Bad news all around this past week — jobs, housing, the markets, what-not — but, especially, politics. The Republicans are determined to drive the US economy into a hole it can't climb out of, and the Democrats are going along for the ride.
All but a few corporately connected economists see the budget deficit as a medium- to long-term problem. Do we have to deal with it? Of course — but we don't have to balance the budget next year, the year after, or the year after that. Anyway, the best way to balance a budget is through economic growth, and austerity programs — no matter what certain ideologues have to say about it — never lead to growth.
The whole idea that businesses will fail to invest because they are afraid their taxes will go up is idiotic. Taxes can only be a percentage of profits (after the usual heavily lobbied deductions and exclusions), so if that percentage is something less than 100%, investments that increase profit margins make economic sense. If a company makes an extra billion that is taxed at 50%, that's still an extra half-a-billion.Even if it's a risky investment, if it pays off it amounts to greater profits. If it fails, it's a write-off, and the tax rate doesn't matter — it may even save the company some money on the taxation of its more profitable ventures.
I do not advocate allowing the US to default on its debt, and I think a responsible Congress would have voted to increase the debt ceiling last week with no commitments to deficit reduction. Now is not the time to play dumb political games. As a matter of fact, now is a time to stimulate job growth through greater deficit spending — enough, this time, to make a real difference.
It won't happen, of course, because too many Americans are economic illiterates, and because the Republican commitment to further enriching the rich is the foundation of the current party's existence. Only by shrinking government can further upper-income and corporate tax cuts be made possible.
I am trying to learn more about Gary Johnson, a dark horse candidate for the Republican presidential nomination. I'm starting to think that a libertarian Republican just might be a better choice for 2012 than a corporatist Democrat — and that somebody (possibly with Tea Party endorsement) has to turn the Republican Party away from its own corporatist commitments. With Johnson (or, even, Ron Paul), progressives just might get more than they will out of Obama.