Since the era of Ronald Reagan, Americans has been held hostage to the myth of the power of supply-side economics. Ronald Reagan promised to cut taxes to spur economic growth. He cut taxes alright, and we had economic growth. We also had a record budget deficit and debt. The economic boom of the Reagan years was a result of the massive borrow and spend policy. Reagan funded the economic growth on the back of future generation by presiding over the greated borrowing ever in peace time.
The deficit hawks did not see anything wrong with it. The same way the Republicans saw borrowing to give tax cuts to the wealthy is exactly the way the current republicans see cutting essential government services to finance tax cuts for the wealthy. The Reagan policy resulted in net increase in spending due to increase in debt, it is called leveraging. Tax cut for the wealthy did not create American jobs, it created demand for the luxury goods made overseas that the affluent have an insatiable taste for. On the other hand, the current push to cut spending and lower taxes for the wealthy will have, at best, zero impact on economic growth and job creation. The most likely effect is an increase in consumption of foreign luxury goods at the expense of basic domestic goods and services that have been displaced by the cut in government spending. Watch out, we may be cutting our way into another recession for the benefit of the priviledged few.
Sunday, April 10, 2011
Competition in Health Care Industry
How amazing that some representatives have their head stuck in the sand. Paul Ryan (R-WI) talks about the role of competition in bringing down health care cost. He proposes replacing medicare with private health insurance such that competition among private firms will bring down health care cost. Can it be that his advisers has no idea of basic Economics 101 and the oligopolistic natyre of the health care insurance industry. What a shame that the fate of our great nation should be allowed to rest on the shoulders of such representative with such limited or in this care zero knowledge of the issues they legislate.
He also argues that the competitiveness of the United States corporations is dependent on lower tax burden. I believe the representative must have selective anmesia. Did he not hear of the recent out cry on the amount ot taxes paid by gaint GE!!! A causry glance at the financial statement of US firms will show that taxes are not the problem. Overhead costs and cost of goods sold are the leading cause of the inability of United States firms to compete. Taxes as a percent of sales are under 4% on the average. The so called high income earners who need lower taxes as an incentive to investment in new ideas is just a myth employed by the likes of Paul Ryan. More than 80% of new jobs are created by entrepreneurs, with modest means not the top 2% income earners whom he cares about.
He also argues that the competitiveness of the United States corporations is dependent on lower tax burden. I believe the representative must have selective anmesia. Did he not hear of the recent out cry on the amount ot taxes paid by gaint GE!!! A causry glance at the financial statement of US firms will show that taxes are not the problem. Overhead costs and cost of goods sold are the leading cause of the inability of United States firms to compete. Taxes as a percent of sales are under 4% on the average. The so called high income earners who need lower taxes as an incentive to investment in new ideas is just a myth employed by the likes of Paul Ryan. More than 80% of new jobs are created by entrepreneurs, with modest means not the top 2% income earners whom he cares about.
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