Switching from Koolaid to Caffeine

Two high profile economists finally seem to have come to the realization our President pushes Republican Policy and caves into Republicans to make it even more Republican than necessary. He’s enabled by what has to be the most stupid bunch of Democrats in congress in U.S. history. This has been a Republican wet dream and an American nightmare! They get to push right wing legislation through and label it as socialism and get street cred for it! I’m glad some people with the ability to grab headlines are finally speaking truth to power, but it’s too damned late to help the unemployed. My only hope is that it saves Social Security from Obama’s Wall Street cronies.

First there’s this from Robert Reich’s blog: “Why Obama is Proposing Whopping Corporate Tax Cuts, and Why He’s wrong”. You’ll probably recognize this topic from something I wrote about last week. Reich is taking the proposed corporate tax cuts head on. Look at this description.

The economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox.

He proceeds to list all the reasons we’ve talked about before. They don’t need to expand capacity. They don’t have any customers. They can borrow cheaply now.

The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.

In any event, small businesses don’t have enough profits against which to use these tax credits and deductions, and large corporations are sitting on over a trillion dollars of profits and don’t need them.

Republicans and corporate lobbyists have been demanding tax cuts on corporate investments for one reason: Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable.

Dig that last reason. It’s something to add to our list. If they invest in robots, it makes the unemployment situation worse. It’s like giving them more incentives to build a plant in Vietnam too. It doesn’t say WHERE they have to do the improvements either. This is a tax cut made to enhance unemployment, not solve it.

So, what about the two-years-too late proposed infrastructure plan? Oops, I already gave you a clue. Let me give you a second one. The tiny tiny proposed funding for infrastructure. Yup, too late and too little, just like the first stimulus. But, you don’t have to take my word for it. You can take Paul Krugman’s words instead. He’s depressed by the proposed corporate tax cuts also. I’m just glad he posted this on a plane back from Japan where he was too tired to censor himself. POTUS is suggesting $50 billion to do something. That’s a drop in the bucket compared to what’s required for both the economy and the infrastructure repair.

1. It’s a good idea
2. It’s much too small
3. It won’t pass anyway — which makes you wonder why the administration didn’t propose a bigger plan, so as to at least make the point that the other party is standing in the way of much needed repair to our roads, ports, sewers, and more– not to mention creating jobs. Once again, they’re striking right at the capillaries.

Beyond all that, the new initiative is a chance for me to air one of my pet peeves: the stupidity of the claim, which you hear all the time — and you’ll hear again now — that it’s always better to provide stimulus in the form of tax cuts, because individuals know better than the government what to do with their money.

Why is this claim stupid? Because Econ 101 tells us that there are some things the government must provide, namely public goods whose benefits can’t be internalized by the market

Okay, Krugman called the claim “stupid”. What’s Reich calling them? Troubling.

More troubling, Obama’s whopping proposed corporate tax cuts help legitimize the supply-side dogma that the economy’s biggest obstacle to growth is the cost of capital, rather than the plight of ordinary working people.

Plus notice the description. This is Reaganomics. Trickle-down economics. Voodoo Economics. Choose your label.

This POTUS is a DINO. What is taking people so long to figure it out? This is the stuff Republicans suggest, not the Democratic Party. Just like the so-called Health Care Reform was Romney Care/Heritage Foundation’s response to the Clinton Health Care Act.

I just put on a fresh pot of Community Coffee! Whose next? C’mon! Give up the Koolaid before it’s too late!