Looking Beyond Tax Cuts!

I don't mean to go off on a rant here, but let me get this straight. Something I will never understand is the conservative mantra that tax cuts are undoubtedly the best and only way to pump money into a struggling economy which in turn will foster job creation. While evidence that clearly contradicts this widely held conviction mounts, conservatives refuse to expand their view of the economy. Taxes bad, bottom line good. Company make money, company make new jobs. This simplistic view is not grounded in reality. While decreases in tax rates have in the past increased job growth, the present problem is clearly not being solved by the previous solution. Other remedies to job loss need to be explored and evaluated more carefully by both parties. Democrats and Conservatives alike owe Americans a realistic strategy for job growth creation. Neither has yet to offer any semblance of a substantive plan that looks beyond preconceived notions of party platforms. Republicans need to admit tax cuts for big business and the wealthy don’t cure all of life’s problems, and Democrats need to stop using protectionist rhetoric to criticize free trade. Repealing parts of the egregious Bush tax cut is a great start, but it is only part of a much more complex solution. Liberals and Conservatives should engage each other in a real discussion on how best to put Americans back to work. In an effort to win re-election, our representatives are short changing America by intentionally simplifying the problems facing our economy. In doing so, they are failing to address their constituent’s biggest concern, getting a job.

The following op/ed in USA Today disccusses this dilemma facing our nation’s law makers and offers one solution. Take note of the paragraph in bold. The article states,

"While Washington has showered tax cuts on U.S. businesses to spur them to grow, executives have not created new jobs or shared their increased prosperity with workers. Instead, the tax benefits largely have fattened companies' bottom lines. The growing disparity between corporate and worker fortunes requires a re-examination of strategies for stimulating the economy.

Corporate profits are up 30% since the end of the 2001 recession, according to the Commerce Department. And dividends paid by the Standard & Poor's 500 companies have increased 19% in the past two years. By contrast, 2.3 million jobs have disappeared since 2001. And weekly earnings for the average worker in 2003 rose just half of one percent in two years, after adjusting for inflation, the Labor Department reports.

Those were not the results corporate lobbyists promised in 2003 when they won $148 billion in pro-business tax cuts over five years. Among them:

Lower capital gains taxes. Businesses said reducing the tax on stock-sale profits from 20% to 15% would stimulate investment in their growth and create high-paying jobs. Instead, much of the money has paid for new technology that lets firms produce more with the same or fewer workers. The efficiency gains have fattened profits more than paychecks, government data show.

In light of business' failure to deliver on earlier promises of job and wage growth, worker-friendly ways to stimulate the economy are worth exploring first. One example: extending unemployment benefits for 760,000 people who have exhausted benefits. According to Economy.com, a consulting firm, every $1 invested in extended benefits generates $1.70 of increased economic activity because the money is spent quickly. By contrast, each $1 spent cutting dividend taxes pumps just 9 cents into the economy, the firm says. The benefits' $14.5 billion annual cost could be offset partly by eliminating some business tax breaks and subsidies.

Business groups say strong economic growth soon will pay off as companies hire new workers and give current employees raises so they don't look for jobs elsewhere.

But similar predictions a year ago that jobs are just around the corner still haven't come true. Until those jobs materialize, corporate claims that policies good for business are good for the country will ring hollow."