Is it me? Because I just don’t get it. I don’t understand how the Republicans can keep coming back to the same old / same old and think that it will work. Yes, Ronald Reagan cut taxes in 1981, but he raised government spending (and I’m really simplifying because monetary policy had a lot to do with the recovery). The idea that the country can get our citizens back to work via lower tax rates and the reduction of government regulations is a one that is not based on any facts.
Here’s what drives companies to hire people – it’s simple, but true: DEMAND. That’s it, demand for a company’s good has to be high enough for the company to hire more people. PERIOD. If we’re not out purchasing Ding Dongs, the Ding Dong factory up the road is not going to hire more people. It doesn’t matter how low a company’s taxes go, they’re NOT going to hire anyone they don’t actually need.
I don’t understand why it is that the Republicans in the Senate (led by John McCain) and the majority of the Republican Candidates for President do not understand the basics of economics. And, actually, I do understand why Michele Bachmann doesn’t – the woman doesn’t know that Abraham Lincoln wasn’t a founding father and that Elvis is dead. I understand why Rick Perry doesn’t get it – he’s a politician. But, Mitt Romney and Herman Cain are businessmen – Romney hasn’t been one for quite a while, but Cain did an impressive job turning around the Godfather’s Pizza business.
How can either one of them say, in all honesty, that they would hire someone they don’t need in a company just because taxes are low?
Why would anyone?
The truth is that consumers are tapped out. I’m tapped out, you’re tapped out. We’ve pretty much purchased everything we wanted in the last, say, twenty years. I have a house. I purchased two cars – one new, one used – within the past two years. Other than buying some Christmas presents and a new cell phone, quite honestly, I’m done. Finished. There’s no more spending coming from my house. It is time – and this is probably anti-Patriotic of me – to do some saving.
There’s a lot of people out there who are just like me.
So, how does the economy improve?
By the government spending, spending and spending some more. I don’t like the concept, I don’t like the idea, but that’s what has to happen. We can’t lay off 15,000 government workers in one state and expect that state’s economy to make any improvements.
We have been neglecting our infrastructure in this country for years. Now is the time to fix the bridges, the roadways, the levees, our schools and whatever else needs fixing. Now is the time for the government to spend.
There’s a balance that has to be met. We can’t have too much government money pumped into the economy or it will push out private investment. We need to find that balance.
But, we are not going to improve the economy by cutting more taxes and reducing even more regulations. The Republicans need to start singing a new tune, because the economy can’t march to the one they’ve been singing.