Provided by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC
On ABC’s ”This Week” broadcasted this Sunday, June 12, 2011, Robert Reich and Senator Shelby debated about the way to create jobs in the United States. Reich argued that a massive jobs bill, comparable to that of the Great Depression’s WPA, is needed to haul us out of this jobless economy; while Republican Senator Shelby dismissed any stimulus plan and advocated further tax reductions on the rich and corporations. Voodoo trickle-down economics appears to be the only solution for Republicans on everything that ails America: that is, if we give cake to the rich, crumbs will trickle down to everyone else in our country.
But American corporations already are sitting on $1.9 trillion of cash, not investing in our country and creating jobs. What makes Shelby think that if Congress gives these mammoth corporations even more trillions of tax cuts that they will create jobs here in the US? Are the campaign contributions that these corporations are giving to Republican and Democratic members of Congress overtaking the economic reasoning of these legislators?
Even if Congress does lower the corporate tax rate, if the Multinational Corporations do, in fact, create more jobs, they are unlikely to create them here in the United States but rather in countries where labor is paid as little as 22.5 cents per hour. Why would they create jobs here, where the costs of labor are so much higher? That defies the laws of economics. Multinational Corporations are efficient profit machines, the economic terminators of today, without any sense of patriotism, and acting in accordance with the laws of economics, will continue to offshore work overseas because lower labor costs result in more profits for their shareholders.
Of course, the problem with America’s democracy lies in the open door policy of campaign contributions to members of Congress, the Presidency, and every other political office held in America. These very same corporations are also funding all of these 527 organizations that have been established to promulgate this voodoo trickle-down nonsense of how tax cuts for the rich and themselves would create jobs here in the USA, when, in fact, these exorbitant tax cuts would only result in even more deficits and more cuts in social security, medicare, medicaid, pell grants, and other social net programs.
Reich is right. The only way out of this jobless recovery is a dramatic and bold move: a massive government jobs program, comparable to the WPA during the 1930s.
Shelby erred in saying that the WPA and massive government spending did not take us out of the depression, claiming World War II did. But Shelby overlooked the fact that World War II entailed massive government spending of 120% of GDP. This led to huge tax increases on the rich and corporations, resulting in the greatest transfer of wealth from the rich to the middle class America. With this wealth, middle class America bought homes, cars, appliances, etc., and stimulated growth in our economy. Such is needed now for our country to recover economically.
Why would a similar transfer of wealth be justifiable morally today? Because over the last 30 years America has witnessed the greatest upward transfer of wealth from the middle class to the top 1% of our economic society. In essence, it would represent an undoing of a disastrous tax policy that led to the economic downfall of America: a tax policy initiated under President Ronald Reagan and perpetuated by Presidents Bush, Sr., Clinton, Bush, Jr., and Obama.
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