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. Its one of the principal myths handed down from the Reagan eras 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 its a myth, and its one that most Americans dont buy anymore. Thats 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 theyre 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 doesnt 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 Bushs 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, Youre entitled to your own opinion, but youre 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 Moodys Analytics Inc. shows that the rich dont spend their tax cuts, nor do they create jobs with them; they save the money. Now, saving money is good, but not when youre 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, theres 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 Ill let economist/writer Paul Krugmans commentary in todays New York Times state the case:
Last but not least: if Democrats give in to the blackmailers now, theyll just face more demands in the future. As long as Republicans believe that Mr. Obama will do anything to avoid short-term pain, theyll have every incentive to keep taking hostages. If the president will endanger Americas fiscal future to avoid a tax increase, what will he give to avoid a government shutdown?