Nel's New Day

August 11, 2014

Austerity Hurts Economy, Low Taxes for Rich

Filed under: Uncategorized — trp2011 @ 4:15 PM

Conservatives never stop pounding against President Obama with their mistaken belief that he is responsible for too much spending, too high deficits, and too few jobs from the stimulus. Following the old saying that a picture is worth a thousand words, I’ve copied the following images from Dave Brown’s blog in Huffington Post. He took his information in the following two charts from Budget of the United States Government: Historical Tables Fiscal Year 2015. President Obama inherited a budget deficit of $1.4 trillion from President Bush’s last budget year and annual budget deficits have gone down dramatically since.

budget deficit

Gov Spending

In the following chart, as Brown explains. “The RED lines on the left side—the ones that keep doing DOWN—show what happened to jobs under the policies of Bush and the Republicans….  The BLUE lines—the ones that just go UP—show what happened to jobs when the stimulus was in effect. We stopped losing jobs and started gaining jobs, and it was getting better and better. The leveling off on the right side of the chart shows what happened as the stimulus started to wind down: job creation leveled off at too low a level.” Although the stimulus cost almost $800 billion , Republicans insisted that almost than half of this not go to job growth. The remaining money wasn’t enough.

jobs

Other falsehoods from conservative media (aka Fox network):

  • President Obama bailed out the banks. Not true.
  • Businesses will hire if they get tax cuts. Not true.
  • Health care reform cost $1 trillion. Not true.
  • Social Security is either a Ponzi scheme or is “going broke.” Not true.
  • Tax cuts grow the economy. Not true.
  • Government spending “takes money out of the economy.” Not true.

In reality, reduced spending and lower deficits have hurt the economy. Huge corporations and most billionaires spread the idea that government spending is bad because they are greedy. When the top income tax rate was 90 percent and the top corporate tax was over 50 percent, the United States built its infrastructure, provided good schools, and defended the world against the Soviet Union. Higher economic growth increased a stable middle class.

Government spending puts money into the economy, creates jobs, and builds a foundation for prosperity. The current sluggish economy comes from the decline in government spending. The stimulus decreased unemployment, but conservatives continually lie about its positive effect. The following chart from “The Incredible Shrinking U.S. Government” (The Atlantic) shows how government spending to create government jobs rescued the United States in the 1981, 1990 and 2001 recessions. Republican strategies stopped this from happening in the 2007 recession when the government laid off thousands of government employees. Loss of government jobs means loss of private sector jobs because no one has money to spend. According to The Atlantic, “These extra government jobs would have helped preserve about 500,000 private sector jobs.”

Roger Hickey posted the following chart in Continued Jobs Growth. But Highway Bill Shows Austerity Still Hurts to show how “conservative budget cutting has undermined growth from mid-2010 through 2014” because “Republicans are still writing budgets under the mistaken conservative theory that spending cuts somehow stimulate growth.” The pretense that the government shouldn’t have debts in the same way that family budgets shouldn’t have debt is false on at least two premises. If giant corporations and billionaires paid their fair share of taxes again, the debt would shrink. And families borrow money to have homes, education for a better job, and cars to travel to and from work. In fact, conservatives such as George W. Bush encourage people to borrow so they can spend to improve the economy.

Austerity

Conservatives say that the country needs to return to life before Obama. That life means unequal tax cuts for the rich, allowing huge corporations and Wall Street whatever they want, and escalating inequality. Instead, let’s go back to the economy of the 1950s.

The next time anyone complains about President Obama, tell them that the George W. Bush tax cuts cost each one of us $48,000 in pre-tax personal income. The loss of $6.6 trillion could have paid for every student loan, every car loan, and every credit card debt in the United States with $2.4 trillion left over. That’s a loss of $11 every day to every taxpayer during the past 12 years. Hourly wages are now 6 percent less than they were 40 years ago. One-third of income increase in 2012 over 2009 went to 16,000 households, and almost $.95 of every $1.00 went to the top 1 percent. The bottom 90 percent lost ground.

The prosperity of past decades has been wiped out for almost everyone in the United States at the same time that government investment and infrastructure improvements are dissipating. George W. Bush promised in 2000 that his tax cuts would lead to greater prosperity. Instead the middle class has been decimated, and state and local governments are going into budgetary freefalls. With the greatest austerity in the country, Kansas has the biggest problems.

Bush’s wars cost the country another $4 trillion with untold debt in the future because of expenditures for veterans. People in the United States are now living with the Republican experiment: loss of wages, home foreclosures, dismal job markets, insecure retirement, etc.  President Obama gets the blame.

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