Democrats vs. Republicans: The Economy
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Do Democrats tax and spend? Do Republicans give tax breaks to the wealthy? The common man’s guide to explaining the difference.
Breaking news: I’m a liberal; so if there is any bias–I try my best to be objective–it will probably be migrating toward the liberal side of the political scale.
Democrats and Republicans both have different models for fixing the economy, but when it comes down to crunch time, when new ideas need to be implemented, what will each party’s platform do for our economy? Well, let’s begin with Economics 101. When I try to explain the economy, I first begin with supply and demand. Supply, in simple terms, is how much stuff is being made. Demand is how much consumers actually want to buy the stuff being made. When the housing crisis surfaced, demand for many products plummetted. This placed our entire economy in a big ship with one oar. So, naturally, demand for goods, especially long-term products and services (houses, cars, etc.) began to shrink. During this type of economic instability, there are too many products not being sold–stockpiles of cars line up at dealerships. So, in plain terms, demand was low and supply was high.
Now we get to dig into some political theory. Democrats generally believe that, during a recession, tax breaks should be administered to the middle class. This, they believe, will cause demand to rise and for the supply to begin rolling again. Republicans, on the other hand, are generally more worried about job loss than what happens on Wall Street. They believe that taxes for small business and the wealthy should be low, because small businesses and the wealthy employ people. By delivering these tax cuts, they hope to aid business owners in getting more people employed. However, this tactic misses the target in one obvious way: giving money to businesses will only create more supply; so if demand is low anyway, what will more supply do but fuel the problem?
This idea harkens back to the conventional vs. alternative medicine debate: should you treat the cause of the disease, or the symptoms? Democrats hope to create more demand, which would help solve the immediate problem, while Republicans would simply be treating unemployment, a symptom of low demand for products. Sure, thinking that getting more jobs back during a near-ten-percent unemployment rate sounds great, but it doesn’t solve the problem.
I think you’re completely off on the supply theory of Republican tax cuts for business. By providing more jobs to people you are in turn giving more people the ability to purchase goods and services thus raising demand. They then stay employed because the supply needs to keep up with demand and so on….
Give a man to fish and you feed a man for a day. Teach him to fish and you feed him for a lifetime. Why don’t Democrats understand this simple principle?
What you are misunderstanding is that the Keynesian theory (the liberal, or Democratic–Obama’s economic theory) provides tax cuts to the middle class, while the paleo-liberal theory (the conservative ideology now) provides tax cuts to the wealthy; and only a small amount of those in the wealthiest 5 percent are actually business owners, reducing the efficacy of any tax break significantly. Getting back to the Keynesian idea, Democrats support tax cuts for the middle class because it will allow for the majority of Americans to have more spending power, which will increase demand. Now, if you followed my article, you would realize the cyclical nature of the neo-liberal theory: the increased demand would require more supply, so business owners (and only business owners, not just wealthy Americans who do not own a business) will be able to hire more workers in order to counterbalance that need for more supply. Opposed to simply giving tax breaks to the wealthy and just hoping they will use this money to reinvest, or “trickle down,” neo-liberal ideology makes use of a more efficient method of stimulating the economy.
But what do I know? I’m just a red-shirt communist who is only trying to harm America with my taboo ideology.
Tax breaks don\’t create jobs. When the economy crashes, employers lay off workers and don’t hire them again until well into the recovery period, when they’re sure they will need them. No business owner is going to increase production or services until consumers or those who still are employed are no longer afraid of losing there jobs and feel the economy has stabilized and on the way up again, and start spending again. And they still may put off spending for a while and save more to recover there losses on retirement accounts, or home equity or if the markets are too risky for them, they will just pay down there debts.The higher the unemployment or under employment rate, and the deeper the recession, the slower it will take to pick up again. When a company makes little or no profit it won’t be paying any taxes anyway, so tax breaks do little or nothing. Better to give the money to the unemployed or people on the verge of bankruptcy. They will surely spend it on there basic needs. Another better way to spend our tax dollars beside giving it to the rich who will just hoard it, Is for the government to hire contractors to repair and improve our long neglected infrastructure, That will create jobs immediately at the lowest price if they take bids on it and don’t just reward their campaign contributing business buddies with sweetheart deals like George and Dick did with Iraq, which cost the taxpayer billions in overcharges.
Another reason the economy is so slow to recover is that banks won’t lend money anymore, so that even businesses that could thrive can’t operate because they can’t get money for raw materials, pay employees or pay the bills. The stimulus bill was suppose to give the banks the reserves necessary to allow them to continue to lend in a risky economy, but I guess they still aren’t confident enough, even thought it isn’t even their money, So they all just gave themselves raises and more perks. The government will have to start it’s own bank I guess. Maybe that will get those banks off their duffs. But that would be like another health care controversy as the corporate butt kissers (Republicans) got all worked up again.
I couldn’t agree more with you. A multifaceted plan like the one you propose would be benficial in many, many aspect.
Well, you were correct from the start: you stated that you are a biased liberal, and it shows in your logic.
Barack Obama has now succeeded in bringing gas prices to $5.00 per gallon within 24 hours in the U.S. and possibly to $7.50 by next week. Thank you for your drilling moratorium Mr. President while Egypt and the Suez Canal are being shut down and oil shipments are stopped. You have accomplished your mission Mr. President! What a pathetic, yet smart person you have shown us! America and its “transformation” will NEVER be the same anymore!
http://beforeitsnews.com/story/376/642/OIL,_OIL_and_MORE_OIL_AMERICA_HAS_MORE_THAN_ANY_OTHER_NATION.html
Hey Drett………….just how do you define when and how we get to your so-called “recovery period”????
TaterSalad. Look up the gas price when Bush No. 2 was in office. You should shut your face.
If you were unemployed, would you be willing to put your own money into the economy? I don’t think so. You would most likely take the savings you had prier to losing your job and hope that it will last you until you find a new job– until you had security in your own wallet.
What if business’s in America were not hiring citizens? How would you receive security in your own wallet? You wouldn’t… Tax cuts would not give people the security they need to spend money, it would just allow them a little extra in their savings.
In order to get the economy moving, or as you stated, move the demand curve, money needs to be available.
How does an American citizen earn money? Through their job. So, with that said, wouldn’t supplying more jobs (putting a constant flow money in a citizen’s pocket) create the security for Americans to purchase more goods and services?
prior**
I disagree on your savings theory,Cara. People that are unemployed rarely get the opportunity to save money–they usually scramble and stress just to get food on the table. By the time the tax cuts send money to the working/middle class folks, they will spend it for sure–usually on what they’ve been doing without all year long. Or to pay down a credit card bill that they’ve resorted to using for things like groceries or car payments. Desperate times, desperate measures. And back to the model of supply and demand…more spending will increase the demand, which will increase supply which would call for more workers=JOBS!! So the working/middle class who desperately need money asap will get AND “learn how to fish.” That’s more helpful than hoping the “trickle down” effect makes it all the way down to the bottom of the barrel.
i think it’s good that they tryin 2 get more jobs because it is people tht need jobs