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Liberal Democrats and Job Creation

One of the widely held beliefs among Obama apologists and congressional Democrats is that a policy of massive federal spending (stimulus, Keynesian policy...call it what you want) is more effective than tax reductions to reverse negative economic growth (recession). A subject that has been broached on this blog before is the question of motive. What motivates Democrats to promulgate these policies? Implicit in this question is the fact that tax reductions create a more direct and more efficient stimulative effect on the economy than any form of federal spending. Why? Because the tax savings find their way into the consumer's pockets in about, oh, two weeks, after which they arrive with amazing regularity. Compare this to a government stimulus scheme that requires layer after layer of bureaucratic oversight and months (if not years) to deploy.

Tax reductions for the demographic which pays the most taxes proportionately have the greatest impact on job creation and growth (see the recoveries in 1983 and 2003 that followed tax reductions). The liberal argument against this position has mostly centered on the concept that government (in the absence of consumer spending) must spend money during a recession to stimulate growth. Another argument against lower tax policy is that tax cuts don't necessarily translate into spending. The recipient may do something else with the money, like pay off debt. That is a valid point only to the extent that it might accurately describe what happens to the money created by the lower taxes. It does not validate higher government spending.

One unavoidable aspect of the current economic situation is that American consumers in all tax brackets are paying off debt at a record pace, a reality that differentiates the current recession from prior recoveries. The economy is deleveraging from a consumer borrowing binge of epic proportions that has spanned three decades. This is happening not only by individual choice but also out of necessity, as banks restrict every form of consumer credit from credit cards to mortgages. The deleveraging is going to happen and it is going to take a long time. The only question is how best to allow the consumer to deleverage: tax cuts or government spending? The answer is obvious that tax cuts are a more efficient conduit to put more money in consumer pockets. The Fed can mitigate some of the more severe symptoms of the recession by ensuring that the monetary system remains liquid (by expanding the monetary base) but the only way out of the current dilemma is to increase take home pay for all Americans, including the rich.

Which brings us back to the original question: what motivates Democrats to promulgate a policy that hinders American's ability to pay off debt, increase savings and create jobs? Any thoughts on that this weekend?


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Comments (8)

"what motivates Democrat... (Below threshold)

"what motivates Democrats to promulgate a policy that hinders American's ability to pay off debt, increase savings and create jobs?"

Too easy.

POWER! They create a "Worker Class" that is beholden to them for EVERYTHING! Food, medical, shelter, etc.

POWER is what motivates them. A free economy is harder to control...and people free to make choices WITHIN that economy are thus harder to control.

Not rocket science.<p... (Below threshold)

Not rocket science.

Democrats have always felt that they can spend your money more wisely than you can, so they naturally oppose tax cuts that directly give the taxpayer more money. They would much rather dole it out as largesse so as to be able to buy the maximum number of votes.

"Teach a man to fish and you feed him for life: give a man a fish and he'll vote a straight democratic icket for so long as you continue to do so."

"... what motivates Demo... (Below threshold)

"... what motivates Democrats to promulgate a policy that hinders American's ability to pay off debt, increase savings and create jobs?"

That one's pretty clear - it's because they don't believe that their policies do any such thing, all evidence to the contrary.

They've got themselves convinced that the only way any state or nation can survive, let alone prosper, is with government controlling damn near every aspect of life - from what you eat to what you watch to what you listen to, to where you live and what your work conditions are and what your transportation choices are - and all that control takes a LOT of money to implement.

Personally, we've cut back a lot of our spending since we're trying to get the credit cards paid off completely, and get money in the bank. We did a re-fi on the house at about 4.75, and used the money saved each month to replace an aging, unreliable vehicle with a new one. The next steps are saving up for the offspring's braces, and replacement of a 30-year old air conditioning system. (Thing still works, wonder of wonders - if we can keep it going another year and a half we can pay cash for at least PART of the swapout.)

What amuses me (in a sardonic sort of way) are the people who are still saying Obama's not going to raise their taxes - who still smoke. Their taxes got raised - they just don't see an increase on the tobacco taxes as a tax increase. And the garbage Democrats are planning to help 'finance' their 'health care reform' are going to hit EVERYONE.

But watch Obama. He really believes (or says he does, anyway) that health care and the attendant costs are going to be so GOOD for the country, it doesn't MATTER how much it'll ultimately take from the taxpayer.

Hell if I can figure out his financial reasoning on that one, but it's pretty clear he thinks the more he bleeds us, the healthier we get.

The left is interested in p... (Below threshold)

The left is interested in power and rule. It is far more difficult to impose one's will on a prosperous, healthy nation. There have been very few wealthy slaves! As conservatives, we must abandon the notion that everyone loves this nation and would do nothing to harm it. The left will gleefully destroy the greatest nation in history if it will lead to the dreamed of dictatorship.

"what motivates Democrats t... (Below threshold)
retired military:

"what motivates Democrats to promulgate a policy that hinders American's ability to pay off debt,"

Posters 1-4 have hit all the nails on the head.

D. All of the above.... (Below threshold)

D. All of the above.

I'd like to add that if the... (Below threshold)

I'd like to add that if they had only cut taxes there wouldn't be a huge pot of money to dip into with their sticky Democrat fingers.

A lot of the Spendulus seems to have been vanished and the whereabouts of the money is largely unknown.

Maybe Sherrif Biden can tell us where it went?

The liberal paradigm doesn'... (Below threshold)
Mark Evans:

The liberal paradigm doesn't need objective evidence of success because the motivation of the paradigm is based on feelings. Liberals veiw the world in terms of people in need. The need may be relief from poverty, or a need for protection from another entity, or a need to redress past grievances. Whatever the need, Liberals are here to help and make everyone feel better.

Isn't it a great feeling when we help others? The problem arises in determining who actually needs help. Liberals don't ask that question. It's easier to address the problems of those claiming victimhood or creating a class of victims and then doing something to help.

Of course, the only way to help is by making everyone equal and that can only happen if the government controls everything. The determination that a certain class needs help means that another class must be infringed upon to provide that help and the government gets to decide what's fair.

When it's about what feels right, results don't matter. What matters is that I did something to help. Whether it actually helps isn't the point. In their world, their actions and decisions can't be judged by what happens only by their good intentions.






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