't do much to create jobs.





Worse, tax cuts increase deficits. It was the Bush administration's argument that tax cuts would allow us to "grow our way out" of the hole, but this obviously wasn't true. Bush also killed the argument that tax cuts pay for themselves. So, if the very serious people in ties are right that debt is bad, then tax cuts need to be paid for somehow. At least, that's what you'd assume until you talked to one:



WALLACE: We’re running out of time, so how are you going to pay $678 billion just on the tax cuts for people making more than $250,000 a year?

KYL: You should never raise taxes in order to cut taxes. Surely congress has the authority and it would be right, if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending. And that’s what republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.


That's Sen. Jon Kyl, who is, astonishingly enough, the ranking Republican on Senate Finance Committee's Subcommittee on Taxation, IRS Oversight, and Long-Term Growth. In other words, he's the Senate Republicans' top expert on taxation and its effect on economic growth. If you want proof that Republicans are absolutely committed to economic flateartherism, there ya go.

Maybe he believes this stuff and maybe he doesn't, but at the heart of the belief is the "Two Santa Clauses" theory. Democrats are traditionally the ones most likely to believe that government can offer a solution, so they're also more likely to create government programs that benefit the people. Republicans, on the other hand, are skeptical of government power and are the ones most likely to do away with government programs that benefit the people. So, in effect, Democrats are the givers and Republicans are the takers. Put another way, Democrats are Santa Claus and Republicans are the Grinch. The Grinch doesn't get elected. I'll let Thom Hartmann take it from here:

By 1974, [conservative journalist and strategist] Jude Wanniski had had enough. The Democrats got to play Santa Claus when they passed out Social Security and Unemployment checks -- both programs of the New Deal -- as well as when their "big government" projects like roads, bridges, and highways were built giving a healthy union paycheck to construction workers. They kept raising taxes on businesses and rich people to pay for things, which didn't seem to have much effect at all on working people (wages were steadily going up, in fact), and that made them seem like a party of Robin Hoods, taking from the rich to fund programs for the poor and the working class. Americans loved it. And every time Republicans railed against these programs, they lost elections.


So the solution was to say, "Hey, we're Santa Claus too! Here, have a tax cut!" Now they could talk openly about cutting Social Security or privatizing Medicare. They finally had something to give. Without tax cuts, there's no economic reason at all for a working person to vote for a Republican. This is why they've expanded their franchise to include wedge issues like abortion and demonizing gays and immigrants.

The point of all this is to show that when someone like Kyl goes on national television and says he wants to reduce the deficit, but want tax cuts that we shouldn't bother paying for, he's doing it because tax cuts are the only good reason to vote for him and his party. He's not advocating tax cuts because they're good for the economy -- we just ran an eight-year experiment proving they aren't -- he's doing it because that's the only product he has to sell. And so tax cuts are the solution to every problem. If the economy is good, then Americans need a tax cut to keep it good. If the economy is bad, then tax cuts are the solution. At no time and in no economic situation are tax cuts not the answer. Sen. Jon Kyl would advocate tax cuts as a cure for cancer, if he thought you'd believe it.

And at the heart of it all is the belief that Republicans should always be in power -- the only real belief left to the right. They don't care about abortion or gays or immigrants. If they did, they'd have done something about these things. They're interested in talking about them, not in doing anything about them. If the GOP "solves" abortion, for instance, then they've just killed a favorite bugaboo and single-issue voters stay home on election day. No, the only real thing, the only concrete thing they can offer anyone is tax cuts. So they'll offer tax cuts until the sun burns out.

If that's bad for the economy, who cares? The only thing that matters is that Republicans be in power.

-Wisco


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