Can somebody PLEASE explain to me how giving a tax cut to (primarily) businesses and the wealthy will create new jobs?
The argument the GOP seems to be putting forward is that businesses would LOVE to expand and hire more, but they just can't afford to. But if they had a few hundred billion dollars more thanks to a tax cut, they'd hang out their "now hiring" shingle.
Consider this: Southwest Airlines, headquartered right here in my back yard (Dallas), has bought back FOUR BILLION DOLLARS worth of their own stock in just the past two years, even after doubling their dividends. They're swimming in cash, but can't find anywhere better to invest it than in their own company. Lucky them!
They could have taken that four billion dollars and bought another 30 Boeing 737's, and hired a corresponding number of pilots and flight attendants and mechanics, etc, AND PAID CASH FOR IT ALL, but they didn't. Why? Because they knew there wasn't enough demand to fill all those new seats without cutting prices to the point where there was no profit in it.
I doubt many people making more than $500K a year, the ones who would benefit the most from a tax cut, are holding back taking a trip to Florida because they can't afford it. But among those making $50K a year, a tax cut might indeed tempt them to jump on a Southwest jet and travel.
The tax cut now being presented to us would only benefit the middle class for a couple of years, then they'd see their taxes go UP. It seems to me that would dampen demand. The "middle class" reference is just a tease, hoping it will pacify us until their bill is passed and signed, then they'll drop us like a hot potato.
Just increasing capacity will not create long term jobs. Once businesses realize they can't sell all they can produce, they'll start laying off all those new workers they just hired. If the gubment truly wants to create jobs, why don't they take a few hundred billion dollars and start building new and repairing our older interstate highways, bridges, airports, etc? That would create sustainable DEMAND for new heavy equipment, concrete, steel and more for years to come. All those middle class people doing the work would then be able to buy more, thus creating a snowball effect.
Am I missing something? I swear I was paying attention during my college Economics classes. If someone can explain to me where I'm wrong, I'll certainly consider their argument.
S
