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Bernardo de La Paz

(48,930 posts)
15. RepubliCONs are Borrow-and-Spend. Defense money is dead money. Rich park tax cuts in real estate/art
Fri Feb 9, 2018, 10:16 AM
Feb 2018

The old canard that Republicons use against Democrats is that they are "tax-and-spend". Republicons are of course borrow-and-spend, which is hypocritical.

You also have to factor in business cycles. Democrats tend to grow the economy and fix up deficits with a mix of fiscal prudence and some raised taxes. If they inherit a big economic problem like Obama did, they will stimulate the economy.

This is basic economics: Stimulate with government spending and some broad tax cuts during hard times, and pay down the debt during good times with raised taxes and fiscal prudence.

But there's another aspect to what the RepubliCONs did that make their willful mistake worse: Bombs and tanks do not produce more money (production). Machine tools and computers do. Building a jet fighter puts money in motion for a very limited time. Once the fighter is produced, it consumes money and doesn't make anything. Yes, defense is needed for national security, within limits.

However, it gets worse. By giving tax cuts to the rich, they do not invest in production. They are already fully invested; they need more investment opportunities. They park the money in real estate and art which inflates the prices of those two elements.

Tax cuts to the middle class and especially to the poor put money in motion. The money is quickly spend on food and housing and transportation and education. All of those are productive. Healthy people work longer hours. People with good housing are able to provide their children with better parenting and upbringing. People with cars or money to spend on public transit hold more jobs more securely and that makes the economy grow.

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