July 10, 2011
-
Basic Political Economics
Political Economics differs from real economics in a number of ways - primarily in the nature of cause and effect. For example, Politics may demand that a party oppose any rise in taxation while encouraging government spending if its major supporters tend to profit by that spending, as seems to be the case with the present-day Republican Party.
In order to gain popular support for this position, party leaders and candidates loudly proclaim that "Now is not the time to raise taxes - we need job creation and higher taxes will mean fewer jobs" with absolutely no factual or historic support for that statement. In fact historically,higher tax revenue income to the government has meant more government spending with quite a dramatic rise in employment and the general economy.
In fact, since only net income tax raises are proposed, more business activity is the case, since that results in more net income to the business owners. It would seem to me that those whose taxes are raised would want to generate more income and probably hire more workers to do that, thus reducing unemployment.
The curious belief here is that higher taxes will retard business activity. It seems to me that the uncertainty caused by repeated refusal to balance our Federal budget and pay down our national debt is more of a drag on our economy.
historically, when faced with a budget and debt crisis, all political parties have recognized the need for more revenue and have joined to convince voters of that fact. Nowadays, the Republican Party seems to have lost its sense of responsibility and is demanding the shutdown of economically and socially beneficial programs in order to protect the absurdly low tax rates for its major millionaire and corporate supporters, assuming that they can once again convince voters that "What's good for millionaires and major corporations is what's good for America"
Presently, millionaires and major corporations pay at the lowest tax rate since 1942. During the dramatic surge of the US economy which made them so wealthy in the second half of the twentieth century, they paid at much higher rates - as did we all. Most of our present deficit and debt has come about since the "Bush tax cuts"of the past decade.
