Giveth or taketh away?
Republicans in Congress would like us to think that their primary focus is jobs, jobs and jobs. Give tax cuts to businesses so they will create more jobs, they say. That goes along with the general theme of creating a "good climate for business." I don't buy that supply-side economics bullshit, but that's not what I'm here to discuss.
The big hoopla now is reducing government spending. Budget cuts. Republicans (and many Democrats now) believe that is the answer to the country's problems. This action, however, is directly at odds with job creation. No matter how you do it, cutting the federal budget will take away jobs, not create them. If the job creation were truly the Republican's main goal, they would not be pushing for this. So clearly the focus is also reducing the size of the federal government, a long-held fundamental conservative goal. I don't necessarily have a problem with that in principle, but is now a good time? Please don't tell me your goal is job creation when your actions will result in job elimination.
posted by Paul @ 12:28 PM
5 comments
5 Comments:
Paul, interesting thoughts that you hold. I understand the thinking. I suspect it may be flawed. Here is another perspective. The federal government produces nothing above and beyond the service it provides. Therefore, a government job is a vacuum that sucks up money, (tax revenue) while not creating dollars beyond what it produces. Business, done well, produces something beyond paying it's bills. We call it profit. As a company profits they take a portion of that profit and make additional investments. Those additional investments require additional human capital to create more profit - we call that jobs. This process perpetuates itself, over and over and over again - while the owners of the assets become(not always)extremely wealthy. (ex:small business which, so far, in the US produce more than the Fortune 500 combined) These businesses also generate (over time) an endless supply of jobs.
Ironically, another area that often goes hand in hand with the arguement you make is that tax cuts are contradictory to expanding the Treasury. In fact, time has shown, as even President Obama has agreed,(see see May 27,11 - putopunctum.blogger) when you lower the tax rate tax revenue increases. That is because as taxes "on the wealthy" decrease, the amount of money the wealthy possess to create more jobs increase. As jobs increase, productivity increases, as productivity increases, profits in crease and finally, as profits increase tax revenues increase. Example, a 60% tax on 100k is $60,000 a 10% tax on $1m is $100,000 hence a lower tax rate yields more federal revenue. A good plan would cut taxes, cut spending and invest in business (ideally small business). You are right, in the near term there would be a net loss of jobs. But only because we made the mistake of creating a social service sector that was too large in comparison to the private sector that supports it. That fundemental mistake, spending more than we take in, is the reason for the loss of jobs. And just like you or I can only spend beyond our means for so long, neither can the federal government spend beyond it's means forever. They can spend beyond their means for longer, but not indefinately. And that is why the Ryan Roadmap has been brought to the fore. It resolves that issue, not painlessly, but certainly less painfully than an eventual sovereign debt default. Thanks for the thoughtful post.
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You do present quite the conundrum. I'd have to agree with you and say that they push for more jobs and gov't spending cuts so publicly because elections are getting closer. The average person doesn't make the connection that the two are possibly related. They simply know they're out of a job and it makes the poor saps feel better if they're told the gov't is trying to create a job for them. Same goes for gov't spending. Long story short: People need to educate themselves.
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