On this week’s Democratic Perspective, Bill Timberman and Steve Williamson addressed the keys to putting people back to work and fixing our economy; Investment and tax policy.
They began by noting that the private sector has reduced investment since 2008. Republicans want to blame the problem on government (particularly Environmental Protection Agency) regulations. But the main reason for the lack of investment is lack of demand. People simply don’t have the money to purchase their goods. This is confirmed by The Bureau of Labor Statistics, which shows that only 1,119 layoffs were attributed to government regulations in the first half of this year, while 144,746 were attributed to poor “business demand.”
As Bill said, “When people don’t have money or confidence to purchase goods, companies stop investing. As a result, 500 companies listed on the S&P Index are sitting on a record $800 billion.”
“It’s a circular downward spiral,” Timberman continued. “Fewer jobs mean less demand. And less demand means fewer jobs. If companies won’t break the cycle by investing, the government has to.”
Republicans have focused on deficits and debt. At the same time, they want to further cut taxes. This extreme position will only further damage the economy. As Bruce Bartlett, an economist who worked in the Reagan and George H.W. Bush administrations, recently wrote, “Republicans favor tax cuts for the wealthy and corporations, but these had no stimulative effect during the George W. Bush administration, and there is no reason to believe that more of them will have any today.”
As for the idea that cutting regulations will lead to significant job growth, Bartlett said in an interview, “It’s just nonsense. It’s just made up.”
The key to creating jobs is government investment. This has been successful many times in the past. Government spending brought us out of the Great Depression and helped us through WWII. For example, the Hoover Dam was built by the government during the Depression. It not only helped put people to work during its construction. It created cheap electricity and Lake Mead which made Las Vegas and Los Angeles possible. Even the corporate giant, Bechtel Corporation, was created by construction of the Hoover Dam.
Following WWII, deficit spending reduced the deficit and debt through the GI Bill. The country realized similar benefits from the construction of Interstate 80 in the 1950s and the space programs of the 1960s and 70s.
Steve and Bill concluded. “Today, we need the government to invest more than ever. During every economic crisis, the government invests to help us. Then our taxes help the government. It’s a shared responsibility.”
“The surest way to wreck our economy is to do what the GOP wants by further cutting taxes on corporations and refusing to raise taxes on the very wealthy. Or put another way, How has 30 years of cutting corporate taxes worked out for you?”