GOP falls back on its failed economic theory in ‘fiscal cliff’ negotiations

Posted by AzBlueMeanie:

The GOP is already falling back on its faith based supply-side 'trickle down" voodoo economics that has been entiirely disproved and discredited over the past dozen years as the "fiscal cliff" negotiations begin. Greg Sargent writes at the Plum Line:

As the fiscal cliff talks heat up, you’ll be hearing a lot of
Republicans claiming that hiking taxes on the rich will kill 700,00 jobs
right away. But as [Washington Post fact checker] Glenn Kessler documents, the study that this claim is based on falls laughably short of supporting that claim.

Footnote: A recent nonpartisan [Congressional Research Service (CRS)] report found no correlation between top tax rates and economic growth, which Republicans responded to by simply making it disappear. [suppressed it]

Steve Benen reports, CBO: higher taxes on rich won't harm economy:

Yesterday, the non-partisan Congressional Budget Office reported the looming tax hikes and spending cuts would undermine the economy in 2013, but
the "least harmful component of the coming fiscal consolidation is
precisely what Democrats are demanding: the expiration of the Bush tax
cuts for high earners."

CBO doesn't examine the top bracket Bush tax cuts directly. But it
does look at two competing scenarios: One where all of the expiring tax
cuts except for the payroll tax cut are extended; another where all of
the expiring tax cuts except for the payroll tax cut and the Bush tax
cuts for top earners are extended.

The former, CBO says, would increase employment by 1.8 million full
time equivalent employees in 2013 relative to allowing everything to
lapse. The latter would increase employment by 1.6 million. The
difference, 200,000 full time equivalent jobs, is attributable to the
expiration of the top bracket Bush tax cuts alone.

By comparison, other layers of the fiscal cliff save less money and
have far greater economic consequences. Failing to extend the expiring
payroll tax cut and expiring emergency unemployment benefits through
2014 would cost the economy about 800,000 jobs, according to CBO. The
two halves of the sequester — the defense cuts and the domestic cuts —
would each cost the economy about 400,000 full time equivalent jobs.

So, according to the CBO, the Democratic priorities do
more to help the economy, and the Republican priorities do less. The
700,000 figure cited by the House Speaker has no basis in reality at
all.

Maybe Republicans will try to suppress this, too?

These damn Tea-Publicans remind me of the Spanish Inquisition. Anything that questions their socio-economic dogma is heresy. "Burn them at the stake!" What these Tea-Publicans believe is a load of crap. Nobody should be listening to these guys.

2 responses to “GOP falls back on its failed economic theory in ‘fiscal cliff’ negotiations

  1. I remain confused as to what the conservative theory is, specifically. There are, among the number of taxes, two major categories; income and business taxes. Businesses, when faced with demand and sufficient resources, create jobs by hiring people. Individuals, with individual income taxes don’t hire people. They purchase stuff from companies. And that is demand side economics.
    For every wage paying job I have worked at, first I work for two weeks building and selling product, then I get paid. No manner of increased taxes will cause the business to not hire due to insufficient funds to pay wages. Again, wages are paid after sales are made.

    The next issue is that taxes are on earnings, not of total sales revenue. Earnings = Revenue – costs. Profit = earnings * (1=tax rate). No matter what the tax rate, except that it should be 100%, there is always profit except that there are zero earnings. And if there are zero earnings, no taxes are paid.

    It makes some sense that, a company will find themselves short of some cash to purchase the extra supplies necessary for a new higher to build product to sell, thus delaying the new hirer and production. Still, as I have known them, companies pay 30 days out. They have demand, they order the supplies, they hire someone, they build it, sell it, collect the revenue, then they pay the bills and wages. No manner of tax disrupts this process because taxes are paid on EBT, Earnings Before Taxes. Profit is after taxes.
    When it comes to government projects, often they get paid in installments, before the project is even completed.

    At best, an issue might be capital equipment, not having had sufficient time to save profits to use in purchasing capital equipment. Even then, it’s not an issue. The very nature of the Federal Reserve monetary structure and the ever increasing money supply intends that money is borrowed for the purpose of purchasing capital equipment. The money is always there. Indeed, that is how the economy works, it must be borrowed. If business do not continuously borrow from the Federal Reserve, and in ever increasing amounts, the economy stops running.

    I am left to wonder if the conservative base is just confused as to how business finances function.

    Perhaps they assume that business taxes are like individual income taxes. For individual income, there are no expenses. When individual income taxes increase, then there is less to spend. But again, that is demand side economics.

  2. I sense some confusion.

    P-l-e-a-s-e  ….let the good professor explain “TRICKLE-DOWN-ECONOMICS” to you

    …since I know that it is a complex, difficult and often misunderstood term.

    After all, it’s things like this that keep Economics Professors like me in business, no? 

    I AM sorry that I left my graphs at home, but here goes, anyway:

    Well, basically ,there are two parts to this beautiful , time-tested theory. 

    The FIRST part is the “TRICK”le part. 

    You MUST realize, you must understand, and you must emphasize that this is ALL a trick. 

    The rich are the “tricksters, and you my poor friends, are the “trick-ees”.

    Do I make myself clear? Good, then we’ll go on to the second part.

    The SECOND part, dear students of the world, is the crucial “Trickle-DOWN” part. 

    That, my friend, simply means that the super-rich URINATE all over the rest of us

    …and then laugh all the way to their off-shore banks and tax-shelters.

    I hope that I have been helpful. Until next time -ask me anything-!

    – Professor America
    P.S. Bottom lone: the only acceptable looters are the super-rich.
    Anybody else is subject to arrest.