Republican economics: give money to rich people and everything will work out

By Richard K. Barry

Isn't it about time that every working man and woman in America realized that the Republican Party doesn't give a crap about you or your ability to have a job and support your family?

In a recent interview, CNBC host Jim Cramer made the mistake of assuming House Majority Leader Eric Cantor (R-Va) would support extending unemployment benefits "given the chaotic situation." Perhaps not all that surprisingly, Cantor replied:

Jim, the most important thing we can do for somebody who's unemployed is to see if we can get them a job. I mean, that's what needs to be the focus. For too long in Washington now we've been worried about pumping up the stimulus moneys and pumping up unemployment benefits and to a certain extent you have states for which you can get unemployment for almost two years and I think these people on unemployment benefits would rather have a job. So that's where our focus needs to be.

The interesting thing for me is that in the same sentence where Cantor says you can get unemployment insurance for almost two years in some states he also says people on unemployment benefits would "rather have a job." What he really means is that supposedly lazy Americans who want to collect government checks for up to two years need to be cut off so they will be forced to get a job.

What Republican bullshit. Working men and women are just too lazy, in Cantor-world, to get themselves off the government dole.

But not only is this view wrong and obnoxious, it's also bad economics. Republicans want to put more money into the hands of their rich friends through tax cuts, or at least not increasing taxes, which they argue will act to create jobs. They don't care that this just doesn't work and hasn't worked as a way to create jobs, they are ideologically wedded to it. They argue that all we need to do is give money to rich people and they, "the job creators," will make sure there's a job for anyone who wants to work.

In fact, the only thing it ensures, and has ensured, is that the rich will get richer and poor will get poorer.

By definition, to be a Republican means that everything the government does is wrong and everything the private sector does is right, even when that is demonstrably untrue.

As Paul Krugman writes:

When the economy is booming, and lack of sufficient willing workers is limiting growth, generous unemployment benefits may keep employment lower than it would be otherwise. But as you may have noticed, right now the economy isn't booming - again, there are five unemployed workers for every job opening. Cutting off benefits to the unemployed will make them even more desperate for work - but they can't take jobs that aren't there.

As Krugman continues, extending unemployment benefits would help.

One main reason there aren't enough jobs right now is weak consumer demand. Helping the unemployed by putting money in the pockets of people who badly need it, helps support consumer spending. That's why the Congressional Budget Office rates aid to the unemployed as a highly cost-effective form of economic stimulus. And unlike, say, large infrastructure projects, aid to the unemployed creates jobs quickly.

A program like unemployment insurance, which not only helps Americans survive, but is also good for the health of the economy, is of limited interest to Republicans simply because it is not exclusively a private sector solution.

It doesn't matter that unemployment benefits stimulate the economy and job growth, that they have been proven to work. Republicans hold such ideologically narrow views on the role of government that they would rather Americans starve than that we use available and effective policy tools to put the country back to work and the economy on the path to recovery.

The Republican campaign slogan for 2012 should be: "Give Money to Rich People and They'll Make Sure We Are All Taken Care Of." Do you think that would sell?

As I said, any working man or women in American who supports these clowns needs to give their head a good shake.

(Cross-posted at Lippmann's Ghost.)

The debt ceiling deal -- who won and who lost?

By Richard K. Barry 

Two people I tend to consult to get a read on current economic policy struggles in Washington are Paul Krugman and Robert Reich. Not that anyone is ever right about everything, and maybe it's simply true that these two support my understanding of the world and I find that they usually make sense.

Whatever the case, they provided some pretty depressing commentary today on the deal Obama struck to raise the debt ceiling.

Here's Reich:

Anyone who characterizes the deal between the President, Democratic and Republican leaders as a victory for the American people over partisanship understands neither economics or politics.

The deal does not raise taxes on America's wealthy and most fortunate -- who are now taking home a larger share of total wealth, and whose tax rates are already lower than they have been in eighty years. Yet it puts the nation's most important safety nets and public investments on the chopping block.

It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal's spending cuts increase the odds of a double-dip recession. And the deal strengthens the hand of the political right. 

And from Krugman in a piece entitled "The President Surrenders":

For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.

Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.

The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record.

The bottom line is that there are two ways to win in politics. The first is to actually win the election and implement your policies. The second is to lose the election but, somehow, through power politics, political extortion, or appeal to aspects of the winners ideological predisposition that he may share with you, get the winner to do what you would have done had you won.

However it happened, does anyone doubt that, at least this week, the Republicans are controlling the terms of the debate in Washington and that it will be difficult to imagine how Democrats reassert control?

The "deal" means that we will continue to talk about what and how much to cut, which will benefit the richest among us, instead of what and where to invest, which would benefit the vast majority of us, especially those in need of gainful employment.

Not the finest day for America, as far as I can tell.

(Cross-posted at Lippmann's Ghost.)