It seems as if the Republicans in Congress have decided that
sabotaging economic recovery and employment growth is their best tactic for
electoral gains in the November elections. Indications of this plan have been
around since the Democratic victories in 2008. It seems that all doubt about
facilitating the economic downturn as a path to political power for Republicans
have been removed by recent legislative votes.
Economic recessions and depressions almost always result
from insufficient �effective� consumer demand for goods and services produced
domestically. In economic terms, wanting something is not �effective demand.�
For a want to become a demand for goods or services, it must accompany the
desire to buy with the ability to actually purchase. Money is required.
Jobs are not created by just having large pools of
investment money available. There must be the opportunity to invest in a
business that will have customers who can buy the goods and services before the
investment money flows into job creation activities. The Republican Right
economic theory that economic prosperity and employment �trickle-down from the
wealthy� has proven to be unsound by historical experience.
Tax cuts for the wealthy create huge investment money pools
but not jobs. Our nation has plenty of money sitting idle in corporate and
personal coffers. Corporations have almost a trillion dollars sitting
essentially idle in corporate accounts at this time.
Republicans are seeking to extend the tax cuts for the
wealthy by falsely stating that increases in taxes for the upper 2 percent of
income earners would hurt demand and prolong the economic downturn. Experience
and history prove otherwise.
Tax cuts at the highest marginal incomes brackets do
concentrate wealth and political power in the hands of the economic elite. The
resulting political power by the economic elite pushes government policy in
directions that dramatically cut the percentage of the nation�s wealth and
income held by the vast majority of Americans. This reduces the ability of most
Americans to buy goods and services. As a result, the economy unwinds because
customers do not have enough disposable income to keep the flow of goods and
services at a healthy economic level. The former middle class disposable income
now controlled by the economic elite funds speculation and unsound �bubbles� in
the economy instead of a healthy economy, because sound businesses now lack
Deregulation helps corporations charge excessive prices. Not
enforcing anti-monopoly laws permits price gouging. Not capping interest rates
concentrates wealth and reduces consumer spending. Outsourcing jobs to foreign
nations reduces incomes available to buy goods and services. Union-busting
keeps wages and benefits down, which undermines the purchasing power of
Privatizing government services costs consumers more in out-of-pocket
expenses once provided by government. This reduces disposable income for these
consumers. When employers reduce benefits and increase health insurance
co-pays, it increases the cost-of-living for workers. As a result, these
workers have less disposable income to spend on goods and services.
Middle class tax cuts do help the economy because they
increase the disposable income of those members of society who spend the vast
majority of their incomes and have little left over to save. The money changes
hands over and over again instead of sitting idle. This is the multiplier
effect in economics.
Extending unemployment benefits has a huge multiplier
effect. This is because unemployment benefits are so low that essentially all
of it gets spent on goods and services immediately.
Excessive concentration of wealth and income unwinds our
economy. All the Republican policies for the past 100 years have been designed
to concentrate wealth and income in the hands of the very few. Every time they
reach the economic concentration levels that currently exist, we have a serious
depression. This is a direct result of increasingly �Republicanized�
governmental policies over the previous 30 years.
The concentration of wealth and income is currently at
levels very similar to those just before the Great Depression in 1929. The only
reason our current situation has not quite deteriorated to that of the last
Great Depression is that the Republicans have not been completely successful in
undoing the reforms put in place as a result of the New Deal. Despite repeated
attacks by Republicans, our social safety net remains only damaged but not
destroyed. It is not from lack of trying by Republican politicians.
Republican attempts to gut Social Security continue.
Privatization keeps coming back to threaten the stability and viability of
Social Security. Cutting Social Security benefits instead of increasing revenue
seems to be the most effective avenue for the current attack. This approach is
being pushed by most Republicans and some corporatist Democrats. A wiser
economic approach would be to remove the income ceiling above which Social
Security tax is not paid.
Why should almost all workers be taxed at over 13 percent
while those making a million a year are paying closer to 1 percent and those
making 10 million dollars a year are taxed at around 1/10th of 1 percent on
their income? Social Security taxes are the most regressive taxes I know of in
our current system. The poor and middle classes pay much, much more in
percentage terms than the wealthy.
For decades, working people have been paying in far more
than the current needs for each respective year of Social Security payments.
These surpluses were �borrowed� by the federal government so they could fund
annual deficits created by wars and cutting taxes for the wealthiest Americans,
cutting taxes on corporations by huge margins and nearly eliminating taxes on
imports. It is only fair that corporations, wealthy Americans and foreign
exporters selling in the American market pay higher taxes to fund these
previous decades of �borrowing� since they reaped the benefits of that
Republicans only want to look at cutting benefits instead of
making Social Security taxes fairer by eliminating the income ceiling. These
Republicans do not want to pay back the Social Security tax money borrowed by
the federal government to fund tax cuts for the wealthy, fight two wars on
credit and allow the near elimination of taxes on imports.
Sound economics says government should run surpluses in good
economic times and deficits during economic downturns. Following this advice
helps reduce the severity of economic cycles. Under the Republican presidencies
of Reagan and both George Bushes, we did exactly the opposite and created both
the current downturn and the debt crisis. The vast majority of our total
national debt developed under these three conservative Republican presidents.
Currently, the Republicans in Congress have fought every
measure to increase employment and help small businesses. They have fought all
kinds of economic reforms that would curb corporate abuses of consumers,
shareholders or workers. They have fought all attempts to curb excessive
corporate political or economic power. They have been against any measures that
would increase demand for goods and services or levels of employment.
By their actions, it is hard not to conclude that the
Republicans want to worsen the economic downturn until it reaches Great
Depression levels. The economic downturn was created by �Republicanizing� our
economy and the Republicans want to blame the Democrats instead! With tons of
corporate money behind them and a corporate-dominated media helping them, it
might just work.
Stephen Crocket is the host of Democratic
Talk Radio and editor of Mid-Atlantic
Labor.com. Mail: 698 Old
Baltimore Pike, Newark, Delaware 19702. Email: firstname.lastname@example.org. Phone: 443-907-2367.