"Our economy is trapped in a loop. Businesses will not hire more workers until people have more money to spend, but people won't have more money to spend until they are put back to work.
As politically unpopular as this idea has become, we need carefully targeted government spending to create jobs and help break the cycle.
Allowing tax breaks for the highest-income classes has not and will not solve this problem. Letting those tax breaks expire will not worsen the problem. Rather, it will provide the resources to allow the government to spend money without saddling future generations with significantly more debt.
Don't be confused by false connections and partial arguments. There are serious problems with our economy, but extending tax cuts for the wealthy doesn't belong" [as part of the solution].
Saturday, November 13, 2010
COMPROMISE ON THE FAT CAT TAX BOONDOGGLE WILL SPELL THE END OF THE OBAMA PRESIDENCY
The Fat Cat Tax Boondoggle hasn't created any jobs and it won't create any jobs. If the Fat Cat Tax Boondoggle worked then Fat Cats wouldn't be either hoarding money or shipping cash overseas to create work opportunities elsewhere. If the Fat Cat Tax Boondoggle was so bad, then stripping the Fat Cats of their Tax Boondoggle would force them to hire people, that would reduce their above the line income, and they could avoid the higher tax rate altogether by coming within the quarter million dollar save haven. That's right, everyone is supposed to get a tax break on the first quarter of a million dollars of taxable income. Everyone!
This isn't about creating jobs. This is about greed not wealth. Wealth doesn't trickle down. If you don't know what trickles down call your plumber, but I'll give you a hint. What trickes down is what's left of wealth after all of its value has been squeezed out by greed.
Seldom have I recently heard an encouraging word from Kentucky. That changed the other day with an op-ed by Nathan Sivers Boyce published in the Lexington Herald-Leader's on line edition called Kentucky.com. The op-ed is posted at: http://www.kentucky.com/2010/11/08/1515353/extending-tax-cuts-for-wealthy.html. Sivers is an Assistant Professor of Economics at Salem, Oregon's Willamette University. He earned his Ph.D. in Engineering Economics Systems from Stanford University. This fellow is no propaganda spewing slouch, he is one smart person.
Sivers first points out that hiring full time employees is down, that more persons are working part time, and more persons are spending their savings. Then he demonstrates that big businesses are borrowing cheap money to refinance their existing debt at lower interest rates, not to create more jobs. Banks, Sivers argues, are more risk averse today because they got their proverbial teat caught in the ringer during the economic meltdown. Businesses, Sivers says, are waiting for demand for their products to increase before hiring workers to make more products.
The Fat Cat Tax Boondoggle doesn't create jobs and Sivers agrees. The problematic loop between lenders lending, businesses not producing more, and jobs not being created is not worsened by eliminating the Fat Cat Tax Boondoggle. The additional tax revenue will be spent. Sivers argues for targeted spending designed to create jobs, stimulate demand, and break the problematic loop.
Not only will the Fat Cat Tax Boondoggle not work it will exacerbate the problem with the deficit. At the low end it will add $36 Billion to next year's deficit. That's $36 Billion we don't need to borrow. If the old adage about what to do when you are in a hole is correct, then we have to stop digging. If ending the Fat Cat Tax Boondoggle doesn't start to stop the digging, then I don't know beans.
If President Obama goes along with this ridiculous idea and makes this his first post-shellacking compromise, then the President can expect a vigorous primary challenge, one which I will support.
Obama caved in on the American Recovery and Reinvestment Act and got a stimulus too small to work.
Obama caved in on Health Care Reform and we got Mitt Romney's plan with no public option.
If Obama caves in on the Fat Cat Tax Boondoggle then the rich will be getting richer, the poor will be getting poorer, and that isn't change I believe in.