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The Republican plan to wreck the economy and then blame the Dems. Will it work?

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The Republican Party and its powerful allies in the right-wing news media made it clear from the moment Barack Obama took office that they would demonize everything he tried to do, especially with respect to the economy.

Knowing that progressives had no comparable media infrastructure with which to respond and that many Democrats would cower when attacked the Republicans now appear to have convinced many Americans to hand congressional power back to the GOP, a situation that Stephen Crockett addresses in this Consortium News article, a synopsis of which follows here.

Republicans in Congress have decided that sabotaging economic recovery and employment growth is their best tactic for electoral gains in November as long as they can pin the blame for all the joblessness and the bad economy on the Democrats. And this it seems fairly likely they will succeed in doing, given that most Dem voters are essentially asleep at the wheel when it comes to really understanding how our political economic system works. Signs of this Republican plan have been cropping up since the Democratic victories in 2008.

Here are the things you need to understand, to clearly see how this Republican plan will work:

1. Economic recessions and depressions almost always result from insufficient "effective" consumer demand for goods and services produced domestically. In economic terms, merely wanting something does not constitute "effective demand." For a want to become an "effective" demand for goods or services, it must be accompanied by the monetary ability to actually make the purchase.

2. Jobs are not created by just having large pools of investment money available, as most big corporations and banks now do. There must also be the opportunity to invest in a business that will have customers who have the money to buy the goods and services. Then and only then will investment money flow into business opportunities and job creation.

3. Over the last 30 years, the Republican-Right economic theory that economic prosperity and employment automatically "trickle-down from the wealthy" has been proven again and again to be fallacious. Tax cuts for the wealthy create huge investment money pools -- but not jobs.

4. Republicans are seeking to extend the tax cuts for the wealthy by falsely stating that increases in taxes for the upper 2% of income earners would hurt demand and prolong the economic downturn. Experience and history prove otherwise. The large majority of buying is done by the remaining 98% of the population. The top 2% invest much of their income, rather than spend it on consumer goods. Besides, compared to the rest of us, there are not that many of them.

Implications for the larger economy

Tax cuts at the highest marginal income brackets simply serve to concentrate wealth and political power in the hands of the economic elite. This power of the economic elite then pushes government policy in directions that dramatically cut the percentage of the nation's wealth and income that goes to the large majority of Americans. And this has been happening for at least the last 30 years. Hence the decimation of America's middle class.

The ever reduced incomes and wealth holdings of the middle class cuts into the ability of most Americans to buy goods and services. As a result, the economy falters because most customers do not have enough disposable income to keep the flow of goods and services at a level that is sufficient to generate the number of jobs and the kind of incomes that a vibrant economy and a healthy middle class requires.

That part of the national income that previously (prior to 1975) would have ended up in the hands of America's great middle class, as disposable income, has for more than 30 years been increasingly diverted into the pockets of our economic elite who, because they already had more money than they could possibly spend on goods and services, have used most of this recent "windfall money" to invest in things that turned out to be "bubbles." As a result, sound business enterprises lacked the numbers of middle class customers they had always depended upon. As a result, many such businesses faltered and had to start laying off employees and/or moving their factories or other operations to low-wage countries.


Why middle-class tax cuts are important for the economy

Middle-class tax cuts increase the disposable income of those members of society who spend the vast majority of their incomes and have little left over to save. The money changes hands over and over again (instead of either creating some kind of investment bubble here or being invested in a foreign country like China or Brazil). This is the great multiplier effect that people learn about when they take a course in, or read a basic text on, economics. Extending unemployment benefits has a huge multiplier effect as well. This is because unemployment benefits are so very badly needed by the recipients that virtually every penny of it gets spent on goods and services, immediately.

Excessive concentration of wealth and income in the hands of the financial elite stifles this kind of middle class spending and thus cripples our economy. And even though all the Republican policies for the past 100 years have been designed to concentrate wealth and income in the hands of the very few, and have always had the effect of crippling the economy, the political-economic dogma of the hard right obviously does not die easily. Why not? Because the very rich spend billions every year keeping it alive! For what purpose? For the purpose of multiplying their incomes, through tax breaks won in Congress by the politicians whose campaigns they pay for, and through the huge sums of money they can "earn" by buying stocks cheap after a market crash, and then selling 'dear' after the market recovers.

Some other ways that the bought-and-paid-for politicians of the rich help their masters stay rich

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)
 

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When I read your intro I knew that this would be a... by Suzana Megles on Friday, Aug 6, 2010 at 8:07:58 AM
I've seen this cycle repeated.The new phenomenon o... by martinweiss on Friday, Aug 6, 2010 at 8:21:20 AM
The Republicans aka Bush/Cheney have already destr... by Hayesml47 on Friday, Aug 6, 2010 at 8:33:23 AM
Sorry...it's too late for the Republicans to put t... by BARB BF on Friday, Aug 6, 2010 at 8:42:45 AM
you may trip over a political ottoman and the trau... by John Sanchez Jr. on Friday, Aug 6, 2010 at 9:32:27 AM
As if the economy wasn't wrecked until inauguratio... by Maxwell on Friday, Aug 6, 2010 at 10:11:42 AM
Obviously - from your reply - the Republicans have... by Ian MacLeod on Friday, Aug 6, 2010 at 10:18:17 AM
There are now more people over the age of 65 who a... by Richard Clark on Friday, Aug 6, 2010 at 10:54:04 AM
This ridiculous dance that has been happening my w... by Michael Olympia on Friday, Aug 6, 2010 at 9:26:21 AM
This is the spot we refer to as, "between a rock a... by Paul Kruger on Friday, Aug 6, 2010 at 10:44:57 AM
I am going to vote "Green" (that is my vote agains... by Philip Pease on Friday, Aug 6, 2010 at 11:14:31 AM
Keynesian theory posits a government spending mult... by Phil Weingart on Friday, Aug 6, 2010 at 9:46:52 AM
Business majors are brainwashed into believeing ev... by liberalsrock on Friday, Aug 6, 2010 at 10:28:03 AM
Is that the wrecked economy or your Reichwing excu... by Bia Winter on Friday, Aug 6, 2010 at 10:32:33 AM
Really, partisan politics never ceases to amaze me... by Michael Olympia on Friday, Aug 6, 2010 at 2:16:12 PM
Sure, the difference is not sufficient but there i... by BFalcon on Sunday, Aug 15, 2010 at 8:28:29 AM
You can't blame the republicans forever, also reme... by Laura Roberts on Friday, Aug 6, 2010 at 4:03:18 PM
DAMN! sister.. wowit's so incredible the way they ... by Michael Olympia on Friday, Aug 6, 2010 at 7:35:14 PM
The nine billion dollars given to Whirlpool to mak... by Laura Roberts on Saturday, Aug 14, 2010 at 8:41:03 PM
What "more social programs" are created?You either... by BFalcon on Sunday, Aug 15, 2010 at 8:24:40 AM
<<< The premise of the purely theoretical... by Richard Clark on Friday, Aug 6, 2010 at 11:29:45 AM
corporations and Wall Street are stuffing their mo... by John Sanchez Jr. on Friday, Aug 6, 2010 at 1:28:38 PM
I hope Phil will take them into account before he ... by Richard Clark on Friday, Aug 6, 2010 at 2:48:14 PM
Actually, there is a spending multiplier period, n... by Steven Leser on Friday, Aug 6, 2010 at 10:55:01 PM
I posted an article here at Joe the Voter about th... by Paul Kruger on Friday, Aug 6, 2010 at 10:29:36 AM
wife and political party swapping Ronald Reagan ne... by Stanimal on Friday, Aug 6, 2010 at 10:40:13 AM
How can they fail, when half the Democrats also bl... by Perry Logan on Friday, Aug 6, 2010 at 12:11:09 PM
Perry, the Tea Party is the Republicans version of... by Hayesml47 on Friday, Aug 6, 2010 at 3:06:34 PM
Obama lied, he is not a democrat, he is a republic... by Debbie S on Friday, Aug 6, 2010 at 2:56:20 PM
As it is, this article is w-a-a-y too long. Add to... by Ed Tubbs on Friday, Aug 6, 2010 at 3:43:25 PM
Does it much matter if Republicans retake the cong... by Philip Pease on Friday, Aug 6, 2010 at 3:50:44 PM
I thought that I was reading my own writings. I ... by Freddie Venezia on Friday, Aug 6, 2010 at 4:06:50 PM
Guys, they have won. They have the left battl... by Jack Lohman on Friday, Aug 6, 2010 at 4:07:20 PM
Gore Vidal: We only have one political party in ... by Jan Daniel on Friday, Aug 6, 2010 at 8:40:46 PM
I see how you completely failed to show how the ec... by Bob Frapples on Friday, Aug 6, 2010 at 9:33:44 PM
nor are they remotely "the same ... policies" fail... by Steven Leser on Friday, Aug 6, 2010 at 11:07:39 PM
It is extremely ignorant of you to claim that the ... by Bob Frapples on Saturday, Aug 7, 2010 at 8:47:05 AM
Steven Lessor, I see that you did not even bother... by Bob Frapples on Saturday, Aug 7, 2010 at 8:36:02 AM
Where is the outrage from the right (and some on t... by Jack Lohman on Saturday, Aug 7, 2010 at 9:24:15 AM
That link is now http://fairelectionsnow.org/about... by Jack Lohman on Saturday, Aug 7, 2010 at 9:41:37 AM
The banksters are undeterred, still conniving and ... by Richard Clark on Saturday, Aug 7, 2010 at 11:33:33 AM
The democrats are the ones that forced the banks t... by Bob Frapples on Saturday, Aug 7, 2010 at 2:09:19 PM
How is it Clark is not aware of the fact that Obam... by Michael Olympia on Sunday, Aug 8, 2010 at 9:13:49 AM
...pure and simple (well, except forthe very few D... by Jill Herendeen on Saturday, Aug 7, 2010 at 1:06:03 PM
At least, the corporate-owned media will report th... by Jill Herendeen on Saturday, Aug 7, 2010 at 1:10:50 PM
I finally figured it out. If the news media start... by Jack Lohman on Saturday, Aug 7, 2010 at 1:19:22 PM
the media.Why would those people--who own it all--... by Jill Herendeen on Sunday, Aug 8, 2010 at 8:02:22 AM
The Republican plan to wreck the economy and blame... by Ralph Dratman on Saturday, Aug 7, 2010 at 2:03:46 PM
Our Government is for sale to the highest bidder! ... by David McKeever on Saturday, Aug 7, 2010 at 3:51:33 PM
Nothing is going to change until we have public fu... by Jack Lohman on Sunday, Aug 8, 2010 at 8:15:08 AM
From now until Nov. 2, the Republican Party will b... by Richard Clark on Sunday, Aug 8, 2010 at 9:33:11 AM
Nothing is going to change until we have public fu... by Jack Lohman on Sunday, Aug 8, 2010 at 9:56:43 AM
Greed, power, reckless speculation and theft of ot... by Richard Clark on Sunday, Aug 8, 2010 at 3:05:15 PM
In the ill advised effort to address the deficit (... by BFalcon on Saturday, Aug 14, 2010 at 12:24:12 PM
. . the problem is that too many middleclass peopl... by Richard Clark on Saturday, Aug 14, 2010 at 1:56:20 PM
And I am not talking about spending more than you ... by BFalcon on Saturday, Aug 14, 2010 at 4:36:38 PM
Yale economics Professor Robert Shiller says we sh... by Richard Clark on Saturday, Aug 14, 2010 at 6:26:00 PM
right now onbase food pantries are begging for don... by Laura Roberts on Saturday, Aug 14, 2010 at 8:37:21 PM
The Military used to be self sustainable. They ha... by Laura Roberts on Saturday, Aug 14, 2010 at 8:49:54 PM
You make good points but, believe me, if a unit wa... by BFalcon on Saturday, Aug 14, 2010 at 9:47:15 PM
for barracks goes to contracters that milk the tax... by Laura Roberts on Saturday, Aug 14, 2010 at 10:41:29 PM
without the use of contractors, unless... we reins... by John Sanchez Jr. on Saturday, Aug 14, 2010 at 11:33:26 PM
Then draft would be a reasonable thing. However, i... by BFalcon on Sunday, Aug 15, 2010 at 8:48:58 AM
I agree that is a need for some outside, non-milit... by John Shriver on Sunday, Aug 15, 2010 at 9:35:26 AM
War...what is it good for? Absolutely Nothing, but... by Debbie S on Sunday, Aug 15, 2010 at 12:03:05 AM
But it may still be needed in some cases. Reducing... by BFalcon on Sunday, Aug 15, 2010 at 8:39:09 AM
The CBs is just that, construction and would proba... by John Shriver on Sunday, Aug 15, 2010 at 9:25:30 AM
Excerpts: It is difficult enough to convince mo... by Richard Clark on Tuesday, Aug 17, 2010 at 11:45:32 AM