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Wednesday, July 27, 2011

Tea Party Agreements

Hey Tea Party:

Let's have a short talk about the economy of the good ol U S of A.

After all, it's the place we all call home and the place we want to make better.

Now, I know that you folks sincerely want to make the country a better place and we sure agree there.

It'd be just wonderful if we could lower taxes and then get more jobs and also reduce federal spending.

After all, you folks have a good point, namely we just have to get a better handle on our fiscal policy pretty soon or we will be in big trouble.

We can all agree on that.

So, the bottom line here is that we can agree on the broad objectives for the country.

Our only, little disagreement is on how to get there.

There are a couple of things that you folks need to consider pretty seriously in trying to get to the goal we share.

First thing is this: lowering taxes does NOT create more jobs.

I'll grant that there is a small logic there: namely, if people have more money to spend then businesses will hire people to fill the new demand.

Well, even though that sound plausible, it does not work. The record shows that lowering taxes within limits actually reduces the number of jobs. We have proven that several times over the years, most recently with G W Bush policies. I know it does not make sense. It just is.

So, why do some politicians keep on saying that same old thing? The only reason I can figure out is that it gets them votes and campaign contributions. It would be good if politicians did not say things that are not true - well, we can sure agree on that.

So, we can expect politicians to keep on saying that lowering taxes creates jobs - it's our job to see through the BS.

Now, a reasonable person is going to ask this: How is it that keeping taxes high actually creates jobs?

And the answer is something they don't tell you in Econ 1, which I should know about because that's what I teach.

Here's the thing, there are about 70 million people who receive checks from the federal government every month. That's about one out of every 4.4 people [our population is about 311 million today]. If you know ten people, then you know at least two people who depend on the federal check to buy food and rent and medications and so on.

Now if all those folks don't get regular checks, well they won't be able to buy stuff. And, if they can't buy anything, that means that all the businesses they buy stuff from will have to lay off people.

So, by not sending out regular monthly checks, the Federal government will actually KILL about 25% of the jobs in the country.

That would create a very big Depression. It would be social and economic chaos with huge increases in crime and gang activity. Most folks, including you and I, would be afraid to go out of the house after dark.

Now, the second thing you folks need to be very careful about is the idea to stop the federal government from borrowing any more by refusing to raise the debt ceiling of the USA.

That idea seems to make sense - after all if you can’t borrow any more, then you can't spend any more, right?

Trouble is this: we have already spent the money.

Now we have to pay it back.

It's a simple idea.

Pay for what you buy - no brainer there.

But, here's the thing: the only place to get the money is to borrow it.

Of course in theory we could raise taxes to pay for what we spent, but that option is only a theory because of our catatonic political system.

Borrowing is our only option.

Now, I am not saying that is where we want to be.

However, that is where we are.

We agree that we have to fix that.

But, first we have to increase the debt ceiling.

Because, if we don't raise the debt ceiling now, then we will have a great Depression and we will never fix the problem.

If we buy some time, then maybe we can act as real patriots who place country ahead of personal advantage and really fix the problem the way our Founding Fathers expected us to: by political compromises in the best interests of the country.

Here's how the Rolling Stones said it:

'No, you can't always get what you want
You can't always get what you want
You can't always get what you want
And if you try sometime you find
You get what you need'

Well, anyway, if any of you want to explore our common areas, feel free to email me at: mckeever.mp@gmail.com

Your pal,

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