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Almost every piece of legislation passed in Washington these days is pushed forward in the name of creating jobs. Our elected officials are right to be concerned with the issue; Americans want stability and economic security in their lives.

But the predicament we face is hardly new. Over the past several decades, each "recovery" from recession has had fewer jobs attached to it, and those jobs that appear do not restore former standards of living to working people.

If we're going to change this, we must have public policy which demands accountability. That starts with tax breaks. If businesses receiving tax cuts say they are going to create jobs, they should prove it.

Conservatives frequently contend that government is irresponsible and should run more like a business. But what sort of business undermines its base of revenue without demanding something concrete in return? You wouldn't go to a mechanic and agree to shell out hundreds of dollars even if the shop utterly fails to diagnose and fix your car. Yet tax cuts for the wealthy and tax loopholes for corporations are doing just that. They are handouts for the powerful given on blind faith.

The evidence that these handouts actually result in decent jobs for American workers is distressingly thin.

To understand the nature of unemployment in our country today, we must appreciate that a huge gulf has formed between traditional measures of business success and the actual well-being of working families. Traditionally, increased productivity was supposed to translate into increased wages for workers. But, as the Economic Policy Institute has documented, "from 2002 to 2007, productivity rose 11 percent but the hourly wage for high school and college educated workers fell." The only ones benefiting are those at the top. Timothy Noah recently reported in his well-regarded series on inequality at Slate that, "From 1980 to 2005, more than 80 percent of total increase in Americans' income went to the top 1 percent."

The last quarter has been a difficult one economically, right? That's certainly true for the 15 million Americans who are out of work and the record number of the jobless who have been looking for work for more than 6 months. But it's hardly the case for big business. In fact, in the third quarter of 2010, corporate profits hit a record high. As the New York Times reported, "Corporate profits have been doing extremely well for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history."

Since the Clinton era, it has been popular even among Democrats to argue that investment in capital and spurring the economy through low tax rates would lead to job creation. But the evidence amassed since then does not support this idea. As Jack Rasmus recently noted, the period between 2001 and 2004, when George W. Bush pushed through a series of tax cuts for investors and corporations in the name of creating jobs, actually saw some of the weakest job creation rates on record following a recession.

We have to face the fact that the ties between corporate success and the economic health of the wider community have been completely severed. To re-link business growth and job creation policymakers must do three things:

First, if government is going to subsidize the private sector through tax breaks or loopholes, it must ensure that the investment brings public return, in the form of jobs. Individual businesses getting tax breaks in the name of job creation should be held accountable for demonstrating that their efforts are actually working. If they can’t convincingly show that new jobs are being produced, the loopholes should be closed. Or better yet, the businesses should return the money they received.

Second, we must make sure the jobs being created are good ones, with living wages. The most effective way of doing this is to restore the ability of workers to collectively bargain with their employers. Historically, in times when workers have been able to exercise their right to form unions, the American middle class has grown alongside its businesses. The decline of organized labor in recent decades has been a main reason for the delinking of corporate profits and community well-being.

Third, when businesses are not creating enough jobs for American workers, we need to have a safety net for those left behind. Right now, those who are disconnected from employment are falling further and further down, and often the plunge can be fatal in terms of a worker's future prospects. Absent a net, it is almost impossible to get the long-term unemployed back into the job market.

If we're sincere about tackling the current crisis of unemployment and allowing working people to bounce back, we have to get serious about reconnecting productivity and wages. Current blind faith tax breaks are not doing that. Let's try some real accountability for job creation.

- Amy Dean is co-author, with David Reynolds, of A New New Deal: How Regional Activism Will Reshape the American Labor Movement. She worked for nearly two decades in the labor movement and now works to develop new and innovative organizing strategies for social change organizations in progressive, labor, and faith communities. She can be reached via the Web site:

Originally posted to amybdean on Tue Dec 14, 2010 at 06:16 AM PST.

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Comment Preferences

  •  Tip Jar (169+ / 0-)
    Recommended by:
    RichM, Renee, Alumbrados, Superskepticalman, Angie in WA State, chrississippi, ferg, grollen, Ivan, irmaly, mattman, janinsanfran, Shockwave, hyperstation, frsbdg, bumblebums, ssgbryan, Heart of the Rockies, opinionated, TheMomCat, JohnInWestland, cskendrick, DaleA, bluesteel, vmibran, fumie, pollwatcher, Dube, psnyder, Moody Loner, Tracker, TiaRachel, noveocanes, bmor, whyvee, Oaktown Girl, zerelda, TexasLefty, bablhous, vacantlook, slapshoe, Josiah Bartlett, greeseyparrot, joanneleon, maybeeso in michigan, Bluesee, radarlady, NoMoreLies, disrael, Roadbed Guy, LostInTexas, PBen, Flint, Simplify, drewfromct, Brooke In Seattle, Laurence Lewis, Gary Norton, jimreyn, lcbo, markdd, joy221, LivesInAShoe, mightymouse, Snud, CParis, sherlyle, cybersaur, Clytemnestra, buckstop, rhetoricus, blueoasis, NBBooks, twigg, mikeatuva, nonnie9999, arbiter, Terminus, Persiflage, kurious, Nulwee, One Pissed Off Liberal, bear83, mattinjersey, Ken in MN, donnamarie, Habitat Vic, Loudoun County Dem, dmh44, ColoTim, yoduuuh do or do not, frisbee, DWG, Corwin Weber, Kentucky Kid, HCKAD, wilderness voice, millwood, carpunder, TomP, MKinTN, edg, JeffW, elwior, billd, Greyhound, TH Seed, happymisanthropy, venger, Robobagpiper, billybam, papicek, JonBarleycorn, J M F, ARS, greengemini, divineorder, Magick Maven, output, KYrocky, stolen water, maryabein, zaka1, asym, Nonconformist, jfromga, jethrock, Radical def, NY brit expat, sullivanst, Benintn, JRandomPoster, Funkygal, mideedah, washunate, roystah, elengul, Colorado is the Shiznit, Front Toward Enemy, Lost Left Coaster, Jazzenterprises, MaizeandBlue, Cintimcmomma, QuestionAuthority, Aranfell, mrsgoo, marleycat, grannysally, Noamjunior, Safina, MinistryOfTruth, VTCC73, jeffrey789, blue aardvark, Sunspots, Proleft, Azazello, Wilber, APA Guy, greenbastard, S F Hippie, blankportraits, supercereal, rivercard, radical simplicity, Mister Peabody, JimMeeker, The Uncola, lunachickie
  •  Certainly I agree with you. In fact, tax cuts for (36+ / 0-)

    the wealthy are not leading to job creation and yes you are correct there is no accountability. There are many alternative proposals on how to actually create jobs: the most obvious proposal is direct gov't jobs creation.

    Rather than continue shoveling money to the wealthy leading to greater disparities in income and wealth, while not leading to investment and job creation, stimulation of effective demand through increased provision of social services will be a more effective strategy. Diary tipped and rec'd.

    No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

    by NY brit expat on Tue Dec 14, 2010 at 06:28:14 AM PST

  •  We're Not Sincere. This Isn't a Debate, They're (23+ / 0-)

    not making arguments.

    They're doing what conservatives always do. They say good-sounding things about policies they approve, and bad-sounding things about policies they oppose.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Tue Dec 14, 2010 at 06:37:28 AM PST

  •  All of the evidence.. (28+ / 0-)

    .. says that you are correct. If "tax cuts" created jobs, we would have a critical worker shortage, not what we actually have. Well written and spot on. Thanks you.

    Why do they only call it "class warfare" when we are fighting their unquenchable greed?

    by The Uncola on Tue Dec 14, 2010 at 06:42:35 AM PST

  •  This diary (32+ / 0-)

    should be the policy talking points for all elected Democrats forever.

    First, if government is going to subsidize the private sector through tax breaks or loopholes, it must ensure that the investment brings public return, in the form of jobs. Individual businesses getting tax breaks in the name of job creation should be held accountable for demonstrating that their efforts are actually working. If they can’t convincingly show that new jobs are being produced, the loopholes should be closed. Or better yet, the businesses should return the money they received.

    This should be common sense.

    •  So, why aren't we winning? (5+ / 0-)

      We're right.  We've been proven right.

      Why aren't we winning this debate?

      Stop clapping. Stop screaming. Open your mind. Listen.

      by Benintn on Tue Dec 14, 2010 at 07:02:39 AM PST

      [ Parent ]

      •  We are not winning because this has become a (17+ / 0-)

        discussion based upon ideology and political choice rather than one based upon reality and information that can be gleaned from history. Decisions are not being made upon what we know works and what the majority of people need, but upon the desires of the wealthy and powerful.

        No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

        by NY brit expat on Tue Dec 14, 2010 at 07:08:52 AM PST

        [ Parent ]

        •  And why is that happening? (1+ / 0-)
          Recommended by:

          I appreciate the thoughtful response.

          Why are decisions being made on the basis of the desires of the wealthy and powerful?

          And why are the wealthy and powerful more interested in self-preservation and self-aggrandizement than in the success of their less-fortunate fellows?

          Stop clapping. Stop screaming. Open your mind. Listen.

          by Benintn on Tue Dec 14, 2010 at 07:17:09 AM PST

          [ Parent ]

          •  I honestly do not think that it is their (8+ / 0-)

            self-preservation that leads them to make these demands; they are in no danger of extinction. To the contrary, I think they are lost in an ideological blindspot concentrating on short-term increases rather than long-term guarantees. Economic growth and the increase of their wealth will only continue in a steady manner if there are people that will purchase their goods and services. Putting money in the hands of those that will buy their goods and services will ensure economic growth and long-term stability of their money. Reducing people to poverty by destroying the social welfare state and long-term stagnation in wages is counter-productive.

            If we then take into account the impact of globalisation and the fact that capital is not linked to nation states, then their actions may make a bit more sense. Honestly, given that the attack on the social welfare state is happening in the whole of the advanced capitalist world, the only thing that I can think of that they are banking on is offering a slight betterment to those in the 3rd world (which given the state of the majority in the 3rd world will be a vast improvement) in the hopes that they can pick up the lost effective demand in the advanced capitalist world there.

            No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

            by NY brit expat on Tue Dec 14, 2010 at 07:28:26 AM PST

            [ Parent ]

            •  Spot on (4+ / 0-)
              Recommended by:
              grollen, CParis, elwior, NY brit expat

              What we are seeing are politicians who have grown up believing the Reagan mantras "tax cuts cure all" and "people fail because they deserve it".

              There is an entire generation of people in office currently who have been fed the demonizing of the Democrats and their policies in conjunction with the glorification of the Republicans and their policies that the "tax cut" dogma is the only workable solution, in their eyes. It's not so much a "blind spot" as a "world view."

              When one believes that a philosophy is correct, truly believes, then any contrary empirical evidence falls short. At best they can dismiss any evidence to the contrary as some sort of outlier. Typically, they merely dispute the accuracy of the source on some unrelated point so therefor that particular source is no longer considered legitimate. I work with union workers who get 100% of their "information" from Fox News (sic) and the RW radio screamers. Whatever factual information I bring to their attention is disregarded immediately, no matter what the source.

              Even the thoughtful ones will stick to the dogma, when shown the abject failure of the policies to bring about the predicted results they will usually fall back on the old canard "Well, it wasn't implemented successfully."

              "It's never too late to have a happy childhood." - Tom Robbins - Political Compass sez: -8.25, -7.90

              by ARS on Tue Dec 14, 2010 at 09:24:40 AM PST

              [ Parent ]

            •  Here's an interesting Op-Ed piece (1+ / 0-)
              Recommended by:
              NY brit expat

              by Melissa Harris-Perry

              Though about Sarah Palin, the description near the end is relevant to your broader point:

              There is something remarkable and frightening about the depth of her belief in her narrative. Every criticism, every defeat, every attack is just evidence of the virtue of her chosen path. Her show replaces the tough tradeoffs of a politically complicated and economically insecure world with a fiery self-assurance born of the hard, bright blindness of righteousness.

              "It's never too late to have a happy childhood." - Tom Robbins - Political Compass sez: -8.25, -7.90

              by ARS on Tue Dec 14, 2010 at 11:31:47 AM PST

              [ Parent ]

      •  I don't know (6+ / 0-)

        but I would guess it's because Democrats aren't actually that interested in holding businesses accountable either.

        •  Or maybe businesses are willing to kill (4+ / 0-)
          Recommended by:
          NoMoreLies, CParis, JeffW, elwior

          Democrats like they did, en masse, last electoral cycle in 2010.

          Businesses are following the Golden Rule of Capitalism: Whoever has the gold makes the rules.

          Stop clapping. Stop screaming. Open your mind. Listen.

          by Benintn on Tue Dec 14, 2010 at 07:13:15 AM PST

          [ Parent ]

          •  except businesses don't vote (2+ / 0-)
            Recommended by:
            JeffW, elwior

            So it was actually voters who killed Democrats in November. I'm sure businesses were happy about it, and spent money to make it happen, but they didn't pull the levers.

            And at the end of the day, I don't blame the businesses. Capitalism dictates that you do what you can to make the money. It's the government's job to look out for the people, not business'. Government makes the rules. Or in this case, fails to make the rules.

        •  What the administration is trying to do (3+ / 0-)
          Recommended by:
          bluesteel, Brooke In Seattle, elwior

          is to inflate another bubble to make things look good in 2012. Some of the things in the bill are stimulative, but not enough to inflate a bubble. They'll fail and we'll all get blamed.

          Suddenly I've changed from being a social liberal/fiscal conservative to sanctimonious purist.

          by RustyCannon on Tue Dec 14, 2010 at 08:30:14 AM PST

          [ Parent ]

      •  Because Democrats (8+ / 0-)

        have adopted a right-wing narrative.  Especially the Democrat at the top.

      •  because (1+ / 0-)
        Recommended by:

        Democrats in Congress refuse to make the arguments. Well, except for this guy:

        It's time to start looking for more and better Senators and Congressmen, period.

  •  I can prove it (5+ / 0-)

    I'm a small business owner.  Cut my taxes and I will do something with it.  I buy something with it, like add a deck to my house and give someone that work. Or if I save it, I will put in my local COMMUNITY bank that will use it to lend to someone to buy a house or start a business.  

    I have no other scientific proof than my decisions.

    But this is missing the point of the so-called "compromise." The bulk is not a tax cut, but keeping things as they are. This tax maintenance program will not likely create jobs, but it could help forestall worsening unemployment.  If my taxes go up, I will not be able to buy the deck or put it away in the savings of my community bank.

    I think there are three excellent things about this deal:

    1. Maintaining the existing rates (I was OK with raising all of them, but not part of them -- so I support all or nothing)
    1. The payroll tax holiday (my employees are excited for that -- that's an extra $1000 to someone making $50k)
    1. The depreciation holiday (100% expensing) for 2011. This last part is brilliant and will encourage small businesses to make non-consumable purchases. That is the way to do stimulus without the government's heavy hand of directing stimulus money to its cronies.
    •  That's not proof, that's faith. (8+ / 0-)

      Unless you've got numbers and comparisons it's pissing in the wind.

      All that is going to happen is that people are going to put more on their credit cards than they actually get in decreased taxes. I'm going to pay down my credit cards, how does that help anything other than make me less vulnerable to creditors?

      F the right wing whiners. I don't care about them any more they can all F themselves for all I care.

      by UndercoverRxer on Tue Dec 14, 2010 at 07:00:11 AM PST

      [ Parent ]

      •  It is what it is (0+ / 0-)

        Perhaps it is not scientific proof, but it is plainly and truly how it will impact me.

        I avoid credit cards as much as possible.  I think small businesses are best to use community bank lines of credit for their temporary debt needs and avoid credit cards like the plague.

    •  Of course, when the local goverments (10+ / 0-)

      either raise their taxes to make up for the shortfall in services previously provided by the feds, that doesn't reallly help out your business either, does it?

      Nor does the rise in interest rates, which takes that $1000 right back out of the pockets of the $50K earner (and doesn't put in yours either - unless you're one of those small bank owners . . . .).

    •  they shold raise your taxes (7+ / 0-)

      but let you write off the expense of buying the deck. Putting it in the bank is not good for you to do right now, lowering your taxes will encourage you to just hoard your money because you're unsure if demand will ever pick up again.

    •  Community bank lending?! Are you serious? (9+ / 0-)

      90% of all loans for housing these days are loans that have to be backed by Fannie or Freddie.  Community banks are going belly up at 2 or 3 a week because of the bad Commercial Real Estate loans they made several years ago.  You practically have to take a hostage from the bank in order to get them to give you a loan for anything!

    •  To truly prove it, (7+ / 0-)

      you'd have to open up your books.

      What's your most recent P&L statement looking like?

      What kind of business entity have you incorporated?

      And knowing that millions of Americans are looking for work, why aren't you hiring more full-time employees?

      How many employees do you have?

      And adding a deck to your house?  That's the best you can do?  You're gonna put a deck on your house?

      Stop clapping. Stop screaming. Open your mind. Listen.

      by Benintn on Tue Dec 14, 2010 at 07:04:55 AM PST

      [ Parent ]

      •  Good grief (0+ / 0-)

        I wasn't trying to provide scientific proof, just an example of what I would do.

        And yes, a deck.  I would need to hire a local person to build the deck.  Last time I checked that would be cheaper than outsourcing my deck to India.  I'm sure someone local would appreciate the work -- unless you want to stop me from giving out work to local craftsmen.

    •  Are you a billionheir? (9+ / 0-)

      Or even a millionheir? You might spend the money in your community, but the big boys don't. When a CEO gets paid the wage of 500 average workers, does he buy 500 Fords, 500 suburban middle class homes, and 500 new decks? No. Why would he? At the most, he might buy a dozen mansions, and maybe a few Porsches or Ferraris. What kind of spending creates more jobs--selling hundreds of middle class cars and homes, or a handful of high-end items?

      Unless your net income is over $250k, your taxes were not even in danger of rising before Obama and Congress fucked it up. And even then, we were only talking about increasing income taxes by 4% on net income over $250k. Calculate what that would gain you, and then calculate how many jobs you would personally create with that money.

      Now lets calculate what it's going to cost your childrens' children to pay off the interest on the trillions of debt this country is running up so that the billionheirs can add a tenth bay on to their garages to store another exotic car that creates a job for one high-end mechanic.

      Al Qeada is a faith-based initiative.

      by drewfromct on Tue Dec 14, 2010 at 07:08:06 AM PST

      [ Parent ]

    •  Wow. What kind of small business do you own? (12+ / 0-)

      You seem to be very confused on what constitutes proof, job creation, and economic consequences of fantasy stimulus.

      Since you are still in business, we can assume that you've never hired a worker simply because your tax bill went down. You hire employees when there is more work that needs doing than you have people to do it, regardless of your taxes.

      Putting money in any bank, credit union, or investment vehicle stimulates economic activity but doesn't create jobs. If it did, just like the topic here, Wall Street would have more workers than Wall-Mart.

      Building a deck on your house might possibly create a job, but the overwhelming odds are that it saves an existing job for the week the project is done. And while your tax bill is forever, you will eventually run out of home improvement projects, so again, that doesn't do it.

      Additionally, and since you brought it up, maintaining the existing rates will greatly increase the deficit (how much ammunition does the Jedi Chess Master think the Republican'ts need?), this is already well-known and the consequences are a whole 'nother issue.

      The payroll tax "holiday" doesn't mean that taxes are not owed, only that they will not be paid for a time. In a stable economy this can serve very well as a quick stimulus, but in today's ongoing crisis it most likely is going to be used to pay the most delinquent bills (good for Visa, does little/nothing for the economy). And just like that credit card, the tax will eventually be paid.

      The depreciation holiday could actually be a stimulus, but as a small business owner you are probably familiar with the absurd difficulty small businesses nationwide are having getting loans to make those purchases that can be depreciated. Oh, and it further adds to the deficit.

      So bottom line to this disaster-in-the-making is that it serves to distract you from the further expansion of our corporate welfare system and will help make the irrelevant "numbers" a little less bad next quarter so they can convince you that whatever scam they decide to run on you then will be easier to get by your notice.

      "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

      by Greyhound on Tue Dec 14, 2010 at 07:35:35 AM PST

      [ Parent ]

    •  What you fail to see (3+ / 0-)
      Recommended by:
      Tracker, Brooke In Seattle, elwior

      is that there is but one reason to add employees to your business: increased demand for your product or service. Yes, you gain some utility for the taxes you do not pay. You. The things you mention as uses for the taxes you don't pay are not job creators. Savings to your local bank might eventually stimulate economic activity through money to build a house. Or it might be used in a number of other purposes that have nothing to do with increasing economic activity now, when it is needed. Saving it serves the same purpose. It may be used at some future date to increase economic activity. But it does little or nothing now when it is desperately needed. There are better uses for those dollars that will create jobs now. Not at some future time after more damage is done to us all.

      My point is that to you this may seem like a good deal. You feel good about it. It is a good deal for me. (If I only look at the relatively few piddling dollars I will not have to pay out.) I will benefit to the tune of several thousand dollars each year. It is money I would love to have as I approach retirement but it is money I don't really need at the expense of a continued shitty economy, millions out of work, and an increased deficit.

      I was allowed to do well in the good times, hurt like many in the not so good times, and when the country's welfare is at stake maybe it is the right thing to sacrifice my short term gain to mitigate the bad deal for all of us. If you think you are in this alone and that only your well being counts, like most of our economic peers, then you are very, very wrong. The concept that we are all in this together is dead in this country. It's all me, me, me. And the acolytes can't even see it.

      Time makes more converts than reason. Thomas Paine, Common Sense

      by VTCC73 on Tue Dec 14, 2010 at 08:26:27 AM PST

      [ Parent ]

  •  No question: (12+ / 0-)

    tax cuts have become a means of increasing profit, not the productivity of a company.  This has been true for decades and has become a self-sustaining myth.  

    I can see tax cuts being important for start-up businesses.  Once you're established and making decent profits overall, tax cuts only benefit increasing profits and do nothing to make it a healthy business for workers.  

  •  Cmon closeted Republicans (3+ / 0-)
    Recommended by:
    elwior, RustyCannon, lunachickie

    lets hear it.

  •  GOP "Proof, we don't need no stinkin' Proof!" (9+ / 0-)

    The GOTP doesn't require any data to prove any of the tenets of their religion.

    F the right wing whiners. I don't care about them any more they can all F themselves for all I care.

    by UndercoverRxer on Tue Dec 14, 2010 at 06:57:15 AM PST

  •  You make a lot of sense. (3+ / 0-)
    Recommended by:
    sephius1, RustyCannon, lunachickie

    What are you doing on Daily Kos?

    Stop clapping. Stop screaming. Open your mind. Listen.

    by Benintn on Tue Dec 14, 2010 at 07:01:50 AM PST

  •  The " Job Engine" has been stipped (6+ / 0-)

    out of America and sent overseas. It currently lies in Asia, whwere the cheapest labor on earth is.
    Don't worry, one day it'll come back to us. When the middle class will work for that ever lower wage. That's when America will really shine !
    My kids may be living in a tent, but they'll be building the wealth's toys.

    •  That's not enough (2+ / 0-)
      Recommended by:
      NoMoreLies, lunachickie

      Don't worry, one day it'll come back to us. When the middle class will work for that ever lower wage.

      It's a lot more than wages. None of those jobs will be back until things like OSHA and the EPA are long-distant memories. The goal of the very rich and their Teabag dupes is to take us back the conditions of the 1890's.

      Al Qeada is a faith-based initiative.

      by drewfromct on Tue Dec 14, 2010 at 07:45:02 AM PST

      [ Parent ]

  •  The problem is globalization (9+ / 0-)

    Just because a profit is made in America does not mean that those dollars are in turn invested in America.

    In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

    by blue aardvark on Tue Dec 14, 2010 at 07:12:46 AM PST

  •  in a business, when times are tough... (7+ / 0-)

    ... you don't get raises.  I know this full-well because my annual reviews for the past three years would get me merit raises, but I haven't gotten them because... times are tough.  And, I understand that.

    So, why are the rich getting raises in the form of tax cuts?  

    And it's obvious that the Republican meme of "tax cuts for the rich = job creation" doesn't work.  Those tax cuts have been in place for around a decade now... and it's been a decade of steady negative job growth.

    A decade's a long enough testing period.  Time to try something else.  Or, if the rich want to keep those tax cuts, then they better get busy creating jobs here in America.  Don't want to give that money to the government?  Fine, if you do something with it to help the country out more directly. I'd be okay with that deal... but, they'll never make it.

    "Glenn Beck ends up looking like a fat, stupid child. His face should be wearing a chef's hat on the side of a box of eclairs. " - Doug Stanhope

    by Front Toward Enemy on Tue Dec 14, 2010 at 07:15:49 AM PST

  •  GDP=C+I+G+(X-M), where C is net of taxes (6+ / 0-)

    This is the formula that is the foundation of liberal economics devised by John Maynard Keynes.  It basically says that GDP is the sum of consumer spending, business investment and government spending and the surplus of export revenue over import revenue.

    This is the intellectual basis of the New Deal and the stimulus.

    If there is an income crisis or recession, the government can step in and bolster demand, and therefore national income, by increasing government spending while holding taxes steady (deficit spending).

    The formula has over three quarters of a century of empirical data that shows it to basically work.

    But the formula also endorses cutting taxes.

    C is consumer spending, which is income to households net of taxes.

    I is business investment, which is income to businesses net of taxes.

    So reducing taxes increases C and I, which increases GDP.

    Liberal economists like Paul Krugman do no argue that cutting taxes does not increase economic activity; they are saying that during a banking crisis such as we are experiencing, cutting taxes is less effective than increasing spending because consumer and business savings will not be efficiently recycled through the economy as lending.

    I wish that people who consider themselves "progressives" would acquaint themselves with the foundational theories of progressive economics.

    •  no, it endorses spending money (3+ / 0-)
      Recommended by:
      pollwatcher, CParis, lunachickie

      But the formula also endorses cutting taxes.

      I would push back quite strongly on that. The formula endorses cutting taxes - ie, spending money - on people whose marginal propensity to consume makes the expense of the tax change worthwhile.

      The level of wealth concentration in our society is one of the foundational causes of our economic malaise. Giving more money to rich people makes the situation worse.

      I'd love to see the evidence that Keynes thinks marginal tax rates on income, estate, capital gains, and similar revenue streams should be cut relative to where they are today.

      If you want to 'cut' taxes, you do something like the make work pay tax credit that doesn't benefit the wealthy far more than the rest.

      Ask your Member of Congress what they're doing to put Americans back to work.

      by washunate on Tue Dec 14, 2010 at 08:02:15 AM PST

      [ Parent ]

      •  You're mixing up a number of issues (1+ / 0-)
        Recommended by:

        I'm sure that Keynes would have favored high marginal rates, but for reasons of equity.

        It doesn't matter whether the rich spend the tax cut money or put it in the bank or invest it.

        There is a frequently repeated fallacy here on DK that the only way that tax cuts for the rich stimulate the economy is through the purchase of yachts or hiring of gardeners.

        The formula is more abstract than that.  If wealthy people get tax cuts and put it in the bank then the bank has a larger money supply to lend.  If they put it in the stock market, then the money will go to other businesses, increasing I.

        In a normal banking system, money is never idle.  The idea that corporations are "sitting" on billions of dollars ignores the fact that banks never let money "sit" and immediately lend it out.

        However, during a banking crisis, such as occurred in the early 1930s and today, banks are investing in t-bills trying to bolster their balance sheets, which makes ordinary Keynesian tax cut stimulus less effective.

        But the formula itself is agnostic about whether to increase spending or cut taxes.  Just work through the variables with numbers and you'll see.

        The reason liberals prefer tax cuts for lower income people has to do with equity, distribution and the multiplier effect, not because tax cuts don't increase employment.

        One of my pet peeves is that the Republicans are indeed Keynesians when they insist on tax cuts.  Keynes explains both the liberal and conservative approaches to fiscal policy, but the conservatives lie about it.

        Unfortunately, lately many progressives are becoming "paleo conservatives" and "Ron Paul conservatives" and as this thread shows, they no longer believe in Keynesian theory, which used to be the bed rock theoretical foundation for liberalism.

        Progressives have been punked, but they don't realize it.

        •  deeply disagree (2+ / 0-)
          Recommended by:
          Brooke In Seattle, lunachickie

          It doesn't matter whether the rich spend the tax cut money or put it in the bank or invest it.

          Baloney. The money sloshing around our sysetm isn't being 'invested'. Speculation itself is driving much of the systemic breakdowns, from securitization to rapid swings in oil prices.

          I think you're the one mixing up a number of issues. Taxes and spending aren't separate things. A tax cut is one form of spending. What matters when it comes to government outlays is what the money is spent on.

          Ask your Member of Congress what they're doing to put Americans back to work.

          by washunate on Tue Dec 14, 2010 at 08:28:28 AM PST

          [ Parent ]

        •  good discussion, but I'll take exception with (3+ / 0-)

          If wealthy people get tax cuts and put it in the bank then the bank has a larger money supply to lend.  If they put it in the stock market, then the money will go to other businesses, increasing I.

          Your assumption is that the banks will actually lend the money and give some velocity to the money they indirectly received from the tax cuts, via the wealthy.  We are not seeing that at all.  Big banks have huge reserves, but are not lending (for various reasons), so this may actually have a negative effect on GDP.

          You also assume that putting money in the stock market ends up helping a business expand.  By far, the vast majority of money that goes into the stock market simply goes to another investor who sold the stock.  Only during a public offering does a company actually get the money.  So stock market investment also has a negative effect on money velocity and actually takes money away from the "productive" economy.

          Your argument about the formula is certainly correct, but there are far to many other factors to consider than to take the formula as the fundamental principle of Keynesian economics.

          •  As I said, in a banking crisis, things are (1+ / 0-)
            Recommended by:

            different and I agree that money in the bank does not have the velocity it usually has.

            One bit of semi good news -- the NY Times reported yesterday that the banks are flooding consumers with offers of credit cards, which may mean the credit crunch is easing.

            As I mentioned elsewhere, the banks are investing in t-bills rather than lending in order to improve their balance sheets.

            But I really want to address the original diary -- the idea that tax cuts don't create jobs, or that the relationship between them and jobs can't be proven.

            That's just paleo conservativism.  

            •  I'm quite intrigued by all this (0+ / 0-)

              That's just paleo conservativism.

              I don't understand what that means. The data is overwhelming that 'tax cuts' as we discuss them today (ie, spending that goes disproportionately to rich people) generate less economic activity than the cost of the outlay.

              Printing money isn't free. It is done by changing interest rates, reserve rates, and so forth. It damages savings and investment in the real economy while making long-term planning more difficult as speculation and gambling on the changes in public policy combine with information asymmetries and moral hazard to distort a whole variety of incentives.

              It's worthwhile to the extent that the return on the outlay is greater than the cost of capital. In order to perform such an analysis, one has to consider, among other things, who gets the money.

              There's an easy way of seeing this. Would you support a bill that has the government give everyone in the country a $100 refundable tax credit except for me, who would get a refundable tax credit of $100 trillion? That would sure stimulate the economy. And GDP would go through the roof as C explodes.

              I'd sure support that bill. The question is, who not in my immediate circle of friends and family, or perhaps my larger circle of acquaintances and neighbors and colleagues and so forth, would say that such a tax cut is good for the economy?

              Ask your Member of Congress what they're doing to put Americans back to work.

              by washunate on Tue Dec 14, 2010 at 10:24:08 AM PST

              [ Parent ]

        •  what if (1+ / 0-)
          Recommended by:

          the bank is in the caymans and the investment is in overseas factories?

          it just seems that this tax structure did zero for jobs during the bush administration, even before the financial crisis. there must be other variables at work here that aren't being acknowledged by the players in DC.

          "which side are you on, boys?"

          by produceus on Tue Dec 14, 2010 at 09:00:36 AM PST

          [ Parent ]

    •  thanks (0+ / 0-)

      for the econ refresher.

      i'm curious, though, what Keynes would have made of globalization, modern trade policy and the effects they have on skewing this equation. it's a different landscape now, and that needs to be taken into account.

      "which side are you on, boys?"

      by produceus on Tue Dec 14, 2010 at 08:05:03 AM PST

      [ Parent ]

      •  Keynes was a proponent of free trade (0+ / 0-)

        No one can predict what he would think about these things today.  Perhaps he would be like Krugman who accepts the basic theory of trade but shows how the theory often doesn't work in practice.

        Keynes' belief in trade was demonstrated by the fact that he basically created the IMF and World Bank at Bretton Woods, as progressive institutions, and the IMF in particular was designed by Keynes to intervene when trade created balance of payments crises that threatened free trade.

  •  Everyone talks as if the tax cuts are a future... (11+ / 0-)


    They are an event in the past. They have been in place for over 7 years, including the last two. It is a myth that they create jobs. Already proven.

    British Petroleum: I think that means it's foreign oil.

    by Bensdad on Tue Dec 14, 2010 at 07:22:39 AM PST

  •  "Tax Cuts Create Jobs? Prove It." (14+ / 0-)

    The proponents, starting with the White House, can't prove it.  

    The best they can do is a ridiculous and specious argument of "Heads, I win.  Tails, you lose".


    1.  We can't raise taxes in a bad economy because we might stall the recovery.
    1.  We can't raise taxes in a good economy because we don't want to cause a recession.  

    Yes, that is the horseshit that passes for policy today.  

    "I wonder how many times you have to be hit on the head before you find out who's hitting you?" Harry Truman - 1948

    by ThAnswr on Tue Dec 14, 2010 at 07:23:22 AM PST

  •  but they do (6+ / 0-)

    bush slashed taxes and look how many jobs he created!

    or something.

    The cold passion for truth hunts in no pack. -Robinson Jeffers

    by Laurence Lewis on Tue Dec 14, 2010 at 07:24:06 AM PST

  •  I think it might. (1+ / 0-)
    Recommended by:

    More gardeners, butlers, chauffeurs and maids.

    Happy Fucking Monday. -- irony from Colorado is the Shiznit, after a long rant.

    by dov12348 on Tue Dec 14, 2010 at 07:24:14 AM PST

  •  All the tax cuts need to expire not just the (7+ / 0-)

    super rich.  We lived with the Clinton tax rates before we can again. We even ran a surplus.  I'm in favor of raising the taxes on the rich mostly because I don't like them. The revenues would be significant but nothing compared to the revenues if all the tax cuts expired.  Take from the people that have money and give to the poor.  Works for me since I'm poor.  

    I don't belong to an organized party, I'm a democrat.

    by thestructureguy on Tue Dec 14, 2010 at 07:27:22 AM PST

    •  agreed wholeheartedly (1+ / 0-)
      Recommended by:

      Just let the damned things expire. What vise is wrapped around the gonads of our Democrats, that they feel "a deal" has to be made? That's complete bullshit!  

      One wonders if part of the end-game here is to kill the Democratic brand before we can kill the Republican brand. And sadly, our President seems to be helping the not-Democrats  :-(

  •  High taxes are actually the job creator (12+ / 0-)

    I am a succesful life-long businessman.  I would psotulate actually that just the opposite is true...high taxes create job growth.  If I am a profitable business with a 33% tax rate, then two thirds of the profits are mine and only 1/3 the governments, and I have a motivation to keep and invest them.  If the tax rate were 70%, then less than a third of the profits are mine, and the majority is the governments, so I have a significant incentive to invest and grow my company, particlulalry if capital gains taxes are low, and I can monetize my retirement through a sale of my business.  As a businessman, this seem slike a sinple and obvious truth.  Right now corporations are sitting on huge amounts of cash...suppose they were facing much higher tax rates?  I don't think they would be sitting on the cash, they would be attempting to convert it to capital gains.

    •  Why doesn't this get more traction? (1+ / 0-)
      Recommended by:

      I have heard only one economist(Black) make this case. It's like they have all bought in to the low tax narrative, when what your stating is how things really work.

    •  Doesn't make sense (0+ / 0-)

      Each marginal dollar you make is taxed highly. So, you spend a lot of time and effort to expand your business only to get 90% of the extra earnings taxed away from you (say)? It would seem to me that high tax rates are a big incentive to not bother.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Tue Dec 14, 2010 at 09:16:06 AM PST

      [ Parent ]

    •  Thom Hartmann has been saying (1+ / 0-)
      Recommended by:
      Brooke In Seattle

      for quite some time that historically, when the top marginal tax rates are higher then 45%, the economy tends to have very stable periods of moderate growth. You don't get many "flash billionaires" but you also don't tend to have bubbles and crashes.

      Personally, I would rather have a more stable economy for all than a wildly fluctuating economy that greatly benefits a few at the expense of the many.

      "It's never too late to have a happy childhood." - Tom Robbins - Political Compass sez: -8.25, -7.90

      by ARS on Tue Dec 14, 2010 at 09:33:19 AM PST

      [ Parent ]

      •  That is what Candidate Obama said. (1+ / 0-)
        Recommended by:

        He said many times that he wanted to stabilize the economy and eliminate the boom-and-bust cycle that we've been in for years.

        Funny that it seems to have been forgotten by President Obama. He seems to have no memory of ever having discussed this notion.

        "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

        by Brooke In Seattle on Tue Dec 14, 2010 at 10:25:56 AM PST

        [ Parent ]

  •  like auditing the Fed... (4+ / 0-)

    the BLS should be more transparent in it's reporting.

    How many are employed v unemployed?
    How many new jobs - and what are they?

    Part time?
    Private sector v government?
    Permanent v temporary?

    The data is sort of there, but it is not layman-apparent. I'm going to ask everyone I see today what U3 unemployment is. That'll be a couple hundred people. I'd be amazed if I get 10 right answers.

    As in many other aspects of economic reporting, the details make a great deal of difference - and are seldom reported. This would go a long way toward answering the question of just how effective tax relief is compared to direct spending.

    But, count on it, that's not going to happen. This administration is content to try to tempt employers to begin hiring and let the market decide if it's going to wake up or not.

    For my part, the spending portion of the recovery act is what saved us, and is accountable - we can find out where every penny went and to whom. The tax relief third of it went where exactly?

    And it's about a fifteen years late to hear the words "living wage" again in this country. Even my white collar friends have been taking on  second jobs to make ends meet, and this trend began in the 90's, and I don't know any household which can survive on one income anymore.

    Don't get me wrong, I like working. I'm good at pretty much whatever I need to do and that's been a source of pride (tweety take note) over the years. However, when the alternatives to working long enough every week to live disappear, then it tips over into economic bondage.

    Which is exactly what some employers (Koch Bros.) aim for.

    2012: If you think this is the last outrage we'll see from Washington, guess again.

    by papicek on Tue Dec 14, 2010 at 07:29:21 AM PST

  •  Look at the Numbers (4+ / 0-)

    The economy Before and After Tax Cuts. The tax cuts are then invested in building factories in China and India. This reduces jobs and income in the US. On CNBC an investor said "Why would I invest in the United States when China requires that we build Factories in China and I only need one factory. China has a 40% tariff on imported US built products.

    Annualiz­­­­­­­­­­­­­­­&# 173;e­­­d Growth Rates


    1993 to 1996 Real GDP = 3.44%
    1993 to 1996 Real GDP per capita = 2.22%

    1997 to 2000 Real GDP = 4.44%
    1997 to 2000 Real GDP per capita = 3.26%

    1993 to 2000 Real GDP = 4.01%
    1993 to 2000 Real GDP per capita = 2.81%


    2001 to 2004 Real GDP = 2.62%
    2001 to 2004 Real GDP per capita = 1.68%

    2005 to 2008 Real GDP = 1.75%
    2005 to 2008 Real GDP per capita = 0.79%

    2001 to 2008 Real GDP = 2.31%
    2001 to 2008 Real GDP per capita = 1.36%"

    American Heart Association: Diet Soda can cause type 2 Diabetes. "Circulation" July 23, 2007. Read it for yourself.

    by jeffrey789 on Tue Dec 14, 2010 at 07:37:58 AM PST

    •  India gets less than 0.5% of USDI (0+ / 0-)

      That's tiny in absolute terms, and infinitesimal considering India's size.

      As you can see from the table, Europe gets majority share of the USDI. Among developed countries, the Netherlands, the UK and Canada are at the top. Among developing countries, Mexico (2.8%), Brazil (1.6%) and China (1.4%) top the list. Africa (comparable in both population and underdeveloped status with India) at 1.3% gets 3x the USDI that India does.

      Links: USDI 2009 spreadsheet (excel/xls file), BEA USDI page.

  •  Tax cuts on the wealthy (8+ / 0-)

    do NOT create jobs.  In fact, I would argue that they encourage hoarding and so are antithetical to job creation, economic activity and philanthropy. (They do encourage increasing prices on exclusive goods - rare cars, huge homes in ideal locations, private jets, super jewelry, prize-winning horses, etc., but really, that's a blip of worthlessness in the end.)

    Consider: a small business owner who makes MILLIONS in personal income would be more willing to hire, which is a pre-tax exercise, if his bracket was very high.  If he's paying 35% (current) on that second million, he can keep 65% of it.  If he were paying 80%, for example, he might be more likely to hire someone if his business called for it at the margins, because 8-out-of-10 dollars he would use to hire that person would have gone to the government anyway.

    That said, tax cuts on the middle and lower economic classes, and certainly UI money ARE stimulative, because those dollars are recirculated right back into the economy, increasing demand.  


    •  Then why doesn't the owner hire (1+ / 0-)
      Recommended by:

      a person now and get the benefit of the low tax rates they have now for that second million?

      I don't belong to an organized party, I'm a democrat.

      by thestructureguy on Tue Dec 14, 2010 at 08:01:03 AM PST

      [ Parent ]

      •  What? (0+ / 0-)

        That doesn't even make sense in the context of what I typed.

        People hire based on need, first of all, which is why I qualified my statement with "on the margin."

        If it's perhaps a good deal to hire, but marginally so, a potential employer is less likely to do it when he/she is going to get to KEEP more of the money after tax.

        •  I think his point is... (1+ / 0-)
          Recommended by:

          ...if your marginal dollar is being taxed at a high rate, why bother expending tremendous effort expanding your business to make only slightly more money? Whether the money is pre- or post-tax, huge capital investments are a risky and painful process and they are time consuming for a business owner and executives.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Tue Dec 14, 2010 at 09:19:37 AM PST

          [ Parent ]

          •  I was thinking (0+ / 0-)

            more on the line of S-corp/micro business situations, where the choice is along the lines of "should I hire a personal assistant?"  "Should I hire someone to do my taxes?" "Should I get someone in here to take away some of this paperwork?"

            The paperwork of such an addition is minimal and the cost easily controlled.  If you're hiring someone with the government "kicking" in a higher percentage, because your taxes would be substantially higher on that money if you didn't hire someone, it's more likely that you'll do it.

            Same with charitable giving.

  •  the good news is, nobody believes it (3+ / 0-)
    Recommended by:
    Brooke In Seattle, JeffW, Noamjunior

    At least, nobody outside Washington. Most Americans want the government to engage big, bold programs, like unemployment insurance and health insurance and investments in infrastructure and education and so forth.

    What's funny is that even in polls showing support for the overall tax 'deal' or whatever we're calling it - the Bush/Obama/Boehner tax cuts? - only a minority of respondents think the deal will help the economy.

    What intrigues me is that we're not confronting a Lakoff-style framing challenge. Rather, Americans largely agree on the policy choices that support our underlying values. The trick seems to be getting our political leaders in DC to actually advocate and implement them.

    Ask your Member of Congress what they're doing to put Americans back to work.

    by washunate on Tue Dec 14, 2010 at 07:49:56 AM PST

  •  I wish every Democrat in the House... (3+ / 0-)
    Recommended by:
    Tracker, Brooke In Seattle, venger

    ...of Representatives could read your diary, amy!

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Tue Dec 14, 2010 at 07:50:33 AM PST

  •  Different perspective... (0+ / 0-)

    To your first point, I don't believe that Republicans are looking at tax breaks as a "subsidy"...But rather the thinking is that more taxes are bad, less taxes are good.   The thought being that its their money not the government's money.

    To your second point, union households are down to 14% of the US.   There was a point where collective bargaining was useful, but I'm afraid that the unions have caused their own demise by some of their own practices.   I.e. teacher unions protecting incompetent teachers, some of the other unions being physically intimidating towards others.  Perhaps not a large percentage of union workers, but enough of them to give unions a bad reputation.

    To your 3rd point of a safety net - 99 weeks of unemployment is pretty much the safety net.  What more would you want in the way of a safety net?

  •  Why can't we try "trickle up economics"? (7+ / 0-)

    It's not rocket surgery. Give people on or near the bottom of the income level a bit more money and they spend it.  Give a multi-millionaire a couple hundred grand and s/he will either throw it in the bank or invest it in Wall Street, where it'll languish for God knows how long.

    The Republicans, starting with Saint Ronnie, sold a load of horse-shit to the American people and sadly, many bought into it.

    G.H.W Bush had it right though: It really is "Voodoo Economics".

    What's so depressing is that far too many Democrats (and apparently that includes our President) have bought into the lie. I just wonder how long we can go, hitting ourselves in the head with a hammer.

    This ain't no party. This ain't no disco. This ain't no foolin' around!

    by Snud on Tue Dec 14, 2010 at 08:00:45 AM PST

    •  Demand side economics (3+ / 0-)
      Recommended by:
      Brooke In Seattle, Snud, Noamjunior

      When people can purchase goods or services, businesses can ramp up to meet the demand. When people cannot afford to buy any goods or services, nobody winds, no matter what your supply situation is.

      You can have a warehouse full of $1000 electronic toys but if everybody is barely making ends meet, they'll just sit in their pretty boxes.

      People need spending power and security in order to purchase more than the basics. That doesn't come from tax cuts for the top 2%

      "It's never too late to have a happy childhood." - Tom Robbins - Political Compass sez: -8.25, -7.90

      by ARS on Tue Dec 14, 2010 at 09:36:22 AM PST

      [ Parent ]

  •  Sure, they created a lot of jobs (3+ / 0-)

    In China and India.  Now our overlords want more tax cuts to create more jobs overseas.  And we get to pay for our own destruction!

    you don't need a weatherman to know which way the wind blows

    by Dem Beans on Tue Dec 14, 2010 at 08:11:42 AM PST

  •  well they DO create jobs - (4+ / 0-)


    Recent commenter on Ed Schultz' radio show, an international flight attendant, shared how she overhears US CEOs talking about investing in new factories in Macao or building second homes in Shanghai so their commute won't be so far.  

    Those tax cuts will come in handy as they build their global empires.

    Yeah, I'm pitchfork mad like that.

    by lisastar on Tue Dec 14, 2010 at 08:13:39 AM PST

  •  Conservatives misunderstand the role of govt (3+ / 0-)
    Recommended by:
    Brooke In Seattle, ARS, Noamjunior

    The diarist writes,

    Conservatives frequently contend that government is irresponsible and should run more like a business. But what sort of business undermines its base of revenue without demanding something concrete in return?

    and this really gets something right:  the way the conservatives whine and moan about government this and government that, it's clear that they think of government as just another business, although a necessarily corrupt one whose job it is to take money from our Galtian saviors (they say this, but they mean people who happen to be rich) and give it to lazy degenerates (and they say this, but they mean people who happen to be poor).

    What this inchoate whining reveals is that conservatives do not understand why we have a government.  A government is not just another business:  a government is a necessary condition for business as we know it.  It's the government's job to make huge public investments that make profitable commerce possible in the frist place:  investments in infrastructure that make possible reasonably safe and reliable nationwide trucking, for instance, and investments in people--that is, via the instrument of education--that help our society maintain competitive and reasonably meritocratic commerce across generations.  A government makes the huge public investments necessary for a free society that do not make sense for any business to make.  

    This is why we must tax.  In order to maintain a profitably commercial society, we must continue to invest in the basic infrastructure and other preconditions for profitable commerce.  This means we need to see a return on our public investment, and this means that some of the money everyone sees in his or her paycheck, no matter how big or small the paycheck is, is truly a loan from the government.  Tax rates are just if they are democratically decided.  When conservatives tell you that the institution of taxation means taking away money that belonged to deserving Galtian heroes, they reveal they don't understand taxation.  Taxation is how the public sees a return on the public investment.

    Government is a necessary condition for business.  Conservatives just don't understand this.  Money payed in taxes never belonged to the taxpayer in the first place.  Conservatives just don't understand this.  Taxation is not necessarily unjust.  Conservatives just don't understand this.

    Conservatives just don't understand the role of government in society.

  •  Ah, but tax cuts DO create jobs. (4+ / 0-)

    In places like India and Mexico.

    You need to be more specific and ask for proof that tax cuts create AMERICAN jobs.

    You won't get any, btw, because it doesn't exist.

    Obama, 2008: "Yes We Can!"
    Obama, 2010: "No, I Won't!"

    by Mehitabel9 on Tue Dec 14, 2010 at 08:23:56 AM PST

  •  TAX CUTS ARE JOB KILLERS- Prove me WRONG gopers (2+ / 0-)
    Recommended by:
    Dave925, sullivanst

    if we can learn anything from bush-enomics is that giving the wealthy tax breaks stagnates the ecconomy and creates stock market bubbles.
    Thats what history tells us.

  •  Why can't workers organize? (0+ / 0-)

    The author suggests the ability of workers to organize be restored.  I am not aware that it's been taken away.

    The unions to whom I've been personally exposed did not deliver value to their members and were dishonest.  Card check wasn't going to fix that.

    Feyman once said, "Science is imagination in a straitjacket." It is ironic that...the people without the straitjackets are generally the nuts. - L. M. Krauss

    by Nicolas Fouquet on Tue Dec 14, 2010 at 09:43:40 AM PST

    •  Then get involved with a Union (0+ / 0-)

      The union is its members, if it has corrupt leadership then you need to fix it, not tar it as a bad thing.

      "The rich will strive to establish their dominion and enslave the rest. They always did... they always will. . ." Governeur Morris

      by Dave925 on Tue Dec 14, 2010 at 10:35:42 AM PST

      [ Parent ]

      •  But it's a reason why (0+ / 0-)

        union membership is declining.  I guess I don't understand what needs to be restored (by the government in general).  Companies view union activity to be a "deal killer" (thus, they'll look at every option to avoid them, including leaving).

        It's like corporate taxes - corporations have a lot of leverage and tools to avoid them because they can just move.

        The answer, rather, is to lower corporate tax rates to reduce off-shoring and raise individual tax rates for upper income people significantly (perhaps back to 65%+ for the high 6 and 7-figure people).  The French do that pretty well.  Then, put the money back into education, support services and the base economy (and grow new industries).

        I don't think unions can do much to help this cause.

        Feyman once said, "Science is imagination in a straitjacket." It is ironic that...the people without the straitjackets are generally the nuts. - L. M. Krauss

        by Nicolas Fouquet on Tue Dec 14, 2010 at 12:03:10 PM PST

        [ Parent ]

  •  DAVID CAY JOHNSTON: (5+ / 0-)

    We used to have high taxes on business, and businesses complained about it, but the business owners were forced by that to reinvest in the business and create jobs. Low taxes encourage withdrawal from business, which means destroying jobs and putting money into unproductive uses, like buying nice art to hang in your home.

    Democracy Now! this morning

  •  Why Wall St. Loves Unemployment & and why are... (2+ / 0-)
    Recommended by:
    AnnCetera, venger

    Aren’t we holding our politicians’ feet to the fire?  

    While the myth of "tax cuts promote hiring" continue to come out of the mouths of the politicians and pundits as if merely repeating it ceaselessly will make it true—the real truth is:  Wall St. Loves Unemployment:

    "...the US has experienced the largest increase in unemployment in a quarter of a century.  What was Wall Street's response? A remarkable increase in the growth of the stock market numbers...

    There is a clear divide between the short term interests of the public and business in general and an even bigger gap between the average person and Wall Street. The latter is all about profits and bottom lines. They could not be happier about the Draconian steps being taken by businesses these past months for several reasons...

    There is no quicker way to cut costs than to cut employees...I don't believe the job cutting is over. Virtually every publicly owned company is going to seek ways to increase investor confidence in their companies. There is no quicker way to achieve that following a decline in profits than through layoffs...

    However, this article then goes on to claim that the cure for this situation is to "cut taxes on ‘Job Creators" and the wealthy—but that’s where the truthtelling becomes lying.  The further truth to the ugly picture admitted to above is that many businesses now won’t hire because:  "employers are learning to do more with less." (which also helps keep the profit margins higher for all those "investors" on Wall St.).

    ...The problem with bringing down the stubbornly high unemployment rate is that employers are learning to do more with less.

    Employers still aren't hiring enough... "It's not just getting people to do more," he said. "I think companies have stopped doing things...That's not going to change."

    ..."We're producing almost as much as we did before the recession, with 7.5 million less people," said Lakshman Achuthan, managing director of Economic Cycle Research Institute. "The difference is going into the productivity numbers and corporate profits."

    So—we continue to let politicians and Wall St. types claim that if they just get more and more "tax breaks" somehow they are going to suddenly create jobs.  Even articles like those cited above manage to work in the meme that if businesses feel more "confident" in the market, they will start hiring.  

    As a dubious observer and voter—I would respond:  "Prove it.  Before you get those big tax breaks, put it in writing as a guarantee.  In return for the tax breaks, you will provide  X number of new jobs within X number of months—or you will lose that lower tax rate. "
    But then, that’s why I’m just a dubious voter and not an elected "representative".

  •  Let's not get too silly. (2+ / 0-)
    Recommended by:
    HamdenRice, Prince Nekhlyudov

    Tax cuts inflate the money supply.  That tends to create jobs and raise prices.  Basic economics.  You can argue that it doesn't create AS MANY jobs or that in this particular case that it is ineffective because it's countered by other forces, but other than that it's basic economics.  John Maynard Keynes wouldn't hesitate to tell you all this.

    •  Weellllll... (2+ / 0-)
      Recommended by:
      Brooke In Seattle, Habitat Vic
      I agree with your first statement, STRONGLY disagree with your second...which you state as fact.  Money does NOT create jobs and raise prices, depending on who has it.

      I am making a fairly good income as a software contractor.  Give me a tax cut, I have even more money.  If I have no need to spend more money, all I do is put more money in my pocket/bank account.  The only reason I would spend more money is if there were things I needed to spend money on but didn't have enough to do so before.  This is why middle-class tax cuts are a good idea.  HOWEVER, I am not creating jobs.  What I am creating, potentially, is demand...and even then, it's negligible.

      So what happens with that demand?  It should cause business to want to meet it with supply.  This IS basic economics.  What it does NOT do is force them to:

      - Hire someone new
      - Hire someone LOCAL

      So either their workers will each be asked to do more, raising their profits, or more offshore jobs will be created, raising their profits.

      If you argue that that is why we need to give tax cuts to the owners of those companies, the fallacy is that the money will be put into hiring new staff.  The only thing that causes a business to hire even a single worker is demand, NOT increased revenues.  This is the load of crock that everyone is being given.

      Basically, if tax cuts ARE creating new jobs, it likely isn't creating them here, which is what we should care about.  And then the money goes straight out of the system, to become revenues that most likely, by all accounts, are no longer taxed by the US.

      It's a spiral that's good for the company, but bad for most everyone else.

      The work goes on, the cause endures, the hope still lives and the dreams shall never die. - Sen. Edward M. Kennedy

      by Stymnus on Tue Dec 14, 2010 at 10:53:17 AM PST

      [ Parent ]

      •  I disagree with one of your points. (0+ / 0-)

        You state that the only thing that causes a business to hire is demand, not revenue. That may be true of businesses fully staffed, but for a small company like mine, I hire a worker to take some of the workload off me when I have enough revenue to do so. It gets tiresome working 80+ hours by myself. Multiply me by millions of small business owners and revenue becomes a huge factor.

        Modern Democrats excel at bringing nerf guns to a Hellfire missle fight.

        by edg on Tue Dec 14, 2010 at 12:19:46 PM PST

        [ Parent ]

        •  My point stands. (0+ / 0-)

          The work goes on, the cause endures, the hope still lives and the dreams shall never die. - Sen. Edward M. Kennedy

          by Stymnus on Thu Dec 16, 2010 at 11:19:09 AM PST

          [ Parent ]

        •  My point stands. (0+ / 0-)

          You would not hire if you did not have a need, added revenue or no.  If you were fully staffed, you would not hire someone just because you had extra money in the coffers, would you?

          The tax cuts we are arguing about, those for those making $250,000+, are going to lead to jobs are largely bunk, because most of those people have the money to hire someone if they need to, now...and they aren't doing so, at least not in the US.

          If they currently aren't hiring because they don't need anyone, any amount of money we give them isn't going to change that.

          The work goes on, the cause endures, the hope still lives and the dreams shall never die. - Sen. Edward M. Kennedy

          by Stymnus on Thu Dec 16, 2010 at 11:21:58 AM PST

          [ Parent ]

    •  Tax cuts inflate the money supply? (0+ / 0-)
      •  Because money must be borrowed ... (0+ / 0-)

        to fund the tax cuts. Every time you hear a repub talk about how the KRB (Kennedy Reagan Bush) tax cuts grew GDP or increased tax revenues, just take a look at the deficit figures for the years they claim were so wonderful.

        Modern Democrats excel at bringing nerf guns to a Hellfire missle fight.

        by edg on Tue Dec 14, 2010 at 12:16:12 PM PST

        [ Parent ]

    •  Exactly (0+ / 0-)

      You put it much more succinctly than I could.

  •  Deficits (0+ / 0-)

    Deficits push economic growth, and that creates jobs.

    Generally speaking:

    1. Each dollar od government spending pushes econic growth significantly more than a dollar of tax cut.
    1. Tax cuts for the poor push economic growth more than tax cuts for the rich.

    Corporations are people; money is speech.
    1984 - George Orwell

    by Frank Palmer on Tue Dec 14, 2010 at 11:12:50 AM PST

    •  So, you agree with Bush's deficit spending? (0+ / 0-)

      I thought the Bush budgets are what caused the mess we are in?

      And, yes I am being sarcastic...


      •  Well, (0+ / 0-)
        1. Deficits, good -- debt bad. Unfirtunately, one leads to the other.
        1. That wasn't his only fault. What caused the present mess was the mortgage crisis based on deregulation.
        1. Generally the Bush Deficits resulted from a combination of tax cuts for the rich and simple looting. Spending money off shore doesn't really help much either.

        Corporations are people; money is speech.
        1984 - George Orwell

        by Frank Palmer on Thu Dec 16, 2010 at 08:41:55 AM PST

        [ Parent ]

    •  How do you account for Clinton's years? (0+ / 0-)

      Deficits were largely eliminated by the end of his second term yet he added 18 million permanent jobs in eight years. By contrast, there were 3 million less jobs at the end of Bush's eight years of deficit spending.

      Modern Democrats excel at bringing nerf guns to a Hellfire missle fight.

      by edg on Tue Dec 14, 2010 at 12:22:53 PM PST

      [ Parent ]

      •  As I pointed out, (0+ / 0-)

        Deficits lead to growth, but not all deficits are created equal.

        Defidcit reduction is not the only thing which happened during Clinton's years. Keynes advocated government deficits to combat recessions and government surpluses in periods of good growth.

        As a generla rule, deficits are helpful in combatting recessions caused by excess private savings. They don't work against other problems, nor do they accelerrate growth in good-growth times.

        Corporations are people; money is speech.
        1984 - George Orwell

        by Frank Palmer on Thu Dec 16, 2010 at 08:46:39 AM PST

        [ Parent ]

  •  Demand Side Tax Cuts (0+ / 0-)

    Demand side tax cuts are a basic principle of Keynesian economics.  A tax cut puts more money in people's hands, which increases spending.  This was the centerpiece of JFK's economic program, which was enacted in January 1964 after his death (including a reduction in the top rate from 91% to 70%).  The tax cuts did in fact increase economic growth and reduce unemployment, which went below 4% in 1968, the lowest in postwar history.

    Obviously, times are different today from what they were in the 60s.  To the extent that increased demand today is being satisfied by supply coming from outside the US, then we have structural unemployment.  However, most economists (including Krugman) believe that structural unemployment is at best only partially responsible for the current high levels of unemployment, and that insufficient demand is still the primary culprit.  To the extent they are right, then tax cuts for the middle class (and to a lesser extent the rich) will stimulate demand and economic growth and reduce unemployment.

    Of course, one can argue whether demand side tax cuts are as good a way to stimulate demand as  increased government spending.  However, given current political realties, there is no possiblity of Congress enacting another stimulus in the form of a major increase in government spending.  Demand side tax cuts - combined with extended unemployment benefits, a highly stimulative form of government spending - are the best we are going to get.

    •  what? (0+ / 0-)

      To the extent they are right, then tax cuts for the middle class (and to a lesser extent the rich) will stimulate demand and economic growth and reduce unemployment.

      krugman just argued in a recent column:

      The point is that while the deal will cost a lot — adding more to federal debt than the original Obama stimulus — it’s likely to get very little bang for the buck. Tax cuts for the wealthy will barely be spent at all; even middle-class tax cuts won’t add much to spending. And the business tax break will, I believe, do hardly anything to spur investment given the excess capacity businesses already have.

    •  the bush tax cuts aren't stimulative at all. (0+ / 0-)

      What a dollar of stimulus puts back into the economy when spent on...

      see bar graph.

    •  You're perpetuating a myth. (0+ / 0-)

      The growth in the mid to late 60s was due to Vietnam war spending and the introduction of Medicare. That spending, and the borrowing to pay for it, is what spurred the growth. It was certainly not Kennedy's tax cuts.

      You might want to talk with some of us who lived thru the 60s before you buy into Republican myths about how tax cuts spur growth and employment. The height of the war was 1967-9 and there was a draft in place. That accounts for the low unemployment rate, and the deficit spending accounts for the economic growth.

      Modern Democrats excel at bringing nerf guns to a Hellfire missle fight.

      by edg on Tue Dec 14, 2010 at 12:32:19 PM PST

      [ Parent ]

  •  asdf (0+ / 0-)

    thom hartmann points out when tax rates were high, he would plow profits back into his business, including hiring more staff. i guess there is write off for doing so.

    when tax rates were low, he would take the profits from the business and pocket them.

    the idea that an increase in tax rates = hiring more workers  -- is counter intuitive to what the general public expects.

  •  Tariffs, even Conservatives are worried (0+ / 0-)

    American Heart Association: Diet Soda can cause type 2 Diabetes. "Circulation" July 23, 2007. Read it for yourself.

    by jeffrey789 on Tue Dec 14, 2010 at 12:12:30 PM PST

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