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December 4, 2010
That's right Chuckie. Rich people are just going to let $300 billion pile up around in their homes in garbage bags. No investing. No buying. No nuttin'. Just change in the couch cushions.
Why is this man trusted with more than $25 weekly allowance?The Senate on Saturday also rejected an alternative proposal, championed by Senator Charles E. Schumer of New York, to raise the threshold at which the tax breaks would expire to $1 million. Some Democrats said that the Republicans’ opposition to that plan showed them to be siding with “millionaires and billionaires” over the middle class.
“It seems to me that about the best way to reduce the deficit is not to give $300 billion of tax breaks to the 315,000 Americans whose income is over a million dollars,” Mr. Schumer said, adding: “It’s not that we want to punish wealthy people. We want to praise them. But they’re doing fine, and they’re not going to spend the money and stimulate the economy.” -- Senate Rejects Obama’s Plan on Extending Tax Cuts - NYTimes.com
Posted by Vanderleun at December 4, 2010 10:50 AM. This is an entry on the sideblog of American Digest: Check it out.
Your Say
The current economic crisis is a different situation from when the original Bush tax cuts were passed. Those tax cuts could reasonably be expected to increase investment by increasing the amount of money available to invest.
The rich folks getting the Bush tax cuts could not reasonably be expected eat more, wear more clothes, travel more, et cetera (that is, CONSUME) because they already had pretty much all they wanted.
The current economic crisis is a shortage of Aggregate Demand (AD). We need people and corporations to save a little less and spend a little more. Maybe more than a little.
So tax cuts for the rich will not help increase Aggregate Demand.
But tax cuts (or outright redistribution of wealth) from the various taxpayers to the poorer segments absolutely will increase AD. They will spend money on 3 things, mostly: 1) food. 2) clothing. 3) housing (mortgage or rent).
Tax cuts or subsidies for business may not increase AD, because they will "prudently" save the money until things get better (thereby preventing things from getting better), or they will invest overseas. Businesses, though, vary from one another more than poorer people do.
This is why extending Unemployment Insurance (UI) is a good thing to do now. Likewise, increasing Food Stamps is also a good thing.
Posted by: AreaMan at December 4, 2010 1:33 PM
AreaMan,
1. Define "rich".
2. How do you know redistribution of wealth to "poorer segments" is a good thing? What makes you assume they wouldn't just spend all their redistributed dollars on crack, Colt .45, and Cheeze Whiz? Hey, it's all "free money," right?
Here's a tip: the quickest way to end the need for welfare is to change the culture and bureaucracy that encourages it.
Posted by: MarkJ at December 4, 2010 1:51 PM
Consumer spending by "poor" people does not expand the economy significantly. By definition, these people are "poor", and therefore have limited amounts of money to spend on anything. Even if they're given additional money (i.e., redistribution from taxes), that money only goes so far. And in any event, consumer demand is a trailing indicator--people buy new things when they feel reasonably confident about the future. If they don't, they either do without or fix what they have now.
What does grow the economy in a big way is the "working wealthy", especially small businesspersons, investing in property, plant, and equipment (PPE), hiring new workers, buying additional raw materials, taking out bank loans, and increasing production when they believe the market opportunities are favorable for their businesses (this also applies to service industries). Only then does consumer demand increase.
Posted by: waltj at December 5, 2010 2:08 AM