The economy is at risk for a second recession if responsible adults don’t take control of the policy dialogue. Sadly there are none who meet that description; instead what we have is Democratic fecklessness, coupled with Republican stupidity and brinksmanship in Congress, all over allowing Bush’s tax cuts for the wealthiest members of society to expire. Congressional Republicans generally profess the belief (whether sincere or otherwise) that by directing wealth to the top, the excess capital will spur investment and job creation. This is basically an oversimplified “energy in = energy out” concept of how capitalism works, and there’s nothing wrong with it, as far as it goes.
Nothing wrong – except that it’s been in effect for a decade without producing the promised result. Consideration of the concept almost never goes any deeper than that, so the broad balance of incentives has been interpreted completely wrong. Why expend effort and resources when acceptable results can instead be had by rent-seeking at taxpayer expense? The GOP seems to have no trouble with this argument when employing it in the context of cutting “social safety net” programs to (ostensibly) combat indolence and malingering, but fails to recognize that it tends toward diminishing returns at the upper end. If one need do no more than elect Republicans in order to maintain and accumulate large quantities of wealth more rapidly and easily than one might do otherwise, then nothing more than that will be done. On the lower side of the spectrum, basic needs and expenses drive the bulk of economic activity: “do or die” is very close to literal. Does that survival dynamic exist at the upper economic tiers?
It purportedly works like this: if people at the top invest and create jobs when they have excess capital, then naturally they will do even more of that with even more excess capital! We can detect genuine belief in this idea when we hear the Speaker of the House say “I’ve said many times throughout this process that we’re trying to cut spending so that we can create a better environment for job creators to create jobs in America,” and “we can’t tax the very people that we expect to reinvest in our economy and to create jobs.” See the “better environment” and “expect” remarks? That gives away how Mr. Boehner is thinking about this, and I think he is sincere in his economic faith – cargo cult though it may be. Liberals, for their part, tend to derisively dismiss this belief as mere window dressing for their much-beloved “Republican wrecking crew” narrative, in which they see ideologically driven Republicans trying to “starve the beast” every time money comes up.
Some people slightly under-feed their dogs on the premise that this makes them more alert and aggressive as watchdogs, but clearly they’re not going to be of much use if you starve them into weakness and death. On the flip side, giving them increasingly larger amounts of food on the premise that additional caloric input will result in proportionally more energy output is pretty damned stupid, too (calories = energy ∴ more calories = more energy). Can we see the problem here?
Boehner is a relatively mainstream Republican vigorously pursuing the ritualistic proposition that Tinkerbell cannot rise again unless we all fervently believe, and prove it with ever-louder applause. Unfortunately for him, he isn’t included in (or even nominally in control of) the media-created Tea Party™ faction within his party, and that’s why actual policy has become next to impossible. It’s difficult to negotiate with nihilists who fervently want little more than to starve government before “drowning it in the bathtub.” You will note that they don’t tend to talk so much about what follows, or at best they describe their desired results in assumptions and vague generalities; they are interested not in building what replaces it but in tearing down what now exists.
And before you go protesting that “They’re/I’m just like everybody else, mad that there are no jobs and barely able to get by, while those morons in DC act like they couldn’t find their own asses with both hands and a flashlight,” think about this for a minute. Where did this so-called Tea Party™ thing originate? It started with media pundits engaging in their favorite pastime: talking to and about each other. Some jackass employed by a cable news channel started braying on-camera, then some other cable news jackasses ran with it. When the professional lobbyists smelled opportunity after the 24-hour news cycle had mindlessly primed the pump, they threw some slick-looking PR together to take out onto the hustings for the rubes to buy. It was wholly manufactured, taking advantage of a slice of public sentiment which was probably organic at first, but which is now a wholly artificial superstructure. Who “speaks for” this so-called party (also occasionally called a “movement”) now? Never mind the grassroots activists; they’re contained and have always been sheep to be fleeced: see pump and dump. No, it’s the professional lobbyists and a handful of congressional representatives doing all the talking – on the cable news channels, naturally.
Equilibrium will be restored one way or another, but we have to decide whether we want it to happen in a controlled or uncontrolled way. Over the past couple of decades, federal tax revenues have been repeatedly cut while state and local taxes have risen. Taxes have been shifted downstream in such a fundamental way that while mighty corporations like General Electric can somehow pay zero on $14 billion in profit, average people get hit with degradation of services and ever-increasing tax burdens at the state and local levels. Civil service staffing levels have been cut across the board and work-a-day civilian employees are denigrated as pampered elites, while essential positions go unfilled and government grows less able to perform even basic functions.
If lower taxes amount to letting people keep more money in their pockets, and said taxes are preferentially targeted toward people who already have plenty, what will they do with that money? The Speaker “expects” that they will spend that excess in order to invest and create jobs; I’m realistic enough that I expect them to simply keep it in their pockets.
Welcome to Gilded Age 2.0.