Herman Cain, the ex-CEO of Godfather's Pizza who is running for president for some reason, recently unveiled an economic "plan," the crux of which is the elimination of taxes on capital gains (money made from the return on investments like stocks, bonds and real estate). When an Associated Press reporter asked how many jobs that would create, Cain said, "I don't have a number. We are working on that … but if we do these things, I am convinced the unemployment rate would be 5 percent or less." Based on something.
Former Minnesota governor Tim Pawlenty, who is also vying for the Republican nomination, similarly says governmental burden is holding back an economy that would otherwise be a wellspring of prosperity. "The United States is still home to the most dynamic and entrepreneurial people in the world," he said recently. "They're all around us, ready to innovate, invest, compete and create new businesses and jobs," but they "have been discouraged and weighed down by President Obama's big government and heavy-handed regulations."
The Republicans have been making a single-pronged attack on the Obama presidency by stating that economy would be A-OK if there was no government intervention — no stimulus spending, no healthcare reform, no taxes high enough to be worth weaseling out of — all of which are, according to the mantra of House Speaker John Boehner, "job-killing." This message, remixed one way or another, has been replayed on Fox News like "Hotel California" is replayed on classic rock stations.
Never mind that the 2009 stimulus package included $288 billion in tax cuts, bringing taxes to a 50-year low. If that did not put the economy back on track, why would obliterating taxes even further work?
As for job-death through government spending? It doesn't make any sense. As former Federal Reserve Vice Chairman Alan Blinder asked in a June op-ed in the Wall Street Journal, "How can the government destroy jobs by either hiring people directly or buying things from private companies? For example, how is it that public purchases of computers destroy jobs but private purchases of computers create them?" Last year, the nonpartisan Congressional Budget Office calculated the stimulus bill — which did spend $2.73 for every dollar it let loose in tax cuts — had saved or produced between 1.4 and 3.3 million jobs.
Republicans often note that spending adds to the sky-high federal deficit that is supposedly doing something to the job market. Yet they are stuck in the same public policy tape loop: there isn't enough discretionary spending to cut to seriously impact a $1.3 trillion deficit and they won't tackle it from the other end because they won't alter the tax code in any way that adds revenue to government coffers (because that would be job-killing, of course).
Politicians often work to lessen the governmental pressure on the moneyed interests that fund campaigns, but Republicans' current stance seems to be motivated by an almost cult-like belief in the negative impact of anything government. They are succeeding in making Americans share their phobia. A Bloomberg poll found 55 percent of us think lowering taxes and cutting government spending would be more effective at creating jobs than maintaining or increasing spending.
Oh, how we have forgotten the lessons of history. After the Great Depression, the last economic catastrophe comparable to the late 2000s recession, the federal Works Progress Administration employed 8 million people during the course of its lifespan, fixing and building infrastructure across the country. That's right; the government created jobs — directly. As part of the same New Deal package, President Franklin D. Roosevelt implemented new labor standards, tightened regulations on bankers, started social security and raised taxes. The result? A three-fold drop in unemployment, from 25 percent in 1933 to 9 percent in 1937. And the Republicans also called him a socialist.
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