Are we being played for chumps?

The "fiscal cliff" is apparently the only news out there these days.  That's all I hear...fiscal cliff...fiscal cliff...blah...blah...blah.  Both sides agree spending will have to be cut.  The devil will be in the details, I understand, but at least it's a start.  The sticking point is taxing the rich.  The Democrats say it will bring in a gazillion dollars and help reduce the deficit.  The Republicans say it will cripple job creation.

Here is my question:  How will raising taxes on the rich, the "job creators", hinder hiring?

The argument seems to be that if taxes go up on the rich (actually if the Bush tax cuts aren't extended to the rich), they won't have the capital (money) to finance new entrepreneurs or fund business expansion, therefore no new jobs.  

Here's the fly in that ointment....the rich already have TRILLIONS of dollars (the Wall Street Journal estimates $1-2 Trillion) sitting on the sidelines not currently invested.  Our economy isn't strong enough to support all these new businesses the Republicans envision, and there isn't any place in China or Europe to invest this money either.  (China is slowing and Europe is a basket case.)  It just sits.

The money to invest in new job creation is there NOW.  How will any MORE money in the pockets of the wealthy create any new jobs?  This money has been in their pockets for a DECADE, since the GW Bush administration.  So where are the jobs?

Somebody please (honest question) explain in terms I can understand how tax cuts to the rich will somehow create new jobs while the money sitting there right now can't?

The wealthy seem to like the sound of the term "job creators" and have made it their justification for existing, and their Republican puppets in Congress happily spout it every chance they get without ever explaining it.

In fairness, let me admit right now I think an entirely different set of special interests are pulling the strings on their (Democratic) puppets in Congress, too.  It's a pretty sleazy game they play in Washington and you and I are the big losers.  If you'll just follow the money trail you'll see who the big winners are.

S

This could be bad news....

There is an email going around that says a coup is underway to oust John Boehner as Speaker of the House and replace him with Paul Ryan.  (Hmmm...I actually thought it would be Eric Cantor who would lead the revolt.)  I'm no big fan of John Boehner, but I feel like he would be someone who could/would negotiate with the Democrats.  

Paul Ryan is a headline-grabbing "my way or the highway" kinda guy.   Bad move, Republicans!  The Tea Party-ers apparently didn't get the message:  The People have repudiated extreme politics.  They want our leaders to work together to get something done and not throw us all under the bus.  

My concern is that if this is true and Ryan (or Cantor) does become Speaker, we're going over the "fiscal cliff" next year.  Sequestration (across-the-board spending cuts) will automatically kick in, cutting not only fat from government (good) but meat, too (bad).  And we can ALL see our paychecks reduced when the "Bush tax cuts" expire and we go back to our previous tax rates.  Ouch!  Ryan has said, and I believe him, that he will NEVER allow taxes to go up on the wealthy.  

"If my friends can't get their tax cut, then none of you can, either."

Ryan says the wealthy are the "job creators", which is a half-truth at best.  While the wealthy might be "incubators" of new businesses, they depend on middle class consumers to actually buy whatever the new businesses are selling in order to succeed.  If the middle-class has their take-home pay reduced due to higher taxes, they'll buy less.  New businesses will stagnate or even fail, perhaps taking us into another recession.  How would that create any new jobs?

Whatever the two sides can negotiate regarding tax rates for the wealthy, so be it, but don't hold the middle class hostage in the process.  The election is over.  Now we need leaders, not ideologues.

S

What happens when you have "too much"?

"Those who ignore history are doomed to repeat it."

I recently saw an interesting chart that brought home to me exactly how history repeats itself.  It showed what happens when too much wealth is concentrated in the hands of too few:

During the first part of the 20th Century the United States practiced "Laissez-faire" capitalism....pretty much "anything goes".  Since "those who have the gold make the rules", by 1928 the wealthiest 1% controlled 23.9% of total pre-tax income.  (See chart.)  Remember what happened right after that?  The economy went off a cliff in what later became known as "The Great Depression".  By the early 30's the government instituted new regulations, particularly affecting the financial industry, and our economy eventually bottomed out and slowly improved, helped along by the full employment brought about by WWII.

Beginning about 50 years later those who had the gold once again made the rules (thanks to their friends in Congress) and by 2007 they controlled 23.5% of total pre-tax income.  (See chart.)  Remember what happened right after that?  Our economy went off a cliff in what later became know as....well, it hasn't been named yet, but we'll call it The Great Depression II for now.

Apparently 23% is the magic number beyond which The Consuming Class (the middle class) doesn't have enough wealth to continue buying things in the quantities needed to keep industry humming along.  It seems counter-intuitive, but too much money in the hands of too few actually hurts the few, as they are the ones (the vaunted "job creators") who own the companies that can't sell enough to make a profit.  Sort of like "killing the goose that laid the Golden Egg".

Make sense?

This isn't about confiscating money from the 1% and re-distributing it to others.  That's wrong in a whole other way.  What I suggest needs to happen is that we need to scrap our entire tax code and re-write it so that it is fair to all and not tilted in any special interest's favor.  And close regulatory loopholes, end subsidies, and closely watch the financiers, too.  A level playing field will naturally undo past inequities and put money in the pockets of The Consuming Class AND in the pockets of those who own the businesses that sell to The Consuming Class.  

The chart suggests that "sweet spot" should be where the wealthy control between 10-15% of income.  Entrepreneurs who make a superior product or offer a better service can and should still get rich, but then their wealth would be merit-based instead of crony-based as it sometimes is today.

How bad do things have to get before our politicians admit what we're doing now isn't working, face historical facts, and build a fairer system that is sustainable?

S