The Republicans are back with their bad old idea on improving the economy: tax cuts for the rich. But you’ll never believe their new twist!
Paul Krugman published two short post that I thought were very interesting. The most recent one was a comparison of the economic recovery under Obama and Bush, Obama The Job-Killer. As you can see in the graph below, the Bush recovery was much worse than the Obama recovery. Don’t worry about the recession at the end of the Bush administration. Just look at the main trend line. Obama’s trend is faster than Bush’s. That’s amazing. I’m the first to admit that the Obama recovery has been mediocre. I don’t blame Obama for that; the Republicans have stood in the way at every turn, pushing policy that only hurts the economy.
But there was Bush. During his first two years, he had a Republican House and a compliant Democratic Senate. From 2003 to 2007, he a Republican controlled Congress. So he got to do pretty much what he wanted. And the results were meh. Because that’s what Republican policy does. It is designed to help the rich, and it does that brilliantly. But it doesn’t help the economy generally. And that would be fine if that was what the Republicans campaigned on. But they know that if they campaigned on their actual agenda, they would never get elected anywhere.
Here is the comparison of private jobs created during the two administrations:
So what are the policies that we are talking about? Basically, we are talking tax cuts for the rich. The Republicans only have two policies that they push. They are the same policies that they have been pushing for four decades. The first is deregulation of the finance and oil industries. I’m not going to go into it here, but these are policies that give more money to the already rich without helping the overall economy. The second is focused tax cuts that give more money to the rich.
Under the right circumstances, tax cuts can be helpful for the economy. It is certainly true that the temporary payroll tax cut during the first term of the Obama administration was helpful. That’s a tax cut that helped all working people, allowing them to spend more money. But you will note that when it came time to lift that tax cut, the Republicans didn’t complain. They had “reasons” why it didn’t matter. Grover Norquist was okay with it. He didn’t have a reason for it. But we know why he didn’t care: it didn’t affect the rich.
Giving tax cuts to the rich does not help the economy because they will just sit on the money. If the government had it, the money would be put to use in the economy. Alternatively, it could be given to working people who would also put it to use. But giving money to people who already have too much money does little good for the economy. But what do you think the new breed of Republicans think we should do to help the economy. Let’s all say it together: tax cuts for the rich! Here’s a graph from the second Krugman article, Doubling Down On W:
The only think that has changed is that the tax cuts of the establishment candidate, Jeb Bush, and the “crazy” candidate, Donald Trump, are even more lopsided than the very lopsided tax cuts of George W Bush. This is what we get from the Republicans. I constantly hear from Republicans how Democrats want to do the same old stuff but that the Republicans have big new ideas. But they don’t have any ideas. Sure, some conservative thinkers have some ideas. But they are only around for window dressing. If they ever became politically possible, the Republicans would turn on them in an instant.
So time and again, giving the rich huge tax cuts has not helped the economy. So the new group of Republicans is back with the same old idea. But with a twist: the tax cuts will be even bigger!