Myths of Deficits and Inequality

Cut taxes on the wealthy, the "job creators," so they can create more jobs, Republican "conservatives" insist.

Here is a direct refutation: the wealthy are hoarding their cash--the top 1% save 37% of their earnings. Rather than creating jobs, by their out-sized savings rate they destroy jobs.

We should cut corporate taxes argues the Chamber of Commerce incessantly, because (by one measure) US taxes are higher than economic competitors like Japan and Germany.

Corporations are also hoarding cash, again cutting jobs: money not spent on consumption or real (as opposed to financial) investments, is jobs not created and wealth not multiplied.

Higher taxes on the wealthy and corporations would capture some of this excess cash to build infrastructure, improve education and hire people in needed jobs.

The US is the fourth most unequal nation among wealthy OECD nations, having a Gini index of .36 compared to the most unequal nation's Gini of .50 (Mexico). 0 would be complete equality, 1.00 represents complete inequality, where only one person received all the income. According to the Nobel economist Joseph Stiglitz, and even the Economist, inequality is inefficient. Increased inequality drains consumption and investment spending: low consumption drives low investment, drives low job growth.

Repeal Obamacare. The Republican House of Representatives has voted to repeal it 33 or 34 times. Proponents of repeal claim that the program will increase deficits and cut jobs. It's likely that the reverse is true in both instances. While Obamacare will increase some taxes, mostly marginal, it will also save an astonishing amount of money not yet easily calculated. Health care costs, and costs to the government may actually go down, through lower hospital and emergency room costs, and a reduction in treatments needed as people get regular medical care, instead of only going to the doctor (or the emergency room) when a health crisis strikes.

The Congressional Budget Office (not a partisan institution) estimated cost savings from Obamacare that would reduce out-going deficits substantially. In fact, its most prominent recent caveat (reduction of the reduction) was the administration agreeing to a year's delay in the employer mandate (to provide insurance or pay a fee per employee), which CBO estimated to cost the government $10 billion.

So, what's going on here? The Mainstream Media emphasize the Republican message, even though it's the opposite of the truth and makes no economic sense. Higher taxes on the wealthy do not curb growth; they probably stimulate it, up to a point. Obamacare, while far from perfect, does not increase future deficits; it will reduce them.

Why are "conservatives" and Republicans against higher taxes for high incomes? They have high incomes, or are paid by people who do. Ditto the MSM.

Inequality is rising worldwide, in the US faster than most, and the "winners" want to keep it all. They are like Fifth Century Roman Senators, who chose the Fall of the Western Roman Empire, instead of imposing taxes on themselves.