It cannot be said too often that tax revenue comes from people who earn income. The reason we’re in trouble now is that there aren’t enough workers and their income is too low. There are other factors, such as the disgraceful tax-dodging of major corporations who pay no taxes at all, and the hoarding of vast amounts of cash by the ultra-rich, but the plain fact remains that employment is too low, income is too low, and because of it, tax revenue is too low.
Against all logic, just about everybody has taken up the drumbeat of austerity in the hope that trashing the government economy will somehow make it all better. That didn’t work in the thirties, and it doesn’t work now.
Perhaps you read Paul Krugman. If you don’t, you should. On a fairly regular basis, Paul will discuss the several masochistic programs endorsed by conservatives and compliant liberals, explain the steps they have taken and the results expected, and then ask, “How’s that going?”. It’s never going well, of course. What has been implemented has had exactly the wrong effect. Surprise.
The NYT on 1 April 2011 had an article (no April Fool joke) that explained that crappy jobs that pay too little don’t even cover basic living costs—apparently a huge surprise to conservative economists. New jobs have failed to budge the unemployment figure far from its nine percent throne, and too many new jobs are for poor pay. People who work for inadequate pay find themselves seeking things like public food programs, and their income is sinking in the direction of poverty. So not only is unemployment unacceptably high, many of the new jobs fail to pay enough to provide even the basics, which of course lowers tax revenue.
OK, let’s summarize a bit. Wall Street screwed us all by pursuing their boundless greed, which killed millions of jobs. There isn’t enough tax revenue because unemployment is too high and jobs pay too little. The economy is in trouble because there isn’t enough tax revenue. We’re trying to fix that by taking steps like removing union wage protection, creating lower wages and lower tax revenue. Conservatives also want to cut all government to bare bones, creating more unemployment and ending vital programs, as well as failing to save enough cash to turn the situation around. Am I missing something here?
Basically, trying to solve low tax revenue problems by cutting essential government services is bass ackwards. Conservatives are trying to do this because they believe in minimal government. Not because it actually works, but because it is an item of conservative faith.
If conservatives want to reduce government to what’s really necessary, great. Who could disagree with that? But they don’t know what is necessary and what is not. They don’t know which cuts would help, which would hinder. Faith provides no clue. Take a look at my previous post for an example of that. So far conservatives have failed utterly to prove that the cuts they want will do anything other than make things worse. Maybe it would be a good idea now to try the things we know will make it better. You think?