Sunday, November 21, 2010

Facts Don't Seem to Matter When You Have Government by Plutocracy ‎

Facts Don't Seem to Matter When You Have Government by Plutocracy

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Thirty years after Ronald Reagan assumed office, we're still having a national debate on trickle down versus trickle up. This is odd if you look at the history and the facts because the whole Reagan-Bush concept of making the wealthy wealthier has led to an imploded economy.

Now, two million Americans are poised to lose their federal unemployment checks, which will expire the end of this month. The Republicans appear ready to block any extension before the conclusion of the short lame-duck session. Ominously, it would likely take divine intervention to pass legislation that would provide a federal financial safety net to those without jobs (the long-term unemployed - the "99ers" - have been cut off for some time) in the Republican House of 2011.

But beyond the historical lesson that increased production and more jobs don't result from the rich getting more money to invest in stocks and lavish lifestyles, there are some simple facts that show extending unemployment payments is good for the economy.

The Wall Street Journal even gets this point:

Every dollar spent on unemployment insurance has the effect of $2 spent in the economy, according to a report the Labor Department will release this week.

The report, commissioned by the Bush administration and conducted by research firm IMPAQ International and the Urban Institute think tank, showed an average of 1.6 million jobs were preserved each quarter because of unemployment insurance and 1.8 million job losses were averted in the depths of the current recession.

"When you give a dollar to the unemployed they're the most likely to spend it," said Betsey Stevenson, the Labor Department's chief economist.

Now, compare that to the relative insignificance in job and productivity growth that would result from extending tax cuts for the rich. As Steven Pearlstein of The Washington Post notes: "But look more closely at the argument and it turns out to be 'largely bogus,' according to Eric Toder, a former Treasury and IRS official who now works at the nonpartisan Tax Policy Center. Very few of those businesses earn more than $250,000 in profit, and those that do tend to be very successful hedge funds and law firms that are flush with cash and unlikely to be dissuaded from hiring extra employees or make new investments because of a 4 percentage-point change in the marginal tax. Because most hiring and investment can be done with pre-tax dollars, Toder said, the tax rate is largely irrelevant to those decisions."

Yet, the Republicans - and conservative Democrats like Ben Nelson - insist that an extension of unemployment benefits requires a deficit offset, but continued high tax breaks for the wealthy don't, even though they are far more costly to the Treasury.

Facts don't seem to matter when you have - as Bill Moyers recently noted on Truthout - government by plutocracy.

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