Terrance Heath

Young Guns, Deadly Ideas

Filed By Terrance Heath | September 27, 2010 11:00 AM | comments

Filed in: Politics
Tags: conservative leaders, GOP, GOP leaders, Republicans

When last we left our story, the young guns came galloping into a critical moment. The recession is over, and as the dust settles it reveals that the American economy and middle class lay bleeding: Young-Guns-book.jpg45 million Americans are living in poverty, last year saw the largest increase in the U.S. poverty rate in 40 years,, 41 million Americans are on food stampsrepresenting a 20.8% increase in the program 1 in six Americans receive services from anti-poverty programs, 50 million are now on Medicaid,nearly 15 million are unemployed, 1 in every seven mortgages are underwater, 10 million are receiving unemployment benefits,4.7 million are dropping out of the job market after extended unemployment. The “young guns” answer amounts to watching both bleed out. Comparatively, a bullet actually seems more merciful, but the effect on the economy is the same: finishing it off.

In another series of posts, I’ve framed the difference between progressives and conservative in terms of how differently we answer three questions, in terms of how we address any of the crises we face today: “Can we?”, “Should we?” and “What do we mean by ‘we’?” In the case of the “Young Guns,” the answers are predictably consistent with conservatism’s stock answers.

The economy and the middle class like bleeding. Can we do anything to stop it? No, we can’t. The economy and the middle class lie bleeding. Should we do anything about it? No, we shouldn’t.

Can we support people who are unemployed through no fault of their own? No, we can’t. Should we support people who are unemployed through no fault of their own? No, we shouldn’t.

The “young guns” don’t directly address unemployment benefits -- perhaps because there is no way to do so without highlighting the GOP’s obstruction of extending unemployment benefits, and no way to put a positive spin on it. But each inveigh against the stimulus on a number of fronts, forgetting that part of the stimulus was intended to help states extend unemployment benefits to the unemployed.

Their stance is reminiscent of that of Republican governors who refused or threatened to refuse stimulus funding, like South Carolina governor Mark Sanford who -- while threatening to refuse $700 million in stimulus funding, could only offer his prayers to an unemployed constituent pleading with the governor not to turn away the help this man and his family needed.

CALLER: I hope you all are not playing politics with this. People in South Carolina are hurting. You know how unemployment rates are high right now and going up higher. We are running out of money in the unemployment bank -- we need money for that, the people that need help. And I'm one of them, I can't get no help. [...]

SANFORD: Well I'd say hello to Charleston because its home and I'd say hello to this fellow this morning and say that my prayers are going to be with him and his family because it sounds like he is in an awfully tough spot.

Sanford offered no other alternative solution for his constituent and instead argued that the state could not accept money to extend unemployment benefits because “increasing the tax on unemployment insurance” would negatively “impact the caller's family” (although he didn't say how).

The “young guns” answers to the challenges Americans are facing today aren’t that different from Sanford’s, and no different from the answers conservatives offered when they held both Congress and the White House. It’s essentially, “kill regulations, cut taxes and hope for the best.” Not only didn’t work then, but it won’t work now, because it helped get us into this mess.

Can we make direct investments in putting people back to work? No, can’t. Should we invest in getting people back to work? No, we shouldn’t.

When Eric Cantor launches into his chapter entitled, “a better way,” it takes a while to get past the pages of revision and accusations against progressives, many of which — selling promises that “just don’t add up,” “employing the politics of fear,” and backing policies that “run up the national credit card” — are easily and appropriately leveled against his own party. Just this week, Republicans offered a “pledge” to lower the deficit with no credible plans to do so. The past two summers have seen conservatives launch a nationwide “campaign of fear” — one against health care reform, and the most recent targeting Muslim Americans. And, in a previous chapter, Cantor actually praises Obama for doing less than he’d promised about the two biggest charges on the “national credit card” — the war in Afghanistan, and the war in Iraq (which George W. Bush’s administration started planing as soon as he took office).

Once past Cantor’s “new history,” his “better way” sounds like the same old ideas that got us here. Some are dressed up in more appealing rhetoric. I don’t know how many times the words “small businesses” appear in this book, but Cantor in particular claims that small business owners tell him “virtually every day” about “increased taxes” that deter job growth. Since he doesn’t mention that President Obama has signed eight small business tax cuts into law, which Republicans blocked. And when the president incorporated some of their suggestions, they balked at small business tax cuts that didn’t permanently extend tax cuts for the wealthy. Just this week, Republicans opposed a bill aimed at helping small businesses and creating jobs, with almost $12 billion in tax breaks. Never mind that small businesses put spending and hiring on hold waiting for the bill to pass.

In their concern for small businesses, the “young guns” ignore or are unaware of the reality that small businesses won’t create that many jobs because, as Ruth Marcus puts it, they are both good job creators and job destroyers.

Small businesses are job creators; they are also job destroyers, as firms fail. Most start-ups do: About 40 percent of jobs created by start-ups are eliminated in the first five years. Meanwhile, established small businesses--your neighborhood dry cleaners--don't generate many new jobs.

The chief source of small-business job creation comes from a mere handful of firms--the "gazelles," in the evocative term of economist David Birch--that start small and prosper. The difficulty is that the gazelles among the herd can be seen only in the rear-view mirror.

And existing firms that change with the times and expand are another major source of new jobs, a phenomenon that the bipartisan fetishization of small business studiously ignores.

Just like congressional conservatives blocked relief to the unemployed, they attempted to block action to help small businesses create what jobs they can. And it’s significant that as they demanded that any extension of unemployment benefits be “paid for” with cuts elsewhere, in practically the next breath pushing permanent tax cuts for the rich, and saying those tax cuts don’t need to be paid for.

Throughout, the message is that cutting taxes for the wealthy increases investments that, in turn, create jobs and growth. Except, we’ve tried that and it hasn’t worked. The Bush administration’s tax cuts were sold as a means of increasing revenues and economic growth. It didn’t work. At least not for most of us.

Uh-Oh! We never got the “trickle down” of prosperity the tax cutters promised. Instead, we got a kind of Bizarro World “trickle up” economy, where billionaire Warren Buffet has a lower tax rate than his secretary. Of course it didn’t work. It couldn’t work and we’ve known for years it wouldn’t work. This long, slow grift actually began decades ago, but really began to pay off in the past ten years — when conservatives had control of both the White House and Congress, and could finally do a lot of things their way.

Take these numbers, compare them to those above, and the “young guns’” dog-eared roadmap looks very familiar. Match them against the bullet holes in the economy, and it’s a bit clearer how we came to this point.

It’s an attractive message for politicians, but the reality is that those tax cuts resulted in zero job growth for nearly a decade, because they didn’t get invested in job creation. They weren’t spent that way. Those tax cuts were pocketed instead.

Give the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it


Tax cuts in 2001 and 2003 under President George W. Bush were followed by increases in the saving rate among the rich, according to data from Moody's Analytics Inc. When taxes were raised under Bill Clinton, the saving rate fell.

The findings may weaken arguments by Republicans and some Democrats in Congress who say allowing the Bush-era tax cuts for the wealthiest Americans to lapse will prompt them to reduce their spending, harming the economy. President Barack Obama wants to extend the cuts for individuals earning less than $200,000 and couples earning less than $250,000 while ending them for those who earn more.

That’s because, to borrow a old saying, you can lead a horse to water, but you can’t make him drink. You can cut taxes for the wealthy, but you can’t make them invest it in the kind job creation that the country needs. You can lead a horse to water and hope that he drinks, and you can cut taxes for the wealthy and hope they’ll invest in creating jobs.

That’s an almost certain way to finish off the economy and the middle class along with it. But that’s what the “young guns”‘ proposals will do.

Or we can invest directly in job creation. We can take direct action to put people to work, and put tax-breaks into the hands of people who will stimulate demand by sending them on the goods and services small business and entrepreneurs provide — and will provide more of when demand calls for it, thus creating jobs.

The “young guns” prefer to lead that rich horse back to the water and hope it drinks this time. Meanwhile, the economy lies bleeding. And when it’s bled out, the “young guns” — and the horse — will likely ride off into the sunset. Leaving us with the carcass.

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Why is it the "trickle down" theory only seems to trickle down money into the wealthy's pockets?