I confess, I don't understand the appeal of Reagonomics. Maybe one has to have lived through the culture wars to get it. Maybe one has to feel a sense of insecurity about people 'smarter' than them lecturing them about the benefits of tax cuts and the superiority of corporate decision-making. Maybe one has to be too exhausted by the daily rigors of work and family and similar responsibilities to follow what's happening in our society.
I don't know what it is.
But what I do know is that the trickle-down, laissez-faire, supply-side corporatist policies of the Reagan-Bush era make for bad politics and bad policy - for Democrats, at least.
My fascination is why so many Democrats go along with, or even openly endorse, the core messaging and substance of the GOP: tax cuts are the answer, businesses know how to invest better than the government, indirect incentives are superior to direct investment, the cost of capital is the main bottleneck in our system, etc.
You see, suggesting that business tax cuts and loan guarantees will help deal with the fallout of the Republican Recession declares that the underlying problem we face is a lack of private investment.
But that's an incorrect read. We have lots of excess capacity in the private sector. Small business owners want paying customers, not debt and tax breaks, while our country's major firms have access to plenty of capital, from retained earnings to low-interest financing. The area where we lack investment is in the public commons. It's our schools and clinics, roads and bridges, sewers and water systems, libraries and museums, that are falling apart. We need new subways and commuter rail and regional rail and high speed rail. We need more teachers and nurses and wind turbines and solar panels. We need more parks and public spaces and bike paths and walking trails. We've cut the role of government so to the bone, that we even have failing levees, a deteriorating power grid, and need more fire fighters.
I want to keep this pretty short. If you're unfamiliar with our infrastructure needs in particular, I encourage you to check out the American Society of Civil Engineers' Infrastructure Report Card. When you look at the map assembled by the High Speed Rail Association, I hope you see not an aggressively ambitious plan, but rather, the mere skeleton of a much larger system we could create.
There are two key points to remember about advocating tax cuts as a way to stoke investment and job creation.
- Tax breaks send counterproductive political messages.
- Tax breaks target the wrong need.
Massive investments in America would be a great thing. But we have to invest it in the right places in the right ways or it doesn't do much to help.
As Robert Reich tirelessly explains
corporate tax cuts help legitimize the supply-side dogma that the economy’s biggest obstacle to growth is the cost of capital, rather than the plight of ordinary working people
Crossposted at The Seminal at FDL.