(The cartoon image above is by Jeff Danziger in the New York Times.)The Republicans have been pushing a "trickle-down" economic policy for a while now -- a policy based on the false assumption that if the government gives the rich & the corporations more (through tax cuts, subsidies & loopholes, and less regulation) those entities will then share that new wealth with the rest of America, and everyone will be benefitted. That policy was kicked into high gear during the Bush administration, and we saw the disastrous results.
Nothing "trickled down". It just stayed in the bank accounts of the rich and the corporations, resulting in a vast gap in both wealth & income, which then triggered the worst recession since the Great Depression. Millions of jobs were lost, the ranks of the poverty-stricken swelled, foreclosures & bankruptcies reached record levels, and trillions of dollars were lost in the stock market.
The rich and the corporations have bounced back from the recession. They have recovered their losses, and are now making record-breaking income and profits (which is not surprising, since the GOP economic policy was designed to benefit them). But the rest of America is still struggling to recover from the recession. Millions remain unemployed, the median income is falling, the middle class is shrinking, the poverty rolls continue to grow, the majority of the few jobs being created are low-wage no-benefit jobs, and the national economy is stumbling along with a GDP far below what would be considered a healthy level.
Congressional Republicans say they have a solution to the nation's economic problems. That "solution" is to continue the trickle-down economic policy and increase it (by giving the rich & the corporations more tax cuts, and remove more regulations), and to add austerity to it (by cutting the government social programs that help already-hurting Americans).
This is a false solution. The rich and the corporations don't need more money. They are already sitting on record amounts of money (trillions of dollars). If giving them more money created jobs, then this country should be swimming in good jobs -- but it isn't. The only thing that creates jobs is an increased demand for goods/services, and that doesn't happen by letting the bank accounts of the rich grow larger -- it can only happen when the mass of ordinary Americans have more money to spend. But the new austerity takes money out of the economy, meaning ordinary Americans have less money to spend, and creating less demand (which will just cost more jobs).
Taking money out of an already-troubled economy does not help that economy. It just depresses it even further. The cure for a recession is to pump more money into the economy, and make sure most of that money goes to the Americans who need it the most. They will spend it, and that will increase demand, which increases business profits and stimulates job creation. While a small measure of austerity can reduce the budget deficit in a health economy, it is disastrous for a poor economy.
Reducing taxes further for the rich & the corporations, depressing demand and job creation through austerity, and keeping wages too low are also not solutions to the budget deficit (and therefore the national debt). The Republicans oppose raising the minimum wage (and some would even like to abolish it completely). But the fact is that would just help to increase the budget deficit. Unemployed people don't pay income taxes, and neither do low-wage workers. As unemployment remains high and the percentage of low-wage jobs continues to increase, it just means more people don't make enough money to pay an income tax -- and lowering the tax for the rich & the corporations will just mean less revenue flowing into the federal government, which means the deficit will increase (not decrease).
There is only one real solution to fix the economy and lower the deficit -- to pump massive amounts of new money into the economy (with most of it directed at the poor and working classes). I know some of you are saying to yourselves that this would increase the deficit -- and it would, but only on a short-term basis. As that money circulates, it would increase demand substantially, which would create jobs (and with a raising of the minimum wage, these new jobs would be good jobs).
These new good jobs would elevate the number of taxpayers, which would raise the amount of revenue flowing into the federal government. And a small raise in taxes for the rich, along with an elimination of many corporate subsidies and tax loopholes, would help pay for the new infusion of money into the economy -- and make the whole plan work much faster. The result would be a higher GDP, a healthier economy, and a significant reduction (or elimination) of the budget deficit.
There is a plan that would work to create jobs, fix the economy, and lower the deficit -- but it is not the failed trickle-down w/austerity plan of the Republicans. Unfortunately, we cannot institute that saner and fairer economic plan as long as the Republicans control a branch of the government. This makes it very important to flip control of the House (and maintain control of the Senate) to the Democrats in the 2014 election. Failure to do so will just mean more years of economic problems and hardship.
