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The Republican Shell Game With Jobs and
the Economy
The problem
with the United States today is that
as a population we can’t agree on and stay focused on the problem. We
all agree
at some level that the biggest problem is the lack of jobs. It is hard
to
ignore. However, contrary to the opinion of some, there are certain
objective
aspects that can be supported or refuted by data. For example: Some
things that are not problems: 1.
There is no
lack of investment money.
Investors have trillions of dollars parked on the sidelines, in many
cases I
suspect, wishing there were enough good bets to move it back into the
economy. 2.
There is no
current or apparent short-term
problem with inflation. 3.
Regardless of
what the credit agencies
say, investors still consider U.S. debt the safest investment compared
to all
the others, consequently there is more demand to loan money to the U.S.
than
the U.S. is willing to borrow. The result: the interest rate the U.S.
pays on
new debt has gone down, not up, since the downgrade. Some
things that are problems: 1.
A lack of
customers (consumer demand) 2.
A lack of
jobs (the reason we have a lack
of customers) Solutions
that will not work because they address the wrong problem: 1.
Lowering
interest rates by the Federal
Reserve 2.
Reducing
taxes and maintaining tax
loopholes for the wealthiest Americans and large corporations These won’t
work
because availability of investment money is not the problem. a.
It is not
good business to lend money to
people or companies that can’t pay it back, like people without jobs or
companies without demand for their goods or services. There is more
money to
invest than the availability of even marginal investment opportunities,
therefore making even more investment money available will have little
to no
effect. b.
Companies do
not hire employees because
they have more money (net profits). They hire employees because they
can’t meet
their current demand or opportunity with their current employees, so
once again,
having more money available will have little or no effect on job
creation. 3.
Cutting
government expenditures during
the current economic crisis a.
The data do
not support the assertion
that the markets are overly fearful of the current U.S. debt. If they
were, the
interest rates the U.S. has to pay on its treasury bonds would be going
up, not
down. Not to say people don’t believe we need to do something about
controlling
costs, but their actions say they do not think this is the most serious
immediate concern. b.
Cutting
government expenditures makes the
problem worse by reducing demand in their role as a major customer of
goods and
services and by reducing the number of other customers in the market by
cutting
government jobs or reducing government employee wages or benefits. Solutions that have a
chance to work 1.
Governments
spending more money and creating demand as a customer for goods and
services
and creating more customers by paying people decent wages to do jobs
that need
to be done. a.
The data
indicate that in our current
economic situation private industry has not, and apparently cannot,
create
enough demand in their own purchases or enough jobs from meeting their
own
demand to even maintain our current precarious economic situation. b.
The only
thing government has direct
control over is government spending, and the current circumstances
indicate we
need to be doing more at all levels of government, not less. c.
If you are
going to repair our
infrastructure, now is the time to do it. We can borrow money at lower
interest
rates than at anytime in the recent past, and we are not competing with
other
private projects for the goods and services required, so inflation is
not a
factor. 2.
Paying
for at least part of the increased spending by raising taxes and
cutting
loopholes for the wealthiest individuals and largest corporations. a.
This is where
the bulk of the private
investment money is pooled. Any tax cuts they get are going to increase
that
pool on the sidelines, and any tax increases (either direct or by
cutting
loopholes) are going to have virtually no affect on actual investment
(there is
no good place to invest) or consumption (they have discretionary income
meaning
they already purchase anything they likely are going to purchase). b.
At this
point, investing in government
infrastructure projects is probably the most productive use of their
sidelined
investment dollars. An improved economy floats all boats (including
theirs) and
an updated infrastructure increases their investment options and
opportunities
in the future. Increased taxes are their best investment! c.
Because of
the loopholes and tax breaks,
many of the individuals and corporations in this group currently
pay
a
smaller percentage of their income in taxes than most
people in the middle class. d.
Increased
spending in the areas of
government being targeted for cuts today did not cause the current
deficit. It
was caused by the tax cuts from the previous Republican administration
and the
simultaneous expenditures of two unfunded wars. Reversing some or all
the taxes
cuts is the most fiscally responsible thing we could do if immediate
deficit
reduction really is that serious of a problem. The Shell Game (where are
the jobs?) Republicans
claim they
want to create jobs. However, when given the opportunity they insist
that additional
funding for any jobs bill (be it bridge repair or disaster assistance
for
hurricane Irene) be “offset” by spending reductions in other areas. As should be
apparent
from the data above, what this means is that while they look
like they are “creating” jobs by passing the bill, in fact
they are insuring that the jobs created are taking away jobs (created
by
government spending) somewhere else. Thus they really insure that
joblessness
remains at the level where it started. That is why unemployment levels
have not
changed significantly! So far they
have been
successful at playing this shell game and keeping the economy in the
doldrums
by switching the immediate perceived
problem from jobs to deficit reduction, or tightly coupling the two in
the
public’s mind. They repeatedly harp on common slogans that reinforce
this
artificial connection. Their bet is that if the economy does not
improve by the
next presidential election that the U.S. electorate will do what they
always
do, vote for the only other choice in town. It will not matter that the
other
choice is advocating more of the same policies that drove the car into
the
ditch in the first place and want to continue policies that are likely
to drive
it
further down the ravine. What other alternative does the electorate
have to
show their displeasure with the inability of the current administration
to correct
the jobless situation in three years while simultaneously trying to win
the "fixed"
Republican shell game? In 2012 we
will see
who was correct, Adolph Hitler or John Adams: “The
receptivity of the great masses is very limited, their intelligence is
small,
but their power of forgetting is enormous. In consequence of these
facts, all
effective propaganda must be limited to a very few points and must harp
on
these slogans until the last member of the public understands what you
want him
to understand by your slogan.” Adolph Hitler “Fear
is the foundation of most governments; but it is so sordid and brutal a
passion, and renders men in whose breast it predominates so stupid and
miserable, that Americans will not be likely to approve of any
political
institution which is founded on it.” John Adams Principal iorg.com |