While President Obama, congressional Dems, and pundits all scratch their heads about how to get corporations to spend their record profits and holdings putting people back to work, no one really seems to be talking about the obvious solution... raise the minimum wage.
I know this is simplistic, but at times the simple solution is the best one. If we are unwilling to direct that money into the economy through tax increases, then raising the minimum wage is pretty much the only option of freeing that capital.
Bloggers and pundits have been correct in their taking issue with the idea that extending the Bush tax cuts will create any jobs. Folks have been correct in pointing to the fact that they haven't worked so far, and their is no reason to believe that they will magically start working now.
Now when we compound this issue with the fact that there seems to be no will to raise taxes or institute a debt financed jobs program, we are left in a pickle. If we can't increase taxes on the wealth our "jobless recovery" is creating and then use that money to put people to work fixing our crumbling infrastructure, etc, then how else can we get the money out of Wall Streets bonus accounts and into the pockets of average Americans?
We know that we need to create domestic demand, for our main street economy to recover. Any economist that isn't on the fringe of the right will agree. Well, why not just raise the minimum wage? If we force the corporations that are hoarding their cash to spend it on the workers at the lower end of our economic spectrum, it will increase wages across the spectrum(as it does every time we raise the wage) and will put this currently frozen money back into our main street economy.
Before anyone says "but we can't raise the minimum wage in the middle of a recession", well the main reason that we're still not adding jobs isn't that the companies aren't making money, it's that they aren't spending it on domestic workers. If our government isn't willing to directly redirect this capital, through taxation and spending, then the only other way to ensure that this money flows is to statutorily force these corporations to pay their workers better.
Why this would actually accomplish what the tax "compromise" is supposed to do, but won't.
-The "payroll tax holiday" is intended to get more cash into the hands of the average worker. It will, but at the expense of imperiling Social Security. Wanna know another way to fatten workers' paychecks? Give them a raise. I know it's old fashioned, but hey, I've got a soft spot for policies that work in the real world.
-The increase in earnings will help embattled state and local governments close their deficits. Increasing wages will allow these lower level government entities to collect more revenue, in the form of sales and income taxes.
-The increase in earnings will help close the federal deficit. It won't be enough to dig us out of the hole we're currently facing(only raising taxes to reasonable levels will do that). By the same mechanism mentioned above, the federal government will collect more money in income taxes, and the job creation spurred by the increased household spending that will accompany the increase will mean less families seeking government aid. It's a "twofer".
Seems pretty simple to me.