Archive for the ‘Conservatives’ category

The Reagan that Never Was

September 22nd, 2014

Republicans worship the legacy of Ronald Reagan. His name is mentioned frequently as the ideal conservative (sometimes by Democrats). Anti-tax advocate, Grover Norquist, has successfully promoted the Reagan legacy as something worthy of numerous big-city streets being named after the former president; and he has pushed for coins and Mount Rushmore engravings on top of this. Nevermind the recessions, illegal negotiating for arms with Iran (using this money to fund contra rebels in Nicaragua), illegal intervention in soverign Central American states, using “social issues” to polarize and divide the country, and his severe mishandling of the economy.

Reagan pledged during his 1980 campaign for president to balance the federal budget, but never submitted a balanced budget in his eight years in office. In 1981, the deficit was $79 billion and, in 1986, at the peak of his deficit spending, it stood at $221 billion. The federal debt was $994 billion when he took office in 1981 and grew to $2.9 trillion when his second term ended in 1989. [source] Reagan also added more trade barriers than any other president since Hoover in 1930. US imports that were subject to some form of trade restraint increased from 12% in 1980 to 23% in 1988. [Source] (source: http://reagan.procon.org)

The truth is that Reagan was not what conservatives imagine he was. He was an actor, a puppet, and a tool for powerful interests.

 

Incomes under Reagan from MotherJones Magazine 10.14.2011

 

 

George Carlin:
“This is the Ronald Reagan administrant we are talking about. These are the law and order people. These are the people who are against street crime. They want to put the street criminals in jail to make life safer for the business criminals. They’re against street crime, providing that street isn’t Wall Street.”

 

http://www.amazon.com/gp/mpd/permalink/m21XM8ZOMICNOS

Books on the (real) Reagan legacy:

http://www.amazon.com/Reaganomics-Rhetoric-Reality-Frank-Ackerman/dp/0896081419/ref=pd_rhf_shvl_2

http://www.amazon.com/Man-Who-Sold-World-Betrayal/dp/B00394DOF2/ref=pd_sim_b_2

http://www.amazon.com/Tear-Down-This-Myth-Distorted/dp/B002PJ4GEK/ref=pd_sim_b_1

http://www.thenation.com/article/158678/ronald-reagan-superstar

http://motherjones.com/politics/2011/02/reagan-anniversary-david-stockman

See also:

  • What’s the Matter with Kansas? Thomas Frank
  • The Wrecking Crew, Thomas Frank

Understanding the Debt Ceiling

November 17th, 2013

Last night the Republican Senate very irresponsibly refused to pass an increase in the debt ceiling which is necessary if we ‘re going to borrow and keep the government running…I sounded off and told them I’d veto every damn thing they sent down unless they gave us a clean debt ceiling bill. That ended the meeting.” —Ronald Reagan (Nov. 1st, 1983; The Reagan Diaries, p. 192)
debt ceiling negotiationsRonald Reagan, the patron saint of the Republican Party, once said of the debt ceiling: “The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility – two things that set us apart from much of the world.” (source)

In 1987, he said, “The choice is for the United States to default on its debts for the first time … or to accept a bill that has been cluttered up. This is just another example of Congress trying to force my hand.” His treasury secretary said, “To play around with the debt limit this way means really that you’re playing with dynamite…There is a gun at [the president’s] head, if you will.” (source)

This government-cripling tactic accelerated under the Gingrich-led House in the 1990s, and became far more radical starting in 2010 when Tea Party Republicans took the House back from Democrats. The debt ceiling is now being used as a tool to hold the economy hostage in exchange for minority rule of the government. This approach has created a Federal Government in unprecedented gridlock. But this approach to the debt ceiling is a recent trend, and should not be used as a way to rule from a minority position. In fact, the debt ceiling is a highly misunderstood procedure. If understood correctly, the American people would never tolerate their Republican representatives in the House to use it in this way.

Sean Wilentz’s article in Rolling Stone gives a useful history of the debt ceiling:

The Republicans either believe, or would have you believe, that the debt ceiling limits the size of the national debt and thus limits government spending. Raising it, Rep. Walter Jones of North Carolina has remarked, is just another way of saying, “Well, you’ve got a little bit more credit – keep spending.” The words “debt ceiling” or “debt limit” can certainly sound as if that’s what’s involved. But these assertions are false.

The debt ceiling dates back to America’s entry into World War I. Contrary to a widespread misimpression, it came into existence not as a constraint on congressional spending, but in order to make government fiscal procedures less cumbersome amid the pressures of mobilizing for war. It had – and has – nothing to do with authorizing spending; Congress does that as part of the normal legislative process. Nor does the ceiling have anything to do with annual deficit levels, which explains why even today, with the deficit shrinking, Congress still needs to raise the debt ceiling. Rather, the ceiling is an artificial cap, determined by Congress, on the amount that the government can borrow to cover obligations already made.

Through the era of World War II, the limit looked to some like it might actually act as a useful check on government borrowing. But over the decades that followed, as the size of the nation’s economy – and with it the national debt – grew exponentially, the debt limit became a vestige of a bygone era. By 1974, it was truly obsolete; that year Congress passed a new law compelling it to approve a budget and thus set borrowing levels annually.

The implication by the Republicans that raising the ceiling will enable the government to spend the nation into bankruptcy all the faster is utterly phony, a pseudo-crisis rooted in no real problem, a fraud manufactured and then stage-managed by the GOP to frighten the public and score political points. Indeed, it is the Republican radicals, and not the Democrats, who are threatening to throw the government into immediate bankruptcy unless they get their way over other issues, above all defunding (which means, basically, repealing) Obamacare.

You don’t have to be Paul Krugman to understand all of this. Since the 1950s, economists have called the debt ceiling an experiment that failed long ago. Addressing Congress in 2003 as the chairman of the Federal Reserve Board, the Ayn Rand acolyte Alan Greenspan disparaged the debt ceiling as “either redundant or inconsistent with the paths of revenues and outlays you specify when you legislate a budget.” Eight years later, as the House Republicans threatened, Greenspan called the debt-limit problem “unnecessary” and said flat-out that the debt ceiling “serves no useful purpose.”

For decades, though, Congress went along with raising the debt limit as a mere formality. Every year from 1941 to 1945, Congress raised the debt ceiling to accommodate the accumulating costs of World War II. Since 1960, Congress has raised the ceiling 78 times, including 18 times under Ronald Reagan, six times under Bill Clinton, seven times under George W. Bush and seven times under Barack Obama. Occasionally members of both parties have voted against raising the ceiling as a symbolic gesture to focus attention on various issues. Indeed, in 2006, Sen. Barack Obama joined every other Democrat in the Senate in voting against raising the debt ceiling, a bit of political posturing that was part of the normal cut-and-thrust on Capitol Hill.

If the debt limit is not raised when necessary, the federal government will immediately default on some of its obligations. That, in turn, would disrupt its ability to pay its creditors, from bondholders and defense contractors to recipients of Social Security and Medicare. A default that lasted for just a single day – and perhaps even the threat of such a default – would have dire effects, causing every credit agency to downgrade the nation’s credit rating while presenting to the rest of the world a bizarre spectacle: the richest and most powerful nation on Earth willfully damaging both its economy and its international credibility. A default that lasted more than a few days would risk triggering a catastrophic financial crisis. Until now, no member of Congress, from either party, has seriously entertained wreaking such havoc. (Source: http://www.rollingstone.com/politics/news/republican-extremism-and-the-lessons-of-history-20131010page=2#ixzz2kvf0h61I)

Americans need to put pressure on their elected representatives to stop using the debt ceiling as a way to cripple government. Instead, public servants should propose ideas that appeal to the interests of the American people, and in turn, they will win elections.

Why it is not “both parties” ruining Washington

March 16th, 2013

I often hear the argument that the current gridlock in Washington is a result of “both sides.” Political discussions with my RepublicanRepublican Congressional Leadership friends usually start out with their position that, “my side is right the other side is wrong.” All too often their arguments are word-for-word talking point straight from Fox News, like “Obama has failed to lead.” When I point out that their side (the Republicans) have engaged in unprecedented obstruction and political gamesmanship, they usually end up throwing up their hands and saying, “Well both side are a joke, and they are both guilty.” That answer is a cop-out.

I agree that both sides have some responsibility for our current problems. However, the more I learn about the details and history of how the two parties work together, the more I am convinced of the following conclusions:

  • Republicans have become much more extreme since the 1970s, while Democrats have stayed about the same. In fact, this is the most extreme Republican Party in history—and the conservative media industrial-complex has helped shift much of the Republican base in the same direction.
  • The primary goal of Republicans in congress is to block anything Obama supports, even when it is their own idea or legislation that will help the American people.
  • Republican tactics are undemocratic: They are attempting to make it harder for people to vote (voter ID laws, fewer voting locations, etc.); they are redrawing election districts in their favor (as a result, they kept control of congress in spite of receiving fewer votes nationwide); they have used the filibuster at record levels (i.e., as a minority party, they have blocked much of the legislation of the democratically elected majority party); and they push policies that will benefit the wealthy at the expense of everyone else.

I will provide evidence and additional detail in support of these conclusion below.

Conclusion

Democrats have not been innocent in the political battles of recent years. Obama has said that he could have reach out more effectively to congressional Republicans during his first two years in office. And Democrats have been almost as bad as Republicans in their close work with lobbyist and acceptance of corporate donations. They have also attempted redistricting (i.e., gerrymandering) in their favor, although not nearly to the level of Republicans.

However, what congressional Republicans have been doing is completely unprecedented. Political scientists Thomas E. Mann and Norman J. Ornstein described today’s Republican Party:

The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.

Today, thanks to the GOP, compromise has gone out the window in Washington. In the first two years of the Obama administration, nearly every presidential initiative met with vehement, rancorous and unanimous Republican opposition in the House and the Senate, followed by efforts to delegitimize the results and repeal the policies. The filibuster, once relegated to a handful of major national issues in a given Congress, became a routine weapon of obstruction, applied even to widely supported bills or presidential nominations. And Republicans in the Senate have abused the confirmation process to block any and every nominee to posts such as the head of the Consumer Financial Protection Bureau, solely to keep laws that were legitimately enacted from being implemented.

In the third and now fourth years of the Obama presidency, divided government has produced something closer to complete gridlock than we have ever seen in our time in Washington, with partisan divides even leading last year to America’s first credit downgrade (source).

From the very beginning of the Obama administration, as discussed in a Republican strategy meeting on the night of Obama’s 2009 inauguration, Republicans planned to “Show united and unyielding opposition to the president’s economic policies.” (source; see also: Do Not Ask What Good We Do: Inside the U.S. House of Representatives, by Robert Draper). In an October 2010 interview with National Journal, Republican senate minority leader Mitch McConnell said: “The single most important thing we want to achieve is for Obama to be  one-term president.” (Though McConnell later backtracked and said, “I don’t want the president to fail, I want him to change.”)

The decision not to work with Obama was made before he took office, and was meant to make him a one-term president, even if this meant harming the American economy (e.g., unprecedented use of the debt ceiling leading to the U.S. Credit downgrade, blocking bills that would help the economy and create jobs, etc.). It is not surprising that one year after the Republicans took control of congress in 2010, they received the lowest approval ratings in polling history, at just 9%.

The bottom line is that the Republicans are hurting their own party, and even more so they are hurting the country that they claim to love. The problem in Washington is not “both sides.” The problem is an extreme Republican Party that is hellbent on keeping and gaining additional power at any cost. I encourage my Republican friends to be a voice of reason within the Republican Party, rather than being pulled to the fringe where the GOP is currently residing.

 

See additional detail below.

» Read more: Why it is not “both parties” ruining Washington

The Liberal Message of Les Miserables

December 29th, 2012

I really enjoyed the movie version of Les Miserables, the musical. It was a masterful interpretation of Victor Hugo’s literary classic, with superb acting. The message of this film, at its core, is one of forgiveness, charity, and democracy. In a word, it can be called liberal.

This makes me wonder why so many conservatives celebrate this musical. Yes, there is a spiritual theme that many on the religious right may find appealing. Yet I can’t understand how they miss the overwhelming liberal message in this story.

The title can be translated from the French as The MiserableThe WretchedThe Poor OnesThe Wretched Poor, or The Victims. The story illustrates the horrors of poverty and unbridled laissez faire capitalism, including child servitude and horendous work conditions (hostile workplace, sexual harassment, etc.). It also captures the evils of an undemocratic, heavy-handed state, including cruel treatment of prisoners and a murderous response to popular protest. Remember, it is liberals and progressives who struggled to do aways with these practices; and it is conservatives who want to return to an unregulated market with little or no safety net.

There is also a revolutionary theme in the story. “Do you hear the people sing/singing the song of angry men/it is the music of a people who will not be slaves again.” The revolution is about restoring power to the people. It is liberals who promote political equality; and it is conservatives who over-represent the interests of big business and the wealthy.

Jean Vajean is a man who was reformed, not from his 19 years of prison time, but through the compassion of a Bishop. The Bishop gave Valjean a valuable collection of silver, and Valjean was able to escape from poverty and crime to become a business owner and government official. Valjean did not deserve this handout (“entitlement”) from the Bishop, and the Bishop had no reason to expect that the silver would be put to good use. But this unexpected act of charity gave Valjean an opportunity to become an honest, self-reliant man.

It is liberals who believe in equal opportunity for all; who believe rehabilitation is more effective than jail time; who believe we need a safety net to prevent extreme poverty and suffering. It is conservatives who want to dismantle the safety net so they can lower taxes on their rich donors; they want a heavy-handed state with a military that is bigger than all others combined; they want to strengthen the prison industrial complex, and they want to criminalize drugs, illegal immigration, but then go soft on white collar crime.

In my last post, I wrote about the contradiction between the conservatives’ reverence for Christmas on the one hand and the fact that their beliefs closely resemble Christmas villains like Scrooge and Mr. Potter on the other hand. I think there is a similar dissonance in how they watch Les Miserables. They are likely to see a religious theme; that God blesses people for their righteousness. Yet, the story does not fit that interpretation. The story does not fit into that world view about God punishing the wicked and rewarding the righteous. Instead, it captures real life. And it seem to be urging viewers to be more charitable to others, especially the undeserving—through private acts of charity, forgiveness, donating to good causes, and yes, supporting government-run “entitlement” programs and regulations that prevent our society from returning to the horrific conditions of the industrial revolution that is captured in Hugo’s work. That is a powerful Christian/liberal message, one that many conservatives talk about at church, but vote against in every election.

Why are Christmas villains always conservative?

December 22nd, 2012

For years I have enjoyed watching classic Christmas films during the holiday season. Among my favorite holiday films are “Scrooge” (the musical) and “It’s a Wonderful Life.” One day it hit me that these two classics were condemning greedy, conservative businessmen as villains. I find it more than ironic that modern conservatives claim Christmas as their own, and believe that there is a “war on Christmas” (however ubiquitous it might be!), yet the villains of so many Christmas films are greedy businessmen whose harshest lines sound strikingly like today’s Republican Party. Conservatives need to learn from these films. They both have powerful themes about self-awareness, making a difference by giving to others, and valuing people.

(I want to be clear that my comparison is not to say that business people are bad, that wealth is bad, or even that conservatives are bad; it is greed and anti-social behavior that are bad for society.)

In Scrooge, you have pre-conversion Ebenezer Scrooge, who cares about nothing but his own money. He has come to hate people, and would rather see the poor dead than help them. In “It’s a Wonderful Life, you have Mr. Potter, the greedy banker who cares only about accumulating more wealth, even at the expense of ordinary people. I think these two characters both personify modern conservatism. (Yes, I was tempted to add the Grinch.)

Why are Christmas villains so often conservative businessmen? I suppose nothing could be a better contrast to the message that Christ preached than someone who thinks only of their own needs. For a person who not only fails to consider the needs of others, but whose greed causes them to harm others for their own benefit, this is the ultimate antagonist to the message of giving that we celebrate at Christmas. These villains illustrate a powerful contrast to New Testament messages to loving your neighbor, give to the poor, the love of money is the root of all evil, don’t judge others, etc.

For roughly 70 years, there was a consensus about the role of government in the United States. From the Gilded Age to the Progressive Era and the Great Depression, our values about government intervention were recalibrated to embrace a balanced approach to the free market and the welfare state. While we embraced the power of markets, it was also widely recognized that there are winners and losers in the free market system, and we wanted a system that cared for those unable to care for themselves and minimized suffering. With the implementation of the New Deal and the Great Society programs, government was able to prevent millions of seniors, children, veterans, and the disabled and mentally ill from slipping into poverty.

But over the past 30 years, conservatives have united around several ideas that have destroyed the previous consensus about the role of government. First, conservatives have pushed the idea that welfare is evil, that it creates dependency, and requires hardworking people to pay into a system that redistributes their property to less deserving people. Second, they have made business their sole constituency. Virtually every policy they promote is in the service of the business community, which is sometimes counter to the interests of ordinary people (e.g., deregulation in finance, environmental protection, etc.). Third, they are anti-democratic. They obstruct legislation even when there is a clear majority vote; they realign election boundaries to their own benefit; and they change election rules to make it harder for people to vote—especially people that may not be voting for their party. As Republicans and their media outlet (Fox News) have used fear and anger to lead their followers into supportting their message, they have been allowed to dismantle important aspects of the 70-year consensus about the social safety net and the broader role of government. This has led to a number of negative outcomes that affect all of us, including massive inequality (to the level of some of the worst in the 3rd World), a Great Recession, crippling political polarization, and big business abuses of people and the environment.

Today’s conservatives need to spend some time this season thinking about the villains of Christmas. They need to look inward at how they have been led to believe things that are uncaring and insensitive, and have supported representatives who are steering our Nation in a direction that harms the most vulnerable in our society. Here are my favorite examples of Christmas villains.

From the film Scrooge: Trying to collect Christmas donations

2nd Portly Gentleman: What may we put you down for, sir?
Scrooge: Nothing, sir.
1st Portly Gentleman: Ah, you wish to remain anonymous.
Scrooge: I wish to be left alone, sir! That is what I wish! I don’t make myself merry at Christmas and I cannot afford to make idle people merry. I have been forced to support the establishments I have mentioned [i.e., prisons and workhouses] through taxation and God knows they cost more than they’re worth. Those who are badly off must go there.
2nd Portly Gentleman: Many would rather die than go there.
Scrooge: If they’d rather die, then they had better do it and decrease the surplus population. Good night, gentlemen.
[walks away, then turns back]
Scrooge: Humbug!

Here’s the version from the book:

Charles Dickens, A Christmas Carol

“At this festive season of the year, Mr. Scrooge,” said the gentleman, taking up a pen, “it is more than usually desirable that we should make some slight provision for the poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.”

“Are there no prisons?” asked Scrooge.

“Plenty of prisons,” said the gentleman, laying down the pen again.

“And the Union workhouses?” demanded Scrooge. “Are they still in operation?”

“They are. Still,” returned the gentleman, “I wish I could say they were not.”

“The Treadmill and the Poor Law are in full vigour, then?” said Scrooge.

“Both very busy, sir.”

“Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,” said Scrooge. “I’m very glad to hear it.”

“Under the impression that they scarcely furnish Christian cheer of mind or body to the multitude,” returned the gentleman, “a few of us are endeavouring to raise a fund to buy the Poor some meat and drink, and means of warmth. We choose this time, because it is a time, of all others, when Want is keenly felt, and Abundance rejoices. What shall I put you down for?”

“Nothing!” replied Scrooge.

“You wish to be anonymous?”

“I wish to be left alone,” said Scrooge. “Since you ask me what I wish, gentlemen, that is my answer. I don’t make merry myself at Christmas, and I can’t afford to make idle people merry. I help to support the establishments I have mentioned: they cost enough: and those who are badly off must go there.”

“Many can’t go there; and many would rather die.”

“If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population. … It’s enough for a man to understand his own business, and not to interfere with other people’s. Mine occupies me constantly. Good afternoon, gentlemen!”

 

Mr. Potter from “It’s a Wonderful Life”

 

Mr. Potter: Have you put any real pressure on these people of yours to pay those mortgages?

Mr. Bailey: Times are bad, Mr. Potter. A lot of these people are out of work.

Mr. Potter: Then foreclose!

Mr. Bailey: I can’t do that. These families have children.

Mr. Potter: They’re not my children.

Mr. Bailey: But they’re somebody’s children, Mr. Potter

Mr. Potter: Are you running a business or a charity ward?

 

 

Obama has Shrunk Government, While Bush Grew It

October 12th, 2012

OBAMA HAS SHRUNK GOVERNMENT, WHILE BUSH GREW IT

Republicans like to position themselves as the small government party. For people who care about facts here is an interesting little factoid.

Obama shrunk government, Bush grew it. (Who’s the “socialist”?)

Source: http://www.economist.com/blogs/buttonwood/2012/07/economic-policy

“You Didn’t Build That”: Put it in Context

October 9th, 2012

OBAMA’S STATEMENT, “YOU DIDN’T BUILD THAT.”

 

The facts:

Obama’s remark came at a July 13 speech at a firehouse in Roanoke, Virginia, where he attacked Republican opposition to his economic plans and defended the role of government in promoting economic growth. It is true that he used the phrase, “you didn’t build that.” However, when you put it in context, there is nothing in the statement that indicates that he is saying small business leaders did not build their business and that somehow the government did. Nothing. Keep reading.

 

Here is the full text:

“Look, if you’ve been successful, you didn’t get there on your own,” he said. “You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges.

“If you’ve got a business — you didn’t build that,” he continued. “Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own.”

So there it is. Everything before and after “You didn’t build that” refers to infrastructure, education and public services.

Obama released a rebuttal to the criticism within two weeks of his Roanoke appearance. In a television spot, the president tells viewers, “Of course Americans build their own business. Everyday hardworking people sacrifice to meet a payroll, create jobs, and make our economy run. And what I said was that we need to stand behind them, as America always has. By investing in education, training, roads and bridges, research and technology.” He called ads that used the edited version of his remarks “flat-out wrong.”

 

(Source: CNN)

Do Tax Breaks Create Jobs?

July 11th, 2011

There are two fundamental Republican articles of faith with regard to the economy. First, “tax cuts increase tax revenue.” Second, “tax cuts create jobs.” We have already debunked the first of these ideas (see: Do Tax Cuts Increase Revenue?), so let’s look at this second Republican belief.

There is really one fact that significantly challenges this faith-based belief: Profits are at record highs, and the level and lengths of unemployment it at a high. The idea that tax cuts create jobs is based on the idea that letting people keep more of their money will lead them to growth their businesses by hiring more people, and thus decrease unemployment. If profits are up and unemployment is down, this logic does not work.

When politicians talk about tax cuts, they are typically referring to personal income taxes. If I am a highly compensated executive, and I get a tax cut, that means I take home more money. What will I do with this extra money? Will I go out an hire someone? Probably not. Why? Because companies hire people, individuals don’t hire people with their net salary.

“But,” I can hear my Republican friends say, “if that highly-compensated executive decides to invest that extra income in a business, this will create jobs.” Again, probably not. If I own a business, my primary concern is not to create jobs, it is to maximize profits. If there is extra money, and I don’t absolutely have to hire more people to grow the business, I am not going to hire. I am going to pay myself and my shareholders first. And because taxes are paid on profits, not revenue, I am actually inclined to keep my costs (labor) down so I can maximize profit.

There is a reason that the rich don’t suffer in a recession; that middle-class wages have been stagnant for 30 year; that the majority of the nation’s wealth is in the hand of the top 1%. Conservative tax policy has dominated for 30 years. And in this Great Recession, with profits way up, there is not need to hire more people. And in this context, with a skyrocketing national debt, with millions out of work, the Republicans can still talk endlessly of how tax cuts are the answer to creating jobs. No. Tax cuts are the answer to enriching the already-wealthy.

A Forbes blogger asks the question, “do tax cuts create ‘real’ jobs?” The answer in this pro-business publication is rather surprising: “Do tax cuts create jobs? No, just deficits.” This article goes on to say,

U.S. public companies pay well-below the official 35% tax rate while 13.5 million American workers search unsuccessfully for jobs  And start ups tell me that tax cuts don’t affect whether they’ll create new jobs. In short, the tax cut rhetoric, while effective politics, is lousy economics.

George H. W. Bush wisely pointed out in his 1980 debate with Ronald Reagan that expecting to balance the budget with tax cuts and defense spending increases was “voodoo economics.”  But along with Reagan’s ascendancy came the rise of huge budget deficits — that Bush wisely helped end when he agreed to raise taxes in 1990.

Despite $858 billion in December 2010 tax cuts, companies still complain that they pay too much in tax. General Electric (GE) has become famous for paying no taxes on its $5.1 billion in 2010 U.S. profits while keeping a big staff of lawyers on hand to make sure it pays as few of them as possible. Meanwhile, the New York Times reports that GE is not alone and that the prevailing estimate for the actual U.S. corporate tax rate is 25% — costing the U.S. about $100 billion in lost revenue.

But corporations have absolutely no reason to complain about taxes. After all, they earned record 2010 profits of $1.68 trillion and 85% of them are beating their first quarter 2011 earnings estimates as 70% are growing revenue faster than expected while their operating margins stand at a near record 19.8%.

And companies are achieving that record profitability by squeezing workers. After all, 2010 productivity rose 3.9% while unit labor costs fell 1.5%. To get more work out of the same number of workers while paying them less, it helps to have 13.5 million people out of work and the easy ability to hire part-time labor and outsource to countries that pay much lower wages.

So tax cuts have not spurred big companies to create jobs. But what about start ups? Based on my October 2010 interviews with 17 start up CEOs, my conclusion is that not a single one of them would create a job based on tax cuts. All of them told me that their decision to create a new job would be based on whether the long-term cost of that new job would be offset by higher revenues and profits.

As Dick Cheney famously pointed out — deficits don’t matter. And his supporters are probably profiting from the weak-dollar, commodity-inflation bet whose profitability depends on the persistence of those deficits.

If Washington was serious about creating new jobs, it would make companies pay the 35% rate — yielding $600 billion in tax revenue on their 2010 profits. That and the peace dividend that should flow in the wake of Bin Laden’s execution, would go a long way towards balancing the budget and creating a climate that would spur a boost in capital flows to new ventures.

As always, Rachel Maddow brings up some excellent issues on this topic:

Another astute blogger pointed out:

“Rush Limbaugh famously said, “Ive never been employed by a poor person” which is true, if irrelevant

­. I’ve never been employed by a rich person myself… I’ve been employed by a lot of companies though. An increase in taxation on millionair­es would mean nothing, let me repeat, NOTHING in the way of jobs.

Corporatio­ns employ large numbers of people, not individual billionair­es. If a billionair­e got a tax break, he wouldn’t immediatel­y invest it into his company for the purpose of hiring new employees. There is a salient difference between taxing an individual CEO’s paycheck, and taxing the corporatio­n itself.

Rather he would most likely save it (along with his other excess funds); which again does NOTHING to stimulate the economy or jobs. A Poor person with excess funds, on the other hand, would be prepared to spend it, which WOULD stimulate the economy.

If you really wanted a fairer system, I’d eliminate the tax on the first 20k of EVERYONE’s income. Then leave all the loopholes and tax cuts that the rich enjoy in the dust, and raise taxes on everyone making over 250k a year. If everyone is sacrificin­g, those poised to benefit societal rewards should pay most of the costs.” (source)

Republicans say they know how to create jobs but they never produce the results. Take Mitt Romney. According to the Huffington Post: “[A]s Massachusetts governor from January 2003 to January 2007, Romney presided over one of the puniest rates of employment growth among the 50 U.S. states, at a time the nation’s economy was booming.” (Huffington Post, 5/31/11). According to MarketWatch:
While he was Governor, “according to the U.S. Labor Department, the state ranked 47th in the entire country in jobs growth. Fourth from last. The only ones that did worse? Ohio, Michigan and Louisiana. In other words, two rustbelt states and another that lost its biggest city to a hurricane. The Massachusetts jobs growth over that period, a pitiful 0.9%, badly lagged other high-skill, high-wage, knowledge economy states like New York (2.7%), California (4.7%) and North Carolina (7.6%). The national average: More than 5% (MarketWatch, 2/23/11).
FactCheck.org noted, “By the end of his four years in office, Massachusetts had squeezed out a net gain in payroll jobs of just 1 percent, compared with job growth of 5.3 percent for the nation as a whole.”
If you look at how Romney made his millions, you get a sense for how important jobs really are to his class.  In 2007, the Los Angeles Times reported:

From 1984 until 1999, Romney led Bain Capital, a Boston-based private equity group that earned jaw-dropping profits through leveraged buyouts, debt hedge funds, offshore tax havens and other financial strategies. In some cases, Romney’s team closed U.S. factories, causing hundreds of layoffs, or pocketed huge fees shortly before companies collapsed.

See more of Romney’s record.
Conclusion
To says that tax cuts do not necessarily create jobs does not mean that all tax cuts/breaks are without value. There are certainly ways to offer tax breaks as incentives to businesses to invest in areas that stimulate the economy. But these incentives should be offered to businesses to encourage investment, not gifted to individuals who already make great money.
In conclusion, Republicans hold fast to their two faith-based economic axioms: (1) tax cuts generate more revenue; (2) tax cuts create job. Both of these idea are false. But it is worth exploring why Republicans push these ideas so forcefully. Why is it so important to Republicans to make sure the rich continue to have low taxes, even at the expense of many social programs that they happily cut? What is it in the system that allows they to get away with this? Why do the American people tolerate this? We’ll have to tackle these questions in another post. But I think we already know the answer: Follow the money.

More resources:

Republicans are Bad for the Economy

June 25th, 2011

Democrats Outperform Republicans by Wide Margin

The Dow Jones industrial average increased by 29.5% in the one-year period following Barack Obama’s inauguration on Jan. 20, 2009—the third best showing, going back 110 years, for the U.S. stock market in the 12 months following the inauguration of a new President. Franklin Delano Roosevelt’s first year, which began on March 4, 1933, tops the list with the Dow increasing by 96.5% over the next 12 months. Meanwhile, Jimmy Carter trails his peers with a loss of 19.6%. On average, Presidents in the Democrat party saw an average one-year gain of 24%, while Republicans averaged 1%.

Barack Obama (DEM)

Inauguration Date: Jan. 20, 2009
Percentage Change in Dow Jones Industrial Average During First Year in Office: +29.5%

At 468%, Genworth Financial was the best-performing S&P 500 stock during Obama’s first year in office.

William J. Clinton (DEM)

Inauguration Date: Jan. 20, 1993
Percentage Change in Dow Jones Industrial Average During First Year in Office: +19.3%

The industrial sector was the best-performing sector in the 12 months following Clinton’s inauguration.

Woodrow Wilson (DEM)

Inauguration Date: Mar. 4, 1913
Percentage Change in Dow Jones Industrial Average During First Year in Office: +0.5%

After World War I began during Wilson’s second year, the U.S. stock market closed for 4 1/2 months.

John F. Kennedy (DEM)

Inauguration Date: Jan. 20, 1961
Percentage Change in Dow Jones Industrial Average During First Year in Office: +10.8%

The U.S. economy grew 6% in 1961, more than any other President’s first year since at least 1948.

Lyndon B. Johnson (DEM)

Inauguration Date: Nov. 22, 1963
Percentage Change in Dow Jones Industrial Average During First Year in Office: +21.6%

The Dow increased 27% over the length of Johnson’s five-plus years in office, or about 5% a year.

Richard M. Nixon (REP)

Inauguration Date: Jan. 20, 1969
Percentage Change in Dow Jones Industrial Average During First Year in Office: -17.0%

The Dow also lost 17% during the first year of Nixon’s second term.

Ronald Reagan (REP)

Inauguration Date: Jan. 20, 1981
Percentage Change in Dow Jones Industrial Average During First Year in Office: -12.7%

The prime rate topped 21%—the highest level on record—during Reagan’s inaugural year.

Dwight D. Eisenhower (REP)

Inauguration Date: Jan. 20, 1953
Percentage Change in Dow Jones Industrial Average During First Year in Office: +0.5%

The Dow hit a bottom in September 1953 and then went on to double over the next 2 1/2 years.

Franklin Delano Roosevelt (DEM)

Inauguration Date: Mar. 4, 1933
Percentage Change in Dow Jones Industrial Average During First Year in Office: +96.5%

The Dow Jones industrial average rose by an average 9% a year during FDR’s 12-year tenure.

George Bush (REP)

Inauguration Date: Jan. 20, 1989
Percentage Change in Dow Jones Industrial Average During First Year in Office: +19.6%

The 1980s ended during Bush’s first year, with the Dow rising 228% over the decade, or 13% a year.

George W. Bush (REP)

Inauguration Date: Jan. 20, 2001
Percentage Change in Dow Jones Industrial Average During First Year in Office: -7.7%

During his eight years in office, the Dow fell 22%, to 8,281. The S&P 500 lost 37%, closing at 850.

Gerald R. Ford (REP)

Inauguration Date: Aug. 9, 1974
Percentage Change in Dow Jones Industrial Average During First Year in Office: +4.2%

The Dow fell 45% between Jan. 11, 1973, and Dec. 6, 1974, one of the worst bear markets in history.

Harry S. Truman (DEM)

Inauguration Date: Apr. 12, 1945
Percentage Change in Dow Jones Industrial Average During First Year in Office: +30.9%

Almost 18 years after reaching 200 for the first time, the Dow again climbed to 200 in January 1946.

Herbert Hoover (REP)

Inauguration Date: Mar. 4, 1929
Percentage Change in Dow Jones Industrial Average During First Year in Office: -15.6%

The Dow dropped 48% from Sept. 3 to Nov. 13 in 1929.

Jimmy Carter (DEM)

Inauguration Date: Jan. 20, 1977
Percentage Change in Dow Jones Industrial Average During First Year in Office: -19.6%

Inflation increased by more than 6% during Carter’s fi rst year.

Paul Ryan’s Road Map to Disaster

November 21st, 2010

In a previous column, we looked at the Republican agenda. Knowing how Republican’s plan to govern as they take control of the House next year should be of interest to every U.S. Citizen. Specifically, our column looked at the Republicans’ “Pledge to America.” The Pledge is one of two recent Republican platform proposals. The second document is Representative Paul Ryan’s (R – WI) “A Roadmap for American’s Future.” The Roadmap continues the conservative fear-mongering about deficit spending, which we have also addressed in a previous column.

See this Critique of Paul Ryan’s “Road Map by economist Dean Baker; and this report. Dean Baker found 20 inaccuracies and 4 references to raiding Medicare in the Road Map. See also Nobel Prize-winning economist Paul Krugman’s critique of the Road Map. He points out that Ryan’s plan would reduce federal government revenues by $4 trillion over the next decade, which would add significantly to the current deficit (something Republicans see to worry about on the surface). Krugman goes on to state that, “the Road Map wouldn’t reduce the deficit. All it would do is cut benefits for the middle class while slashing taxes on the rich…even as it slashed taxes at the top, the plan would raise taxes for 95 percent of the population.” The Road Map assumes zero dollar growth in domestic discretionary spending (including energy, education, the courts, etc.), but, outside of Medicare, he does not say specifically what specific programs he would slash.

Representative Ryan’s proposal, if implemented, would be a disaster for the economy, for working families, and would essentially redistribute wealth upward. Ryan is really proposing the same destructive policies that have been pushed bu Republicans for the past thirty years, usually with painful result for low-income and middle class families. In 2012, voters will have a choice about whether they want to live in a society of massive inequality and increased vulnerability for the majority of hard working Americans, or the more-centrist approach that Obama and the Democrats are pushing for. To read excerpts from Paul Ryan’s Roadmap, click the “more” button. » Read more: Paul Ryan’s Road Map to Disaster