Wednesday, December 21, 2011
The feuding Congress is at it again; this time failing to pass a bill which accomplishes something they all agree should be done—extending a tax cut on withholding for social security. This failure, if you listen to most pundits and all Democrats, will wreck havoc on the economy by removing money from workers’ pockets and giving it to the federal government. I have long failed to understand the premise here, and, in fact, of many tax cuts.
The underlying theory, I gather, is that giving more money to the citizens and less to the government will spur the economy and create jobs because people will use all this money to buy stuff. The government, on the other hand, would use all this money to fix and administer stuff. (Of course, if you listen to Republicans, especially those who like to party with tea, government would primarily waste this money. Again, I have never understood how cutting government funds reduces waste. If the government wastes five percent, and you cut their budget five percent, does that mean the only thing cut is waste? Government waste, I submit, is primarily a shibboleth used by people who just don’t like government. You think the private industry who would benefit by these tax cuts doesn’t waste money, too? If they would waste at least as much money then part of the reason to give them the money is eliminated.)
According to this theory, it is better to give jobs to the private sector than to the government. I admit, I know very little about economics, receiving only a C in my econ class in college, but this whole thing makes no sense to me. Not only do I believe that extending these tax cuts would fail to really stimulate the economy, I believe the money would be better spent on government functions.
The tax cuts they are talking about are “significant” according to the New York Times, an average of $1000 per taxpayer per year. A thousand dollars is, for most of us, a significant amount of money all in a lump. But this is no lump sum payment, it is given in your paycheck. That mean the average American will get $20 a week. I don’t think $20 a week will send people out to buy cars, refrigerators, or new homes. It might give some people more money to travel, but not real far. I think most people will use it to pay their bloated credit card bills, save for their kids college, or, perhaps, buy an extra happy meal or two.
Even for those who choose to spend the money, there is no guarantee they will buy things which promote job growth in America. Americans spend approximately $3 billion a month on video games. I believe most of those are made in Japan. Car parts, computers, even iPads and iPhones are made overseas. Increased sales would create more local retail jobs, but the big beneficiaries would be companies employing cheap foreign labor.
Millions of people spending a little extra does not seem like the answer to long-term job growth. No one has enough to make an impact, so all the economy can derive is increased sales of small things or minor services. However, collectively the dollars, if retained by the government, can create jobs. That is what the government does: it employs Americans in America to work jobs to benefit Americans.
Roads and bridges are in serious need of repair, the FDA lacks sufficient food inspectors, there are never enough ICE agents, the military continues to need hundreds of billions, grants for law enforcement, training at places like the National Advocacy Center, not to mention funds for the National Endowments for the Arts and the Humanities, all require tax dollars. I would rather the taxes be withheld to create government jobs rather than given to people in an attempt to create private sector jobs at McDonalds and Playstation retailers. Would you rather give money to FEMA or Coors? (Don’t you think a lot of that tax money will be used to buy some beer?)
The Depression ended when government created massive hiring programs, first through things like the Works Progress Administration and then in World War II. Current economic theory, I guess, does not support a similar response to this recession. Since the Reagan era “government worker” has become a pejorative term. I am biased having been one of the reviled for almost 30 years (and now, collecting a government pension, which everyone hates), but I think there is a place for government. Governments can create good jobs and serve their communities. Twenty buck a week won’t change people’s lives, but a strong Center for Disease Control, an active Department of Homeland Security, and a well-funded Amtrak system can make real differences in America.
The underlying theory, I gather, is that giving more money to the citizens and less to the government will spur the economy and create jobs because people will use all this money to buy stuff. The government, on the other hand, would use all this money to fix and administer stuff. (Of course, if you listen to Republicans, especially those who like to party with tea, government would primarily waste this money. Again, I have never understood how cutting government funds reduces waste. If the government wastes five percent, and you cut their budget five percent, does that mean the only thing cut is waste? Government waste, I submit, is primarily a shibboleth used by people who just don’t like government. You think the private industry who would benefit by these tax cuts doesn’t waste money, too? If they would waste at least as much money then part of the reason to give them the money is eliminated.)
According to this theory, it is better to give jobs to the private sector than to the government. I admit, I know very little about economics, receiving only a C in my econ class in college, but this whole thing makes no sense to me. Not only do I believe that extending these tax cuts would fail to really stimulate the economy, I believe the money would be better spent on government functions.
The tax cuts they are talking about are “significant” according to the New York Times, an average of $1000 per taxpayer per year. A thousand dollars is, for most of us, a significant amount of money all in a lump. But this is no lump sum payment, it is given in your paycheck. That mean the average American will get $20 a week. I don’t think $20 a week will send people out to buy cars, refrigerators, or new homes. It might give some people more money to travel, but not real far. I think most people will use it to pay their bloated credit card bills, save for their kids college, or, perhaps, buy an extra happy meal or two.
Even for those who choose to spend the money, there is no guarantee they will buy things which promote job growth in America. Americans spend approximately $3 billion a month on video games. I believe most of those are made in Japan. Car parts, computers, even iPads and iPhones are made overseas. Increased sales would create more local retail jobs, but the big beneficiaries would be companies employing cheap foreign labor.
Millions of people spending a little extra does not seem like the answer to long-term job growth. No one has enough to make an impact, so all the economy can derive is increased sales of small things or minor services. However, collectively the dollars, if retained by the government, can create jobs. That is what the government does: it employs Americans in America to work jobs to benefit Americans.
Roads and bridges are in serious need of repair, the FDA lacks sufficient food inspectors, there are never enough ICE agents, the military continues to need hundreds of billions, grants for law enforcement, training at places like the National Advocacy Center, not to mention funds for the National Endowments for the Arts and the Humanities, all require tax dollars. I would rather the taxes be withheld to create government jobs rather than given to people in an attempt to create private sector jobs at McDonalds and Playstation retailers. Would you rather give money to FEMA or Coors? (Don’t you think a lot of that tax money will be used to buy some beer?)
The Depression ended when government created massive hiring programs, first through things like the Works Progress Administration and then in World War II. Current economic theory, I guess, does not support a similar response to this recession. Since the Reagan era “government worker” has become a pejorative term. I am biased having been one of the reviled for almost 30 years (and now, collecting a government pension, which everyone hates), but I think there is a place for government. Governments can create good jobs and serve their communities. Twenty buck a week won’t change people’s lives, but a strong Center for Disease Control, an active Department of Homeland Security, and a well-funded Amtrak system can make real differences in America.
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