Wednesday, April 25, 2012

Theory v Fact: Analyzing austerity and stimulus

Yahoo: The varying impact of austerity and stimulus

"...the best way for a government to put austerity into effect is by cutting subsidies and raising taxes for low earners, and the best way to carry out stimulus is by cutting taxes for high earners."

The article presented is ridiculous for no other reason than it only addresses theory and not facts. This is a typical tactic by conservatives -- rhetoric -- as facts have a liberal bias. We have over seventy years of historic policy that would -- and has -- refuted trickle-down theory.

Three things:

1.) Tax cuts do not create jobs. They never really have. Go back to 2001, or go back to the eighties when Reagan was forced to raise taxes after cutting them.

A similar fate awaited Bush I.

Unfortunately, Bush II made that same mistake TWICE while sending us into TWO wars (not to mention Medicare Part D which holds the country hostage to pharmaceutical companies) thus having to borrow from China to fund them.


Oh yeah, no job creation from the tax cuts despite what the article would have you believe.

There's that liberal bias again...

2.) The article does not address consumer know...that little thing that attributes seventy percent of GDP.  This is kind of important when dealing with job creation as spending creates a demand; demand creates jobs.  Stimulus helps consumer spending; it’s implicit. 

3.) Which brings us to the American Recovery and Reinvestment Act of 2009.  In 2010 alone, the nonpartisan CBO reported job growth from the stimulus at upwards of 3.6 million jobs and unemployment reduced upwards of two percent (despite more investor and consumer confidence driving more people into "unemployed" status).

And I'm not sure what country the author is living in, but we have had six-digit job growth almost every month for some time now.

I haven't even touched the auto bailout.

Again, the bottom line is that the author only writes in theory. I just don't understand why he ignores past policy...unless he just doesn't like the facts being presented.