Saturday, July 9, 2011

Republican Economic Shortsightedness

Recently a weak jobs report was issued and bickering concerning the debt ceiling is heating-up. The Republican zombie mantra stupidly continues to spout conflicting messages. On one hand the Republicans claim that the government should stay out of the private sector, yet they turn right around and with a straight smiling face make the unbelievable assertion that the government must provide "incentives" to promote job growth.  Furthermore, now that a Democratic president has been elected, the Republicans seem to have discovered "fiscal responsibility" as a legitimate concept after years of reckless deficit spending.

In asserting that the government must provide "incentives" to promote economic growth, the Republicans don't seem to be aware of the deeper negative implications. That is the promotion of corporate welfare.  The Republicans have proposed that entitlement programs such as Social Security and Medicare be cut, yet they are willing to give your tax dollars to subsidize businesses. Also, think of this: if you take money away from the citizen welfare recipients where will they get the money to buy the products of the business that are now being subsidized?  This is a zero sum game folks.

In terms of the concept of fiscal responsibility; the Republicans propose "incentives", some of which are tax breaks and credits. That means a revenue reduction.  The Republicans, now that a Democratic president is in office, have discovered fiscal responsibility and want a budget that is more or less balanced.  So how will the Republicans make up for the revenue shortfall created through reduced taxes and tax credits? Fundamentally, if certain entities do not have a tax burden, others will have an increased tax burden.

Embedded in this whole discussion is "job creation". The mistaken belief of the Republicans is that providing businesses with so-called "incentives" will jump start the economy.  This is bogus concept based on a number of points.

First, businesses create jobs in response to unmet demand for products and services.  If there is no demand, they will not create jobs. Obama, even though he is a Democrat is proving this to be true. He has flooded the economy with money and interest rates are near 0%.  The program "Bull and Bears" on Fox News had a lively discussion concerning the lack of consumer demand.

Second, the Republican claim to be free market types. Jobs are moving overseas because US workers are too expensive.  Nevertheless, the Republicans still like to blame "government" and because we have a Democrat as president, try to lay the blame on Obama.  Now I am not defending Obama, my point is that the Republicans should acknowledge that this is the free market at work and not make the disingenuous blame the government statement.

Third, now for the obligatory "Blame Bush" statement. Bush, a good Republican, reduced taxes and regulatory oversight to "incentivize" the economy.  It worked; but then the highly "incentivized" economy gave us the housing bubble. massive fraud, and an economic collapse. Well there is that olde adage about those failing to learn from history. I guess the Republicans still have not learned. Are the Republicans even capable of learning?

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