Tax Cuts and Supply Side Economics

This post is a highly edited version of Tax Cuts for the Wealthy DO NOT Create Jobs  ORIGINALLY POSTED at TO JOCAVA ON TUE MAR 08, 2011 AT 06:28 AM PST. and also REPUBLISHED BY INCOME INEQUALITY KOS, DAILY KOS CLASSICS, AND COMMUNITY SPOTLIGHT.

It is economic incentive that drives enterprise, not the supposed nobility of spirit of the wealthy. That idea – that the ruling class is there because they deserve to be, because they are uniquely noble, because they have excellence and a commitment to justice and humane values, to the better interests of at large – is aristocracy. Our nation is founded on the self-evident truth that aristocracy is a lie, and that powerful elites do not share their money, power, and privilege with the people.

We now have a new aristocracy, created by transferring literally trillions of dollars in wealth to the wealthiest people in our society. There is nothing about that process which is promotes democracy. Much to the contrary, the massive and unprecedented transfer of wealth from ordinary, working Americans to the already wealthy —which began with Ronald Reagan and accelerated to warp speed with George W. Bush’s 2001 and 2003 tax cuts—, has crippled our economy and removed any incentive to invest in job creation.

In 2001, George W. Bush inherited a 10-year budget surplus of $1.7 trillion from the Clinton Administration. George’s 2001 and 2003 tax cuts immediately plunged the government into deficit spending. After just one year, by 2002, the surplus was already erased.  When Bush left office, he had doubled Defense spending, pledged over $1 trillion to banks, and exploded the national debt.

The result of these policies? By 2009 average household incomes had FALLEN by more than $2,000 per year;  the most massive transfer of wealth in the history of the world  (The top 20%  control more than 80% of all the wealth – the top 1% control 40%, the 400 wealthiest people in the control more wealth than 155 million people at the other end of the spectrum combined);  25% of all American children living in poverty; 10%+ unemployment;  unemployment 25% among young people and 30%+ among some minority communities;  record bankruptcies;  record rates of home foreclosures;  banks and wealthy investors with no incentive to invest in job creation but plenty of incentive to invest in money-for-the-wealthy financial schemes;  and instead of the wildly prolific job-creation that was promised, our manufacturing base stripped away and our middle class society vanished.

As the concentration of wealth in the hands of the few has accelerated, and the concentration of political power in the hands of the wealthy has followed along, the outright lie that tax cuts for the wealthy are the best, indeed the only, way to create jobs continues to have widespread support. Though real people living in the real world can see with their own eyes that fundamental pillars of our democracy are being eroded, or even eliminated.  Parents across the country know what it would mean to strip funding for Head Start, for public education and for college financial aid;  and the creation of good paying jobs which Americans deserve? Nowhere to be seen.

After 30 years of re-engineering our nation’s economy and tax code to deliver huge benefits, free of charge, to the wealthy, we now know “supply side” trillion of dollar tax cuts for the wealthy is counterproductive, does not create jobs and  undermines our democracy.  Why should the rich “create jobs”, why should they put money into wages, build businesses to make profits, when it’s being handed to them in unprecedented amounts, for free?  When the government takes money from everyone, then hands it out to the wealthiest among , it has the direct effect of disincentivizing investment by those individuals to create new businesses and new jobs.

If you a vibrant middle class is essential to citizen participation and a real democracy, then the collapse of that middle class, the decline in household wages, the rapid escalation in bankruptcies and home foreclosures, should worry you. Even if you are a billionaire, it should worry you, because the erosion of our middle class, the gutting of funds from our educational system, the prioritization of billionaires and multinational corporations, is eroding our democracy itself.

When Vice President Joe Biden left the Senate to join the Obama administration, he was the only member of the United States Senate who was not a millionaire.  As the Senate became the world’s most powerful millionaire’s club, it became harder and harder for ordinary people to break into politics.

Every independent voter, every Democratic and every Republican voter, should demand of every elected official that they cease to prioritize the giveaway to those who have no need for it and will not use it to invest in rebuilding the middle class.

Tax cuts for the wealthy do not create jobs. Tax cuts for the wealthy are not a constructive way to build democracy. Tax cuts for the wealthy are not a sound investment for the already embattled middle class. Every proposed cut to social spending, every proposed tax break for millionaires and billionaires, is part of the same process of eroding our middle class and shoring up the long-term power interest of the already powerful.

The financial collapse of 2007 and 2008 was not brought about by working people’s mortgages; it was brought about by major financial interests that had agreed, implicitly and explicitly, it was no longer of any importance whether major national investment strategies represented real wealth or spurious wealth claims; what mattered was that those at the top could benefit from implementing the strategies.

That is what was done with our trillions of dollars in wealth subsidies: while the were told that tax breaks for the wealthiest of the wealthy would lead to widespread job creation, the money was devoted to creating entirely new markets where only money would be needed to make more money. Gone were the heady old days when earning millions was supposed to represent investment in an actual enterprise doing actual business, building a better society.

The work of our age needs to be the reinvention of our economy, the reversal of this egregious and undemocratic transfer of wealth from the tens of millios to the 400, and the restoration the principle that if it’s good for America, it’s because it’s good for building a vibrant, free and educated middle class that actually has the power to govern its own future and to steer the ship of state.

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