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
- Failure to enforce anti-monopoly laws, thus permitting price gouging.
- Failure to cap interest rates on credit cards, thereby further concentrating wealth in the hands of the banksters and curtailing consumer spending, and in these ways dragging downthe economy.
- Passage of laws that encourage union-busting, which keeps wages and benefits down, thereby maximizing profits. Problem is, once again, it undermines the purchasing power of workers, leading to a recession.
- Passage of laws that lead to the privatizing of government services, which makes plenty of money for the rich but costs consumers more in the way of out-of-pocket expenses that were previously covered by government. This reduces disposable income for these consumers, which of course leads to the same kind of business slowdown already described.
- Passage of laws that allow employers to reduce benefits and increase co-pays. This increases the cost-of-living for workers. As a result, these workers once again have less disposable income to spend on goods and services, which, as we've seen, slows down the economy.
Every time the rich reach the levels economic concentration that currently exist, we will have a depression. Economic concentration of wealth and income are currently at levels very similar to those just before the Great Depression in 1929. And the current level of concentration is a direct result of increasingly "Republicanized" governmental policies which the political whores of the rich have been enacting over the past 30 years, just as their counterparts did before the depression of 1929.
The only reason our current situation has not quite deteriorated to that of the last Great Depression is that the Republicans have not (yet?) been successful in undoing all of the protective reforms (like the Glass-Steagall Act which was repealed in 1999 and which had been enacted after the financial collapse in 1929).
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