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Democrats Must Call Out The Absurd Canard That Spending Cuts Make The Economy Grow
An idea that is extremely unreasonable, so as to be foolish or not taken seriously, or that makes absolutely no sense is an absurdity, and politicians on both sides of the aisle are guilty of propagating an incredibly absurd notion. Worse, a great majority of Americans have bought into the crazy deficit, debt reduction frenzy as if cutting spending will give the people economic relief and set them on the road to prosperity if government only balances its budget at some future date by taking money out of the economy today.
There is hardly any argument that Americans need jobs and with jobs comes consumer spending then businesses hire more employees creating economic growth. However, it is absurd to think for one minute that reducing the nation’s debt, or deficit, through spending cuts is going to create one job and yet Republicans have been on a tear to cut government spending on domestic programs and safety nets as a means of boosting the economy in spite of evidence to the contrary. A case in point is the impending sequester the Congressional Budget Office (CBO) and Republicans themselves claim will kill about a million jobs and retard economic growth, and yet to “reduce the deficit” they are refusing to stop the sequester. It is important to consider that the million Americans who lose their jobs will stop spending that the fourth quarter of 2012 demonstrated slows GDP growth as well as starves the government of revenue that impedes deficit reduction.
In another absurdity, Republicans defend spending government money on oil subsidies and tax cuts for the richest Americans who hoard their money that adds to the debt and deficit, while proposing more spending cuts that retard growth, reduce revenue, and restrain consumer spending. Last week, retail giant Walmart reported feeling the effect of taking money out the economy when they reported 2013 was their worst start in 7 years prompting a Walmart U.S. senior vice president to ask, “Where are all the customers? And where’s their money?”
With no jobs and declining wages, the money is in the pockets of the 1% who accumulated 93% of the income between 2009 and 2010 as the economy began recovering leaving 7% for the rest of the population to split amongst themselves. In fact, in the first three years of recovery, the richest one-percent garnered 121% of income gains and became 11% wealthier, while the rest of the population lost 0.4% of income. When the people have less money to spend for lack of jobs and declining incomes, economic growth suffers and it is good Walmart feels the effect of Republicans taking money away from consumers. In February, Eric Cantor came up with another Republican plan to take more from consumers’ to erode the fragile recovery and it is classic Republican economics.
In his speech at the American Enterprise Institute, Cantor said, “Federal laws dating back to the 1930s make it harder for parents who hold hourly jobs to balance the demands of work and home. An hourly employee cannot convert previous overtime into future comp-time or flex-time. Imagine if we simply chose to give a working mom the opportunity to work overtime this month and use it as time off next month without having to worry about whether she’ll be able to take home enough money to pay the rent.” Cantor is not concerned about working moms or families, he is concerned with padding the income of the wealthy by proposing a Federal law ending overtime pay for hourly workers. Overtime pay has been in existence since FDR signed the Fair Labor Standards Act of 1938 (FLSA) that mandated hourly workers are paid time-and-a-half for overtime work. The effect of Cantor’s “flex-time” law takes more from consumers that Republicans attempted in 2003 with the deviously named “Family Time Flexibility Act” (HR 1119). The GOP’s goal is taking what little money consumers have and giving it to big business under the guise of (unpaid) “family time” next month for a net income loss because overtime pay is eliminated. According to Cantor, “This is the kind of common sense legislation that should be non-controversial and moves us in the right direction to help make life work for families” and the effect is leaching money out of the economy to benefit corporations. It is also why Republicans vehemently oppose raising the minimum wage; to keep money from consumers, enrich big business, retard growth, and restrict revenue.
If one didn’t know better, it might seem Republicans are deliberately creating an economic environment that is guaranteed to fail and they are succeeding by convincing ignorant Americans that earning less, working less, and cutting government spending under the guise of debt and deficit reduction is a common sense economic strategy. The only boost to the economy since the Great Recession was when government increased spending with the American Recovery and Reinvestment Act (stimulus) that the CBO found created at least 3.7 million jobs by mid-2012. Still, Republicans harp on cutting government spending to reduce the nation’s debt when they know full well that every spending cut kills jobs, and when jobs disappear, revenue and economic growth does as well.
Americans struggling to make ends meet need better wages and jobs. When they cannot pay rent, buy groceries, or afford healthcare, the last thing they care about is the nation’s deficit and a balanced budget, but that is the Republican agenda and it is time for Democrats to call out the absurd canard that taking money out of the economy helps the economy grow. There is a time to address debt and deficit, but it is not during an economic downturn or fragile recovery and austerity-drunk Republicans know it. However, they have trumpeted the debt and deficit meme for four years and regardless spending, debt, and deficit are all falling at a record pace, they control the narrative and are on pace to destroy recovery it took four years to accomplish, and that is their endgame.