Class Warfare Blog

January 21, 2011

Republican Perfidy

Filed under: Economics,Politics — Steve Ruis @ 10:42 am
Tags: , ,

The Republican Party was swept back into power upon retaking control of the House of Representatives in the 2010 elections. They ran in that election on “controlling ‘out of control’ spending” of the Federal Government. Upon being seated, their first action on the spending front was to say to the President, “Uh, you go first.” Apparently they would rather lead from behind.

This behavior is not at all atypical, one needs only look back over the previous two years to see what their pattern is. Consider the American Recovery and Reinvestment Act of 2009, aka “The Stimulus Bill.” According to Republicans, they were frozen out of the process and the bill was a “Democrat only” bill. They claimed after its adoption that not one job was created due to it, that it was just another example of “more bureaucratic spending in Washington.”

Let’s examine their claims. The Republicans had one, count it—exactly one, idea for stimulating the economy: tax cuts. That was it. Economists of all stripes stated clearly that tax cuts were the least stimulative of all of the possible actions the federal government could take. A $1 tax cut resulted in only $0.80 of stimulus to the economy, mainly because rich people tend to just stash away their savings as they have no need for the funds as “operating expenses,” i.e. food, shelter, transportation, etc. Poor people and middle class people, on the other hand, were spending every dime they could acquire (and more by borrowing) and hence things they were provided actually created more than $1 of stimulus for each dollar they received. (It you don’t understand how $1 of stimulus could result in over $1 of effect, look up “the multiplier effect” in any economics source.) The greatest stimulus is had from things like food stamps which tend to get spent almost immediately and hence go right into the economy instead of a bank account or money market fund.

So, the final bill came in with a $787 billion price tag. Of that cost, $288 billion was formed of tax cuts, with $237 billion for individuals and $51 billion for businesses. That $288 billion constituted 37% of the cost of the final bill. The Republicans, at the time, had about 41% of the seats in the House and the Senate and their one idea, a poor one in the opinion of most economists, got 37% of the bill. Let the whining begin! A party out of power is rarely honored so well. The President said repeatedly that he wanted bipartisan cooperation and was open to ideas from one and all. The Republicans had one idea and the bill gave that idea a near proportional share of the stimulus bill.

The Republicans immediately started to state that such stimuli do not work, cannot work, which kind of conflicts with their claim that only tax cuts could work. Also, they claimed that not one new job was created, obviously counting the 3.2 million people who would have lost their jobs and did not due to the bill (teachers, firemen, police officers, etc.) as not representing “new” jobs. Apparently old jobs people would have lost do not count. (Lying while telling the truth is an art.) And, if you take their claims seriously, the $288 billion in tax cuts should have worked and the rest should have failed. So, let’s see 37% of 3.2 million jobs is about 1.2 million jobs, so this is the number that should have been expected by the perfidious Republicans. But, no, only “zero jobs” would do.

They followed up on this almost two years later with an infamous “hostage taking” during the lame duck session this past December. They would allow nothing to happen unless the Bush-era tax cuts on earnings over $250,000 per year were continued. That this puts a $70 billion dollar charge to the deficit was no matter, even though they were making significant claims to the contrary just days before. Their claim? That rich people create jobs and if those tax cuts weren’t implemented, no jobs would be made. This is a bald-faced lie. In 2010, U.S. companies made all-time, record profits. U.S. companies also were (and still are) sitting on $2,000 billion in cash, also an all-time high. They have no need of a tax cut to create jobs.

Lies and blame is what Republicans have to offer. What else they can do remains to be seen.

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1 Comment »

  1. Great blog! I truly love how it’s easy on my eyes and the details are well written. I am wondering how I could be notified whenever a new post has been made. I have subscribed to your rss feed which ought to do the trick! Have a nice day!

    Like

    Comment by Big Mommas Like Father Like Son — February 6, 2011 @ 6:25 pm | Reply


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