A Thought About Republican Tactics

The data shows that there is three trillion dollars sitting in corporate coffers that is not being invested not being used to create new jobs, and the explanation is that there is not enough demand to justify investment. The lack of demand is in part due to all the people who are unemployed or under employed, and who can't afford to spend any more to buy goods and services. There is also a problem that a lot of middle class people had their savings in the equity in their homes, and the bursting of the housing bubble, by decreasing the value of those homes, wiped out all or a large part of the savings; those people should be saving more and spending less. So in order to create jobs, the government will want to stimulate demand. One way to do so is to put more money in the actual pay checks of people who are working, and especially in the checks of the people who are just getting by who will spend the money. Another of course is to get money to the people who are unemployed so that they can buy the stuff that they need.

The Republicans want to keep the tax breaks for the very rich. We know that money won't create much demand, because the rich invest more of their incremental income and spend less than the middle class and especially the poor. As described above, the country is awash with funds that are not being invested. So where will the rich invest the extra money? I would suppose they would invest in the places demand is increasing rapidly -- China, India, Brazil, etc. Thus tax breaks for the rich seems likely to result in investment abroad; some of the investment in those countries will actually lead to more exports from emerging economies to the United States and a loss of U.S. jobs.

Why would the Republicans want to insist on a policy that will make the rich still richer and leave more people unemployed or under employed in the United States? It could be of course that the new campaign financing laws imposed on the country by the Republican dominated Roberts Supreme Court means that they will get a lot of campaign contributions for doing so (and plush jobs if they or their staff go through the revolving door into the private sector).

But we know that for some of them, the number one priority is making Obama a one-term president. We also know that history shows that when unemployment is high and the economy weak during the election campaign, the incumbent is more likely to lose. Could some Republicans be choosing a tax policy that is likely to keep unemployment high and the economy weak in order to make an Obama reelection less likely?

If the Republican position is due primarily to ignorance or to siding with the one percent in class economic warfare, the rest of us should vote against them. If it is a cynical plan to get rid of Obama by hurting the country, we should campaign against them.