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.
2 Comments
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.