Cross Roads

America is at a cross roads: One road proposed by the Republicans and one by the Democrats.  Both parties realize that something has got to change in which the way the United States Government stays sovereign and maintains the ability to keep its economy moving forward.  As things stand currently, the best that both parties could actually hope for would be to keep the U.S. economy from shrinking and the unemployment rate from rising, but which plan of action is the correct choice seems to be the problem.

As for the Republicans, their plan is simple, cut spending.  In this plan the only change that would be made to the American economy would be to reduce the size of government and let private industry take the lead to growing the it.  Republicans, it seems would prefer that most aspects of life in America be handled by small business and corporations.  There would be less regulation that they contend gets in the way of capitalism, which would allow the markets to flourish.  While this plan sounds straight forward, what would the consequences of this approach be, are there any examples from the past that could prove useful in making a decision about the validity of this argument?  In examining this plan, it might not take too much of a look into the past to come up with examples of where it could lead.  For more than ten years, the wealthy have enjoyed the lowest tax rates in history, but has the country enjoyed the largest growth in job creation in this same time frame?  If the answer to this question were yes, than one would be inclined to believe that cutting taxes for the wealthy is in fact the way to go, but given the fact that unemployment is currently at 9.1%, the answer must be a resounding NO.  The wealthy have not created American jobs, big corporations have not created American jobs:  The only business entity that seems to be creating jobs at all are small businesses, but even these companies are limited in the number of jobs they can create.  For a small business to thrive, it must have customers, just like medium and large businesses need customers or consumers.  The questions that must then be asked, are where are the consumers and who are the consumers?  And the answer is simple:  The consumers are anyone willing to pay for a service or good who is also capable of paying for that service or good.  The last part of this description is another point at which the Republican's plan is flawed.  While it helps the rich hold onto more of their money, it eliminates funds from so many more people.

Many of the government programs that the Republicans will have to eliminate, due to their spending cuts, will take money away from many poor families who would use this money to buy food, pay rent and keep utilities turned on to keep cool in the summer and warm in the winter:  That's money that would help keep the economy going.  The tax loopholes that Republicans are NOT willing to eliminate, help the wealthy hold onto their money in hopes that these same rich people will create jobs.  In one of these two scenarios, the person or persons have no choice but to spend the money they are given by the government;  In the other, they could choose to create jobs, or simply sit on the stack of cash that the Republicans saved them.

Another of the effects that Republican policies would have would be to cut spending on various programs, which means that people would be laid off.  These people would no longer have the income that they would need to pay for groceries, utilities or mortgages, which would mean that they have to choose between eating and being warm and paying for a house that is upside down.  The choice seems obvious, so the housing market continues to take a hit as it slides further into the Abyss.  Now, the wealthy could simply buy the house that will inevitably be foreclosed upon, but who could pay the rent on all of the houses that the rich must buy and maintain:  The banks don't seem so keen to foreclose these days.  Perhaps it's the fact that those empty homes require lawn services amongst other things to maintain them.  Perhaps it's that banks are beginning to realize that there is no market for these homes which are beginning to produce excessive amounts of mold and in some cases self-composting, due to lack of a regulated environment within the home.  So, cutting spending not only eliminates the income that the poor must spend to survive and the income that keeps government employees in their homes, but both of these consumers are removed from the economy.  Meanwhile, the rich can choice or not choice to invest in the economy by creating jobs.

In the past few years, even with the Bush Era Tax cuts extended, the rich have chosen not to create jobs.  And prior to the Bush Era Tax cuts, the wealthy have seen their incomes increase by $4.00 dollars to 1 cent for the rest of us:  This is all in line with the Republican economic theory called Supply Side AKA Trickle Down economics.  A quick example of how adversely Trickle Down has affected the economy is to consider this:  Earlier this year Forbes detailed how 400 of the wealthiest people in this country have as much wealth as 150 million people in this country.  That's 400 to 150,000,000 which is half of our population.  Now, ask yourself, could, or more importantly, would those 400 individuals match the spending power of the 150 million people they've eclipse?  Wouldn't the money those 400 people are sitting on serve this nation better in circulation?  Some may argue no, but they would be lying.

Don't get me wrong, I'm not a staunch supporter of the Democrats either:  Who could be fond of a group of leaders who call foul on the Ryan Plan only after the Republican's own constituents did it first in various Politician's own town hall meetings.  Talk about leading from behind; the Democrats looked like the last guy to the lynching who asks "Yeah hang . . . What's his name?", but they are still better than the Republicans.  They can sleep better at night knowing that they did not ask America to lay off unknown numbers of government employees, or cut assistance to poor families, without at least ending ridiculous tax breaks for the wealthy and actually asking the rich to contribute more to society.  If you think about, neither Democrats nor anyone for that matter asked the wealthy for a single dime of the money they had amassed to date (estate tax wasn't mentioned in the debt ceiling deal:  I don't think).  Democrats simply asked that whatever money the wealthy make from here on out provide assistance to our failing economy.

I hope that in 2012, not only do more people vote, but that those who think the Republicans are on their side wake up and smell the coffee, because if the Republicans are making it, it's going to be bitter and might even kill you.

You can take that from Fabian Augustus


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