Dear Shri KRS, Greetings!
Of course, it would have been a surprise otherwise,
, a pleasant one I am sure.
You have repeated several usual taking points of Republicans. These are repeated so often that if someone were to give me a dollar every time, I would be a very rich man long ago.
The talking points are these, I have a paraphrased some of them for brevity.
Yes, I know that these are the 'talking' points of the Republicans. I have added my own views of them
- taxing the rich does not bring in more money in, it brings in less (After the initial jump)
- when the top tax rate goes down, more money flows in After the money released in to the economy produces the multiplier effect
- if the Bush cuts go away we will not see anymore job creationI would not put it this way - it will definitely have a negative impact on job creation
- unemployment insurance is a government handoutUnemployment insurance should be a 'bridge' aid - and should be structured in a way that any long term unemployment should look at possibly retraining the individual in areas that are creating jobs, according to the individual's ability - and a more close monitoring of the individual in terms of jobs declined should be there
- Americans don't want government handoutsDon't agree with this - as any humans anywhere, I think most Americans would accept a handout
- the usual bleeding hearts in the democratic party is playing politics I think most Democrats are not bleeding hearts - they simply have a constituency that allows them to play such a politics
- unemployment benefits make people not to look for a jobStudies (especially one by Larry Summers, show that people would wait to take a job with the same or more salary/benefits immediately after being laid off and as the time goes on, based on their situation, have a a salary expectation that is equal to their JI money plus an amount that is different from person to person.
- America is a right of the center countryBorne out by various polls
If your tax rate argument is correct, then whenever the top tax rate was cut the deficits must have gone down, and whenever the top tax rate was raised, the deficits must have gone up. But, if you look at the history of budget deficits and national debt, when the top tax rate was cut, as by Reagan and Bush W, the deficit ballooned and debt soared. When taxes were raised, as by Bush Sr. and Clinton, the deficits came down. By the end of the Clinton's second term the Treasury was brimming with surplus, and the trend of annual budget surplus was expected to continue as far as the eyes could see.
The mistake you make here is connecting the tax decrease with the increase in deficit. Studies have shown (you can look at them at Google)that tax cuts always preceded by spending increases. By the way, Clinton's years had tax increases in 1993 when the economy was rebounding from recession and tax cuts in 1997 (with the persistence of the republican congress that he had to accept) which by the end of the term produced the surplus, because spending was limited. I specifically did not support Bush when he started increasing the budget, while giving out tax cuts. The only reason I supported him was for his foreign policy.
By the way, I think that the fiscal policy in general should be fashioned towards encouraging more wealth creation and not make the government consume more % of the economy, where most of the $ spent do not create wealth. Government needs to prioritize the welfare items - we can not afford everything to take care of all social ills.
Instead of using the surplus to pay down the debt, Bush W passed huge tax cut for the rich (most Americans received a few hundred dollars, but the super rich, the top 5% racked in up to $200,000 in tax cut per year). The surpluses were gone in an instant. Looming deficits all around.
Don't disagree with you on this. However, one strage thing happened after the cuts. The top 50% share of the burden of paying increased. I think this is also an issue when almost 40% of the Americans in the bottom do not pay any or minimal share of the taxes. I think we need to simplify the code, keeping it progressive at current rates, but making sure to create a situation where everyone bear their share of the burden according to their incomes. Take away all the loopholes.
The claim that cut in top tax rate generates jobs is another obvious myth. Clinton raised taxes in 1993, and what followed was an unprecedented economic boom the country had hardy ever seen. Bush comes into office in 2000, and gives a massive tax cut to the rich that they have never seen, ten years of it and the global economy is in tatters, millions of jobs lost, many never to come back. After Bush, Obama comes to office and the job situation is now kind of stable. Here is a
dramatic graph of job loses during the last year of Bush and the first year of Obama.
Okay, if you look at the graph till today, it would be different. However, please go and read articles on what created more jobs under Clinton - after he raised the taxes or after he cut taxes. I do not buy the argument that a tax hike creates more jobs - it just does not make sense. How does it create jobs when one diminishes the capital available for wealth creation which creates jobs ultimately? Government's role in creating jobs are limited, either in defense or infrastructure (both have limited time impact and are not wealth creators in general or have an indirect impact on that). Please read articles comparing Clinton's two terms on job creation.
The top tax rate dramatically declined after Reagan came to office. Since then, the inflation adjusted income of 90% of Americans has stayed flat. During the same period, income of the super rich, the top .01% of Americans, have gone up five fold. Over this period, the wealth gap between the super rich and the rest has widened, especially during the Bush W years. For some interesting charts,
visit this site. During the last 30 years, since Reagan became President, the income and accumulated wealth gap between ordinary Americans and the super rich has skyrocketed beyond comprehension. This did not happen in any other western country.
Scholors in majority agree that this has been happening because of productivity increases during this time with the help of technology. Couple this with WTO and opening up of global markets, things multiplied under Bush. Most of the western nations have protective policies on trade, if I am not mistaken. By the way, more jobs were created during Reagan's time than any other's in office.
You say we need to extend tax cuts for the top 2% and must not extend unemployment compensation because that is what is good for the economy, that is what sane rational people, not given to emotional responses of a bleeding-heart liberal, will do.
I don't couple these two. My stand on unemployment insurance is said above. KEEPING the tax rate the same for the top will stabilize the markets for money to flow in to economy and investments, thereby creating more jobs that are sitting on the sidelines right now. Obviously any tax increase for anyone in this economy with a high jobless rate will have an adverse impact on the job creation.
Alright, let us look at what economists say about what the stimulative effect would be of these two alternatives. I know you prefer any right-wing economists to even Nobel laureate economist if he happens to lean left, so I will cite Mark Zandi, chief economist for Moody's Economy.com and a former adviser to Republican Sen. John McCain during his 2008 presidential campaign. On April 14, 2010 he testified before the Senate Finance Committee. In his testimony (
pdf of the testimony), he stated that spending $1 on unemployment insurance benefits increases the GDP by $1.61 a year. He also stated that, according to his calculations, $1 spent on extending Bush income tax cuts has a multiplier of 0.32, i.e. the GDP will grow by $0.32. These are numbers from a Republican economist.
Yes, I have seen this. By the way, while Zandi was McCane's advisor, he calls himself a democrat nowadays. How does one spend $ on already existing cuts and analyze their impact? By the way, there is a seminal study by Professors Romer and Romer (yes, the same Romer was President's economic advisor, who was behind the stimulus and her husband, which says that a $1 tax cut will have a 3 to 1 impact on economy. This makes more sense to me.
Of all the charges, suggesting that the long term unemployed will not look for jobs seriously enough if the benefits are extended is the most foul one. These benefits are the one standing between these Americans and total ruin. These dollars go to pay mortgage and put food on the table. That is why these dollars have such a dramatic multiplier effect. To say a few hundred dollars from the government is what is keeping them from seeking a regular job is insulting.
I oppose only the unfettered, unmonitored long term assistance. Please read the behavior adjustments these folks make in general.
On the one hand, Bush gave away billions in taxpayer money to banks that took down the entire world economy (Obama and many democrats also supported this) which the bankers promptly used it to pay huge bonuses totaling billions of dollars for themselves for the all the hard work they put in enriching themselves. On the other hand we have people who have lost their jobs due to no fault of their own, struggling to make ends meet, teetering on losing their home, and they are supposed to be greedy ones for government handouts and lazy for not looking for a job seriously enough. If my sympathies with the unemployed make me a bleeding-heart liberal, then I will wear that bleeding heart on my sleeves.
Well, the bank versus the unemployment comparisons would be valid, if the stimulus was not there.
One more thing about the contrast between unemployment insurance and tax cuts to the rich, as you say, the rich are adept at moving their money/income around the world. They take their huge tax cuts to places from where they can extract maximum profits and not pay any taxes to anyone -- the do no evil Google avoiding taxes is a case in point -- resulting in a wimpy $0.32 multiplier effect.
This is why what Andy Grove said makes sense to me. The corporate governance boards should start in partnership withy the government to find ways in which the American work force can move up the knowledge ladder. I think that currently where jobs are created there are not enough skilled labor to fill them. This is something I have been thinking a bit about, ever since the outsourcing in IT started.
I know this post is already way too long. But there is one more thing I have to say and it is about another myth that America is basically a center-right country. All Republicans and the corporatist Democrats, and corporatist journalists and opinion makers like Thomas Friedman repeat this lie whenever they get half a chance. But the facts are opposite. Poll after poll, when asked about issues like, social security, medicare, medicaid, other social programs, Americans by an absolute majority favor clearly left of center policy positions. Even among Republicans there is significant support for these socialist programs. Another example, polls taken during last year's health-care debate showed there was majority support for the much reviled Public Option. It found significant minority support, about 30%, even among the Republicans. Of course, you won't hear of it in the main-stream corporatist media.
Can you cite the source, especially on majority support of the Public Option? This is news to me
It is a complete myth to claim America is a right of center nation.The Republicans and Democrats, bought and paid for by the coportaions, would like to keep people thinking that way. They have only two goals, (i) to transfer wealth from everyone else to the already rich, and (ii) keep the common people engaged in silly social and cultural issues so that they don't notice goal #1 is taking place.
Huh? You have any evidence of this?
I know Shri KRS would read the whole thing, but, all others who had the patience to read to the end, my hats off to you
Cheers!
