Wiggling Left and Right on the Road to Ruin


When attacked on the slow pace of economic recovery and asked about the prospects of big losses for the Democrats in this fall’s election, President Obama is fond of asking, “would you rather restore to power the same people and ideas that got us into this mess in the first place?”  It’s a valid point, but I have to ask:  What the hell is the difference? 

As reported in the above-linked CNBC article, the president will announce this week a plan to give businesses tax credits for capital investments.  He has also announced plans for tax credits for research and development investment.  He’s also advocating putting a hold on the expiration of most of the Bush tax cuts.  Republicans would counter that, no, they would extend all of the Bush tax breaks.  Even the Economic Recovery Act (the “stimulus plan”) that was passed only weeks into Obama’s administration was very little different from the stimulus plan that Bush had proposed just before leaving office.

With Democrats we get a little more spending – ultimately doomed to failure when the political environment turns against rising budget deficits.  With Republicans we get lax business regulation and enforcement and more tax breaks, but no more fiscal discipline than we would have under a Democratic administration.  None of this is going to improve the economy.  Anyone who suggests that we can boost the economy with more deficit spending, or with more tax breaks that can be paid for by cutting spending is either naive or is flat-out lying.  There aren’t enough mythical $500 toilet seats in the military to make even the tiniest dent in the deficit.  If our only approach to the deficit is to cut spending, it’s simply not possible without taking on social security, medicare and medicaid.  Yes, the economy can be boosted by cutting taxes, putting more spending power in the hands of all Americans.  But paying for those tax cuts with cuts to social security and medicare takes purchasing power back out of the economy just as fast.  In the final analysis, we’re no better off.

All we’re doing is wiggling left and right on the road to economic ruin.  As I pointed out in Five Short Blasts, shifting our aim slightly left or right isn’t going to make the least bit of difference if our aim is completely off-target.  Our economic ills can’t be solved by taxing a little less or by cutting spending a little more.  The problem with our economy is that we’ve carved out a huge sector, loaded it onto ships and sent it packing to China, Japan and Germany, tax free.  In addition, we continue to import 120,000 additional laborers every month at the same time that employers are cutting jobs.  Tinkering with tax rates isn’t going to fix any of this.

I’m extremely disappointed with President Obama but, looking around, I don’t see any real alternatives.  If some Republican stepped foward with a real plan to address our trade imbalance and to restore sanity to our immigration policy, I’d be leading the parade with his/her banner.  But all I hear is the same, lame, worn-out, been-there-and-done-that approaches that have gotten us to where we are today.  It’s enough to make one ponder emigrating to Canada, eh?

7 Responses to Wiggling Left and Right on the Road to Ruin

  1. Mark Hall says:

    I could understand some of the corporate tax breaks if they were designed to coincide with and help alleviate some of the affects of implementing HUGE tariffs on corporate imports from countries that HAVE NOT and DO NOT want to practice fair and balanced trade.

    Other than that, they will be completely wasted on improving corporate margins at the expense of tax payers.

    Thus far, ALL of our government leaders STILL lack the following:






    • Pete Murphy says:

      I don’t really have a problem with the tax credits for capital investments but, again, this is just tinkering at the margins at the best – creating the illusion of doing something about the economy while ignoring the real underlying issues. It’s just not going to help.

  2. Peteopolis says:

    “…give businesses tax credits for capital investments.”

    Like in more shell operations that manufacture capital goods in China and elsewhere?

    “…research and development investment”

    R&D: Codeword for ‘Bailout’

  3. Peteopolis says:

    “Give us Tax Credits or we’ll move more operations to the east”

    I just wish we had the nerve to let McDeath Corp(multinationals) hit the road with the special provision that the names of the executives be forever banned from re-entering the country. Then we could do something about the notion that capital formation being prime brokers and hedge funds and their phoney collateral.

  4. MikeF says:

    Long ago, I resigned myself to the politically homeless camp. I’m a slow learner, but not slow enough to give any credence to the idea that one or the other major political parties have any interest in taking on the actual issues that represent the root cause of our ills.

    Robert Hickerson had it right when he stated,
    “All attempts to reduce the deficit, balance the budget or pay off the national debt are futile. The deficit and the national debt represent the subsidy the government has paid in its attempt to keep growth and unemployment at the level of social tolerance.”

  5. Peteopolis says:

    So why doesn’t an aspiring politician just stand up and announce: “I’m for starting a trade war!”.

    Because practically everyone in the general public is unaware a non televised non shooting war is already in progress. Our side is not even fighting back. And we even have millions of in house traitors. The seemingly silly allegation of “Exporting unemployment” is hardly the sort of conflagration necessary to rile up the docile consumer oriented citizen.

    • Pete Murphy says:

      I think that citizens are plenty riled up about the outsourcing of jobs and importing of unemployment. We citizens aren’t the problem. It’s the politicians, unwilling to do anything about it, and their economists telling them that, in ways that can’t be seen or understood, free trade with the likes of China, Japan and Germany somehow benefits us.

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