Voodoo Economics (2.1)

There is something surreal about the economic prognostications of the Republican leaders in Congress these days. Thus, House Speaker John Boehner tells us with a straight face (well, with only a hint of a smirk) that drastic cuts to government spending will create jobs while raising taxes on the wealthy, or eliminating their unfair tax subsidies, will be a “job killer.”

Actually, he’s got it exactly backwards. Reducing government spending in a weak economy will be a job killer and will have a depressing effect, while raising taxes on the “surplus liquidity” (i.e., unproductive wealth) of the rich will serve to stimulate economic growth. The new revenues are very likely to be spent where the needs are the greatest – preventing layoffs or restoring jobs for teachers, health care workers, policemen and firemen, and restoring cuts to Medicaid, child nutrition, and other safety net programs. Our overall economic problem is to increase consumer demand for goods and services, not to reduce it.

The chart that I posted on Facebook the other day showed that there has been no correlation historically between the top marginal income tax rates and economic growth in this country, going back to the end of World War Two. Higher taxes on the rich have had no significant impact on our overall economic performance (GDP).

The Republicans in Congress probably know their Economics 101, but they also know that lies pay off in politics. And politics is not about getting at the truth but about getting votes. So they peddle Voodoo Economics to us, and it’s ultimately our fault for being so gullible, and for not punishing the liars.

Winston Churchill once said that Americans can always be counted upon to do the right thing, after they’ve exhausted all the other possibilities. This time we may prove him wrong.