Wednesday, April 13, 2011
Issue of the Week: Ryan Uses Economic Lies to Protect the Wealthy
Plus Hero of the Week
Wisconsin Congressman Paul Ryan has put together his
version of the 2012 federal budget, which, if enacted, would transform America
into something that resembles a developing country more than the richest nation
in the history of the world. His cuts would change America as we know it, all
in the name of cutting the deficit.
Is it necessary to address the large budget deficits that America is currently running? Yes, but not when the economy is struggling with a very fragile recovery. The deficit, as every Economics 101 student quickly learns, can and should be addressed when the economy is moving into its boom cycle, not when it is struggling to come out of recession.
Unfortunately for America, Ryan keeps repeating the lie that raising taxes will kill jobs while cutting spending will stimulate job creation. It is just not true. But Republicans keep repeating it nonetheless. There is only one thing that creates jobs: demand for goods and services. Jobs are created when businesses start up or expand, and that only happens if there is demand for the product or service they provide. If there is more demand for computers, computer companies will expand and create more jobs. Whether the computer is bought by individuals like you, or whether the computers are bought by the public school system, the city for its accounting department or the state to keep track of hunting licenses, it all registers as demand for more computers, and new jobs are created. It doesn't matter if it is a private dollar or a public dollar that pays for the computer.
Ryan, who comes from a wealthy family and has spent his career serving the interests of the rich, continues to distort the truth to avoid the reality that we need to raise taxes on the wealthy as a major part of any deficit fix. When you cut spending to schools and local units of government, and they lay off teachers and firefighters, you cause a decrease in demand. Going back to the computer companies in the above paragraph, if someone loses a job, or the school district or local units of government have less money, they can't buy the computers. Computer companies eventually have to lay off employees and we begin to move back into recession. On the other hand, if you raise taxes on the wealthy, who spend little, if any, of their marginal income, the demand is barely affected.
So if you want to grow jobs, you don't want to reduce spending during a fragile recovery. Instead, increase government spending and deal with the deficit in a year or two, when the economy is much stronger. And when you do deal with the deficit, you must include tax increases for the wealthy. We can also fix the entitlement programs with some combination of innovation and raising the tax contributions of the wealthy. For example, Social Security, which is the greatest safety net America has ever created, could become solvent without cutting benefit checks. You simply need to raise or totally eliminate the cap on the maximum taxable earning amount for Social Security. Currently the maximum taxable earning amount for Social Security is $106,800, so the CEO earning $10 million a year pays the same amount of social security tax as a person earning $106,800. If we simply increase that $106,800 ceiling, or even eliminate it entirely, Social Security would be solvent into the next century without reducing benefit checks. Paul Ryan and his friends won't even put that option on the table for discussion.
Heroes of the Week
In addition to providing necessities like food, showers and personal care items, the professional staff at the Guest House offers counseling, social services, employment training and referrals to affordable medical care. The Guest House relies on the help of volunteers—especially for meal services, since the facility has no kitchen. Once a month, Tanya Maney and her family prepare and serve dinner to Guest House residents—just one family making a huge difference in the lives of strangers.
Businesses, organizations and individuals who wish to help the Guest House in giving a hand to the less fortunate with donations of time or material supplies are urged to call 414-345-3240 ext. 111 or visit www.guesthouseofmilwaukee.org.
Is it necessary to address the large budget deficits that America is currently running? Yes, but not when the economy is struggling with a very fragile recovery. The deficit, as every Economics 101 student quickly learns, can and should be addressed when the economy is moving into its boom cycle, not when it is struggling to come out of recession.
Unfortunately for America, Ryan keeps repeating the lie that raising taxes will kill jobs while cutting spending will stimulate job creation. It is just not true. But Republicans keep repeating it nonetheless. There is only one thing that creates jobs: demand for goods and services. Jobs are created when businesses start up or expand, and that only happens if there is demand for the product or service they provide. If there is more demand for computers, computer companies will expand and create more jobs. Whether the computer is bought by individuals like you, or whether the computers are bought by the public school system, the city for its accounting department or the state to keep track of hunting licenses, it all registers as demand for more computers, and new jobs are created. It doesn't matter if it is a private dollar or a public dollar that pays for the computer.
Ryan, who comes from a wealthy family and has spent his career serving the interests of the rich, continues to distort the truth to avoid the reality that we need to raise taxes on the wealthy as a major part of any deficit fix. When you cut spending to schools and local units of government, and they lay off teachers and firefighters, you cause a decrease in demand. Going back to the computer companies in the above paragraph, if someone loses a job, or the school district or local units of government have less money, they can't buy the computers. Computer companies eventually have to lay off employees and we begin to move back into recession. On the other hand, if you raise taxes on the wealthy, who spend little, if any, of their marginal income, the demand is barely affected.
So if you want to grow jobs, you don't want to reduce spending during a fragile recovery. Instead, increase government spending and deal with the deficit in a year or two, when the economy is much stronger. And when you do deal with the deficit, you must include tax increases for the wealthy. We can also fix the entitlement programs with some combination of innovation and raising the tax contributions of the wealthy. For example, Social Security, which is the greatest safety net America has ever created, could become solvent without cutting benefit checks. You simply need to raise or totally eliminate the cap on the maximum taxable earning amount for Social Security. Currently the maximum taxable earning amount for Social Security is $106,800, so the CEO earning $10 million a year pays the same amount of social security tax as a person earning $106,800. If we simply increase that $106,800 ceiling, or even eliminate it entirely, Social Security would be solvent into the next century without reducing benefit checks. Paul Ryan and his friends won't even put that option on the table for discussion.
Heroes of the Week
Guest House
of Milwaukee Volunteers
In addition to providing necessities like food, showers and personal care items, the professional staff at the Guest House offers counseling, social services, employment training and referrals to affordable medical care. The Guest House relies on the help of volunteers—especially for meal services, since the facility has no kitchen. Once a month, Tanya Maney and her family prepare and serve dinner to Guest House residents—just one family making a huge difference in the lives of strangers.
Businesses, organizations and individuals who wish to help the Guest House in giving a hand to the less fortunate with donations of time or material supplies are urged to call 414-345-3240 ext. 111 or visit www.guesthouseofmilwaukee.org.
Incredible. The vast stupidity of this statement: "It doesn't matter if it is a private dollar or a public dollar that pays for the computer" is staggering, but illustrative. There is no such thing as a "public dollar". The money spent by the government is private money, collected through taxes and filtered through a vast system of waste, fraud, and cronyism. Before this money enters the hands of the taxpayer (actually, the government portion is snagged before it ever goes to the taxpayer) it is generated by an income-producing entity- AKA, a BUSINESS.
Again, I must repeat this basic truth- without businesses, there are no income taxes, no property taxes, no licensing and regulation fees, no hunting license fees, NOTHING! Government produces nothing, it only feeds off of business like a parasite. All dollars are private dollars- why should we trust the government to spend them more wisely than those who earned them?
We could increase tax on the wealthy. Not so sure if it would much good. I know a lot of wealthy people and they pay little to no tax. Why? They choose to not have taxable incomes. They live on interest from tax free bonds or real estate investment trusts which pay tax free, return of capital, dividends. They own homes and have drivers licenses in tax free states. Ok, so I hope I don't have to give a lesson in legal tax avoidance. Some own homes in the Carribean, operate profitable businesses there, and then bring the money up to the US during the bad years, to offset losses.
Next, the economy has recovered. Jobs are not an issue. Unemployment is a lifestyle choice. If some really really wants a job, they can get one. But to the Democrats, we are in a perpetual depression and we need to just hand out money to everyone who will vote for them.
Now that the economy is booming again is the time to cut all all the wasteful handouts. But that is just the Republican in me. Democrats just want to push success and redistribute to the lazy hammock class.
Ryan speaks the truth... lower taxes (or no taxes) on business WILL create jobs... but not the kind your daddy had! You know your dad, chances are he barely got his HS diploma (and momma stayed home and served KoolAid, hung out the laundry). The most important thing about his high school was Prom and Homecoming, not grades or college advanced placement. The job that he had is not the kind being created by Ryan's plan, at least not for the long term.
It will be some short-term "educated" jobs here, and lots of long-term "uneducated" jobs created in foreign lands. But Ryan is not going to say that.
The jobs that WILL be created here are a few short-term middle class jobs, the kind that are needed to plan and implement the movement of business' capitalist infrastructure to low cost countries. They need people to document the skills and experience that is jealously locked in the trained American laborers heads, re-format it so an emerging economy worker can hit the ground running with our American know-how (they are not afraid to "read the instructions").
Short-term middle class jobs to move more of your human skills into the machines and automation. What's better then highly automated American machines that reduce the high paid American worker to just "feeding the machine"? The CEO and stockholders know that it is this same machine being fed by a low paid Chinese or Mexican worker, especially if that worker does not pay high US cost of living. And if the quality know-how is in the machine, not in the worker, then us spoiled, high-expectation Americans will have no excuse to not buy foreign made stuff. Meanwhile, low cost high selling price = record profits!
------------------------------------
Let's speak of change, of trends, if you want to get into wonky stuff like Ryan "the thinker" does.
If I am a normal human being, I like doing better each year than the the last. Doesn't matter if I'm doing better because my pay is going up, or prices are going down, or if it's only my taxes that are going down... I can get more stuff than before, so I'm doing better!
Look at it this way... the hyper inflation of the 80's has been over for a long time. During those years, "I did better" because my pay was rising faster than my taxes or prices.
Then there were years of low inflation. My pay was not going up fast, nor were prices dropping, but I was "doing better" because taxes were going down (Reagan / Bush tax cuts).
Then we had this "Bear" economy. My pay was not going up, taxes were holding steady, but I was "doing better" because prices were dropping, and I was able to buy you out when your pockets were not deep enough to ride through the slump.
Now that the slump has stopped, I am not making money off of dropping prices, and I'm not makikng money off of rising income (rising demand). The only way I can "do better" is for all y'all to drop my taxes some more!
Ryan is doing his job, get them taxes down so his wealthy buddies can "do better" during this slow economy (Wall Street only, Main Street is still hurting from trying to deal with the housing value correction).
The article calls for the elimination of the $106,800 cap on social security tax. The employer and employee portion would be a bit over 15%. We shouldn't punish small struggling businesses and sticking them with more payroll taxes. And the poor middle class schmuck who maybe makes $100k to $200k a year, we stick him with 7% in taxes on everything over $106,800. Ouch. Way to punish someone who decided to work harder and earn more. This just encourages people to become 1099 workers. Imagine if you are self employed and only making $200k a year, you have to pay in over $30k just for social security. Then pay federal and state taxes on top of that. This pushes your marginal tax rate up to about 50% or more. $106k a year is not rich by any means. But it seems the Shepherd staff must think it is.