The Mudcat Café TM
Thread #119021   Message #2584006
Posted By: Don Firth
08-Mar-09 - 03:15 PM
Thread Name: BS: Obama Goes For Broke
Subject: RE: BS: Obama Goes For Broke
The reason that tax cuts for the rich and for the corporations will not solve the country's economic woes is that "trickle down" simply doesn't work (which, by now, we should have figured out). The idea is that with less taxes to pay, businesses can create more jobs and hire more workers to fill them. But–even with the workers they have now, production is down.

This is not the fault of the workers. In this "consumer society," people are not consuming. There is no point in making more super-duper widgets if the widgets are not selling and are just sitting on the showroom floor or being stacked up in warehouses. So factories are making few widgets. So, to save money, the company lays off employees who, through no fault of their own, have little or nothing to do.

The result of this is that there are fewer people out there who have enough money to buy widgets. So they lay off more people, and– You get the picture.

Read up a bit on the New Deal and the programs that FDR initiated to get money into the hands of people will buy widgets if they have money to buy them with. The WPA and the CCC and a number of other "alphabet soup" agencies put people to work on needed infrastructure (roads, bridges, various construction projects). This put money directly into the hands of people who needed it and would spend it right away. In addition to this, Roosevelt instituted regulatory agencies such as the Securities and Exchange Commission (and others) to put the brakes on runaway speculation and other excesses that brought the Depression about.

Those who say that it wasn't Roosevelt's New Deal that ended the Depression, it was World War II, don't know from Shinola about what was really going on back then. The U. S. didn't get into the war until 1941. The Depression was not over, but it was well on the wane by the mid-1930s as a result of Roosevelt's common sense programs.

When Obama talks about putting people to work on needed infrastructure and renewable energy projects, this sound kind of familiar.

The Repubs chafed and snarled under the regulations that FDR started because they put curbs on what amounted to rampant greed (not unlike today). Along comes Reagan and his creeping de-regulation. It took a few decades to do things like replace the regulators on the SEC with financial industry flaks and the Food and Drug Administration with pharmaceutical company executives, but look where the lack of regulation got us.

Right back in the same sink-hole. Yet the Repubs want more de-regulation and more tax cuts for the wealthy. But the way out is clear. When you find yourself in a hole, the first thing you need to do is stop digging.

Don Firth