10/27/12

Consumer Demand, Not Tax Cuts, Drives Job Creation

According to presidential candidate Mitt Romney, economic recovery results from cutting taxes on business owners and strangling government regulation.

But even if taxes were too high and government regulations too onerous, Romney's "job creationism" is faulty economics.

Every business owner wants lower costs.  Nothing costs a business more than its employees.  That's why, when business is bad, workers get laid off.

No matter how much businesses are allowed to lower their costs, they're not going to hire more workers unless they get more business.

Mitt Romney's Supply Side Economics doesn't work. Tax cutting and regulation gutting -- without increased demand for goods and services -- only create a windfall for business owners.

If demand for goods and services goes up, businesses will hire, regardless of tax cuts.

When unemployment jumped from 4.4% in May 2007 to 10% in October 2009, it wasn't because of a sudden spike in taxes or government regulation:  it was because demand collapsed.

Republicanomics fails to recognize that it's consumers, not business owners, who are the "job creators".  When demand for goods and services goes up, hiring goes up.

The economy is still stuck because the middle class is stuck:  there aren't enough jobs and there isn't enough money to spend.

Letting the Republicans keep whacking away at the federal budget, cutting taxes and gutting government regulation, isn't going to bring the jobs back.  It's only going to drive the middle class deeper into the ditch -- while making the 1% richer.

The article from Forbes.

Romney's "47%" rhetoric exposes the lie of Supply Side Economics [Huffpost.]

The economy continues, however cautiously, to improve in the third quarter of 2012 [CNBC.] 

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