The Democratic View for Stimulating the Economy

Hey guys, this is my first post here at Debate Politics. My name is Barrow and I'd like to delve into the cruel world of politics. I'm your typical on the fence independent having trouble deciding who to vote for come November. I do admit to being a social liberal, but when it comes to the economy, I'm unsure which position to take. I feel I have a better understanding of the Republican view of how the economy should be handled: Lower taxes for the upper class (small business owners) which will allow the business owners to higher more workers, so people will have more jobs and more money, which will likely cause them to spend more money, thus stimulating the economy. I'm sure there's more to it than that, but that's my general understanding.

But, what is the view or strategy to stimulate the economy for Democrats? I figured this would be a good place to pose the question because I will (hopefully) get answers from a varied group of Democrats, Republicans, and Independents. I don't want to hear why the Republican trickle-down view is wrong, I just want to hear what the Democratic view of economics is, and why you think it works or doesn't work for our economy.

barrow29 said:

Hey guys, this is my first post here at Debate Politics. My name is Barrow and I'd like to delve into the cruel world of politics.

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Welcome, Barrow. It is indeed a cruel world.

I'm your typical on the fence independent having trouble deciding who to vote for come November. I do admit to being a social liberal, but when it comes to the economy, I'm unsure which position to take. I feel I have a better understanding of the Republican view of how the economy should be handled: Lower taxes for the upper class (small business owners) which will allow the business owners to higher more workers, so people will have more jobs and more money, which will likely cause them to spend more money, thus stimulating the economy. I'm sure there's more to it than that, but that's my general understanding.

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It sounds like you may have a libertarian leaning. I too am socially liberal but somewhat economically conservative. I like a true free market while allowing people to live their lives as they see fit.

But, what is the view or strategy to stimulate the economy for Democrats? I figured this would be a good place to pose the question because I will (hopefully) get answers from a varied group of Democrats, Republicans, and Independents. I don't want to hear why the Republican trickle-down view is wrong, I just want to hear what the Democratic view of economics is, and why you think it works or doesn't work for our economy.

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Democrats typically take a strong Keynesian approach to the economy. Basically, they view the market as flawed and we need the government to make the proper adjustments through government spending, regulations, etc.

I'm a geolibertarian, so I believe in a free market but I see the current market flawed due to our land system.

Well the more left leaning democratic view is reduce taxes on the lower middle classes along with small business to give people more money in their pockets and so that small business may hire more.

Both parties will "fix" things by spending more and taxing less. This will cause an economic resurgence and by the time the debt hits 20 trillion, the unemployment rate will be down to 5%.

If you "understand" the position of a political party, then you should question whether you have been hoodwinked, imho. Most of the time we will decide that they have not been fooled whether we have been or not--that's just human nature, confirmation bias and a dozen other things.

Political parties use bumper sticker thinking to promote their agenda despite the fact that the bumpersticker thinking may or may not actually lead to the purported results they tout.

Remember that political parties are in the business of benefiting their party. Political parties are NOT in the business of benefiting the country. To benefit their party, parties must maintain the fiction that they have the best interests of the country at heart. But I advise you to keep this in mind: Political parties are not here to help the country or their fellow Americans--their goal is to benefit the political party. To that end they create compelling narratives to sell to us, the rationally ignorant public. But the goal of those narratives is not to be accurate, helpful or beneficial to the electorate or the country. The goal of those narratives is to be compelling and to encourage the good of that political party.

So, imho, anytime you find yourself in agreement with a politician or political party, you should hold some doubt as to whether that position is actually beneficial to the country or if it's merely beneficial to the party that you hold that position.


FYI, most small business owners are not in the upper class.
Businesses are not hiring because they don't have the sales / expected sales to support a larger staff, not because they don't have the wherewithal to make more prducts or hire more workers. Why hire more workers when you already have enough workers to outproduce the demand?
Productivity's at a high--the slouches etc tended to get laid off first--workers we have working are creating more output per worker than previously.
Business have a "glut" of capital and a glut of excess production capacity. A glut in the sense that there's more than is being used.

It's not clear how increasing either the capital available (further decreasing taxes) or the production capacity (hiring more workers) will help a businesses which already has more of these things than it can effectively use at the moment.

Anyway, gl, stay sharp, and remember that there're organized groups of professionals and experts seeking to fool and confuse you for their own gain.

I'll bite

1. Keeping or lower the tax rates for lower and middle classes.
2. Slightly increasing the tax rate for highest income people
3. Cut all or most loopholes and exemptions in taxes.
4. Give corp and businesses who upgrade facilities or keep jobs here an incentive (taxes?) Penalize those that do send jobs oversees
5. Allow AE to have the same tax benefits as other energy providers thereby leveling the playing field
6. Cut military spending WITHOUT effecting rediness/personnel or logistics.
7. Using Obamacare provide medical coverage for as many Americans as possible.
8. CUT government spending with a scalpel instead of a meat clever. Look for redundant offices and agencies in every department. Look for departments that are out of date or just exist to exist. Eliminate unproductive employees based on performance.
9. Finally collect the millions of dollars of uncollected fees, penalties, overages and fines owed the federal government in every department.
10. Increase fees to market levels to increase revenues and encourage competition (no not on individuals)
11. Determine the need for additional safety and health regulations and implement those that make the most sense.
12. Rebuild our educational infrastucture
13. Assist in the rebuilding of our national infrastructure.
14. Better regulation of the financial industry.

Thats about as far as my thinking takes me.

specklebang said:

Both parties will "fix" things by spending more and taxing less. This will cause an economic resurgence and by the time the debt hits 20 trillion, the unemployment rate will be down to 5%.

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Obama spent 6 trillion in 4 yrs and did not move the needle, 4 more trillion to bring it up to your 20 trillion will not move the needle. Now lets say Obama borrowed and spent up to 20 trillion, how do you think that will effect the economy when they have to pay it back? Here are a couple of things you need to think about, first there would be no more borrowing. That would cause pain just doing that as no more sweet money is pouring into the the economy. Second now the people have to dig into their pocket and give a big chunk
of their money to pay the debt and interest that we have been living high on the hog. Now all of a sudden instead of those future generations having money to rebuild their infrastructure and the like all their money goes to pay for debt service. All you have to do is look at those European countries that have already did what you ask, borrow and spend into oblivion, and now what kind of shape are they in?

Yes, I understand. You do know that my post was sarcasm, right?

Born Free said:

Obama spent 6 trillion in 4 yrs and did not move the needle, 4 more trillion to bring it up to your 20 trillion will not move the needle. Now lets say Obama borrowed and spent up to 20 trillion, how do you think that will effect the economy when they have to pay it back? Here are a couple of things you need to think about, first there would be no more borrowing. That would cause pain just doing that as no more sweet money is pouring into the the economy. Second now the people have to dig into their pocket and give a big chunk
of their money to pay the debt and interest that we have been living high on the hog. Now all of a sudden instead of those future generations having money to rebuild their infrastructure and the like all their money goes to pay for debt service. All you have to do is look at those European countries that have already did what you ask, borrow and spend into oblivion, and now what kind of shape are they in?

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specklebang said:

Yes, I understand. You do know that my post was sarcasm, right?

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I do now. :doh

barrow29 said:

Lower taxes for the upper class (small business owners) which will allow the business owners to higher more workers, so people will have more jobs and more money, which will likely cause them to spend more money, thus stimulating the economy.

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There is an inherent flaw in this logic and it is easily understood with capitalistic theory. Businesses are not incentivized to create jobs. It is just the opposite. Labor is a major cost to companies and so they want to do whatever they can to reduce that cost in order to increase profits. Lowering taxes can indeed create more capital for businesses, but it would be wrong to assume they will use that money to hire more workers. They would be much more likely, if they are intelligent business owners, to find ways to reduce costs such as automating or outsourcing work. So cutting or reducing taxes can and does actually have the opposite effect that Republicans claim and leads to a net loss of jobs as the companies use their increased capital to invest in resources that can automate labor or relocate resources so they can outsource the labor. I don't fault them for doing this, because it is good business, and if they didn't do it, their competitors would and would them price them out of the business. Cutting taxes, before the globalized economy and automation, was not a bad way to create more jobs, but it is now outdated and simply does not work.

Democrats don't have a much better idea. They want to use the government to create more higher paying jobs (middle class jobs) such as teachers, police men, government workers, etc. with the idea that they will spend money which will in turn generate stimulation within the economy. But those jobs are created at a cost which comes from either borrowing and adding to the deficit or increasing taxes.

Both sides are operating under the rules of the old economy (15 years ago), not the new globalized economy, and job creation requires a different kind of domestic policy which takes into consideration foreign currency valuation, tariffs, and trade agreements. Both parties are more concerned with tax policy than with factors which actually significantly influence job and economic growth.

Well, consideing you didn't know, you gave a very rational and reasonable response - so, thanks
:2wave:

Born Free said:

I do now. :doh

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CriticalThought said:

There is an inherent flaw in this logic and it is easily understood with capitalistic theory. Businesses are not incentivized to create jobs. It is just the opposite. Labor is a major cost to companies and so they want to do whatever they can to reduce that cost in order to increase profits. Lowering taxes can indeed create more capital for businesses, but it would be wrong to assume they will use that money to hire more workers. They would be much more likely, if they are intelligent business owners, to find ways to reduce costs such as automating or outsourcing work. So cutting or reducing taxes can and does actually have the opposite effect that Republicans claim and leads to a net loss of jobs as the companies use their increased capital to invest in resources that can automate labor or relocate resources so they can outsource the labor. I don't fault them for doing this, because it is good business, and if they didn't do it, their competitors would and would them price them out of the business. Cutting taxes, before the globalized economy and automation, was not a bad way to create more jobs, but it is now outdated and simply does not work.

Democrats don't have a much better idea. They want to use the government to create more higher paying jobs (middle class jobs) such as teachers, police men, government workers, etc. with the idea that they will spend money which will in turn generate stimulation within the economy. But those jobs are created at a cost which comes from either borrowing and adding to the deficit or increasing taxes.

Both sides are operating under the rules of the old economy (15 years ago), not the new globalized economy, and job creation requires a different kind of domestic policy which takes into consideration foreign currency valuation, tariffs, and trade agreements. Both parties are more concerned with tax policy than with factors which actually significantly influence job and economic growth.

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Great post!

So if cutting corporate tax rates isn't the answer, and cutting taxes on the rich isn't the answer, and if gov employment or spending isn't the answer, then our only alternative, aside from redistributive policies (which doesn't neccesarally mean welfare) is do continue doing exactly what we have already been doing these past few years. I assume that you will be voting for Obama then.

Hello Barrow. Welcome to the forums.

I started this thread that is relevant:
http://www.debatepolitics.com/economics/137422-why-shouldnt-support-progressive-taxes.html

The argument for progressive largely coincides with the differences between supply side (republican) and demand side (democrat) policy.

pdog said:

Inspired by Daize's thread before it spun out of control, I wonder what arguments exists to support a flat or regressive tax in terms of benefits to an economy/society over a progressive tax. Unlike Daize's thread which turned south either from an abundance of "fairness" or long term savings arguments, I'd like to restrict the debate to year over year income taxes.

In my mind progressive taxes are logical:

• A form of investment into small business/entrepreneurship in exchange for higher taxes at a time when they can be more easily absorbed (a bird in the hand).
• Money and marginal propensity to consume are inversely related – a key point in a demand driven recession.
• Effort to make a dollar is marginal – the more money you have the easier it is to make more money.
• Higher taxes promotes long term investment into a business (in order to avoid the taxes) rather than short term investment into a money multiplier machine (stock market, hedge funds).
  • More business investment means benefits to society rather than the next algorithm to trade stocks
• Lower taxes at low income levels increases economic mobility and also increases the onus on a person to succeed.
• Increased economic mobility would increase our base of innovation.
• There is no evidence that our current rates of growth are better than those when our top marginal rates were 90+%.

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IMO it's a difficult argument that republican's continue to make for supply side economics for the following reasons:
* Since the tax code was flipped on it's head in the 1980's dropping from a 70% upper bracket rate to roughly today's levels, growth did not increase and in fact decreased:


* Most corporations are sitting on record levels of cash right now combined with record low borrowing prices. The issue is not that businesses cannot afford more employees, the issue is that there is no demand to justify additional workers
https://www.google.com/search?q=corporate+cash+levels

* Employment is simply an expense. No business throws money at an unneeded expense.

CriticalThought said:

There is an inherent flaw in this logic and it is easily understood with capitalistic theory. Businesses are not incentivized to create jobs. It is just the opposite. Labor is a major cost to companies and so they want to do whatever they can to reduce that cost in order to increase profits. Lowering taxes can indeed create more capital for businesses, but it would be wrong to assume they will use that money to hire more workers. They would be much more likely, if they are intelligent business owners, to find ways to reduce costs such as automating or outsourcing work. So cutting or reducing taxes can and does actually have the opposite effect that Republicans claim and leads to a net loss of jobs as the companies use their increased capital to invest in resources that can automate labor or relocate resources so they can outsource the labor. I don't fault them for doing this, because it is good business, and if they didn't do it, their competitors would and would them price them out of the business. Cutting taxes, before the globalized economy and automation, was not a bad way to create more jobs, but it is now outdated and simply does not work.

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Totally agree up until the last sentence - IMO, money is a human concept, but to a corporation it's just a number. I'd be perfectly fine with a 0% corporate tax rate as long as those that would benefit the most would make up the difference (again, progressive, income based taxes). I think this would speak volumes to foreign entrepreneurs.

CriticalThought said:

Democrats don't have a much better idea. They want to use the government to create more higher paying jobs (middle class jobs) such as teachers, police men, government workers, etc. with the idea that they will spend money which will in turn generate stimulation within the economy. But those jobs are created at a cost which comes from either borrowing and adding to the deficit or increasing taxes.

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Now is the perfect time for public sector employment. Labor and borrowing are cheap and it's exactly what a demand starved economy needs. The key is to offload those workers back to the private sector when the economy recovers. It's filling in the troughs with the peaks yielding a stable, predictable economy. The problem is that when we have a good year we instead celebrate being masters of the universe and issue tax rebates instead of paying of previous deficits. If raising taxes (at least on the consuming classes) doesn't make sense in a recession, then cutting employment certainly does not. Combine that with the fact that our infrasturcture is now ranked 16th in the world with no plans in the future for improvement, we're selling out our future because somebody wants to run on a balance sheet as a political platform as if it's recent news.

CriticalThought said:

Both sides are operating under the rules of the old economy (15 years ago), not the new globalized economy, and job creation requires a different kind of domestic policy which takes into consideration foreign currency valuation, tariffs, and trade agreements. Both parties are more concerned with tax policy than with factors which actually significantly influence job and economic growth.

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IMO, the only long term solution is betting big on education and technology (ie, nasa). The global economy is saturating the manufacturing workforce. Our only hope is to be ready for "the jobs of tomorrow". This is why a strike at big bird is yet one more reason I can't vote for a republican president right now.

barrow29 said:

Hey guys, this is my first post here at Debate Politics. My name is Barrow and I'd like to delve into the cruel world of politics. I'm your typical on the fence independent having trouble deciding who to vote for come November. I do admit to being a social liberal, but when it comes to the economy, I'm unsure which position to take. I feel I have a better understanding of the Republican view of how the economy should be handled: Lower taxes for the upper class (small business owners) which will allow the business owners to higher more workers, so people will have more jobs and more money, which will likely cause them to spend more money, thus stimulating the economy. I'm sure there's more to it than that, but that's my general understanding.

But, what is the view or strategy to stimulate the economy for Democrats? I figured this would be a good place to pose the question because I will (hopefully) get answers from a varied group of Democrats, Republicans, and Independents. I don't want to hear why the Republican trickle-down view is wrong, I just want to hear what the Democratic view of economics is, and why you think it works or doesn't work for our economy.

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Take from the rich, give that money to the poor.

imagep said:

Great post!

So if cutting corporate tax rates isn't the answer, and cutting taxes on the rich isn't the answer, and if gov employment or spending isn't the answer, then our only alternative, aside from redistributive policies (which doesn't neccesarally mean welfare) is do continue doing exactly what we have already been doing these past few years. I assume that you will be voting for Obama then.

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I reiterate, the solution lies in consideration foreign currency valuation, tariffs, and trade agreements. Of course, Americans are going to have to stomach the reality that by those means for every job they create here they make be taking several from overseas. Other people in other countries will suffer so that we can maintain our standard of living and for some emerging economies, there will be stagnation and possibly even decline. If you view yourself as a member of the "global community" like Obama has stated he is, then that will not be an attractive option.

1) Giving "incentives" to companies to create jobs here, keep jobs here, or bring jobs back here, amounts to a taxpayer subsidy to cover the loss of intentionally operating less efficiently. This subsidy is like corporate welfare, and it's incentivizing an irrational business practice that the business thinks would otherwise not work. "We know it's stupid to do it this way, but we'll pay you with taxpayer money if you do it anyway." So again, at its core, this approach (financial/tax perks for job creation) is a taxpayer subsidy of inefficiency. Thinking about this another way, it forces the American consumer to pay for American products/services when they would not voluntarily do so.

2) Penalizing the process by which production costs are minimized/outsourced/etc. is inherently protectionist. While I can daydream about some the upsides of being a self-sufficient country, I think there are complex reasons we cannot suddenly start isolating ourselves from global economic trends. The protectionist philosophy, especially nowadays, is a philosophy of war.

3) Tweaking tax rates is irrelevant from an economic stimulus point of view. We've already manhandled the tax code to appease generations of politicians trying to inflate a sense of their own accomplishment and pay off their biggest supporters. The tax code needs to be drastically simplified just because that's a good idea in and of itself, not because of any delusion that doing so will suddenly stimulate our economy into prosperity.

4) Ultimately, government should not set a goal for itself to "create jobs." As CriticalThought mentioned, the cost of this strategy almost certainly outweighs the benefit.

5) We need to stop pretending that everything that SHOULD be done will somehow magically stimulate the economy or create jobs. Some things should be done for fairly obvious reasons (many related to rampant waste and fraud), but not because it has anything to do with the rallying cry du jour, which this year is "job creation."

specklebang said:

Both parties will "fix" things by spending more and taxing less. This will cause an economic resurgence and by the time the debt hits 20 trillion, the unemployment rate will be down to 5%.

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Spending more and taxing less? Are you serious. How does that work?

I thought the quote marks around the word "fix" would clarify that this statement was sarcastic. So, I jope that clears things up

Anrch-Cptlst said:

Spending more and taxing less? Are you serious. How does that work?

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barrow29 said:

... Lower taxes for the upper class (small business owners) which will allow the business owners to higher more workers, so people will have more jobs and more money, which will likely cause them to spend more money, thus stimulating the economy.

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First off, 98% of small business owners are not in either of the top two income tax brackets. Cutting those top two tax rates will only benefit 2% of small business owners. Nearly 100% of top tax rate tax cuts would be funneled into passive investments, such as stocks, and while this may be a good thing because it would drive the stock market up even more, it doesn't do a thing to promote main street. When people purchase non-ipo stocks, the companies don't get a penny of that money, and thus they don't have any additional money to expand with. Even with IPO's, most of the time having an IPO offering is more about the origional investors cashing out and becoming billionares, than it has to do with raising money to start a new business or to expand with. If anything, any money that does trickle to businesses due to a top tax bracket tax cut tends to be spent on new equipment so that companies can reduce their expenditures of labor.[/quote]

But, what is the view or strategy to stimulate the economy for Democrats?

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I have no idea, they certainly haven't been offering up a lot. There are a lot of good liberal ideas out there that would do wonders for our economy, but nothing is being seriously proposed.

I don't want to hear why the Republican trickle-down view is wrong, I just want to hear what the Democratic view of economics is, and why you think it works or doesn't work for our economy.

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Whats odd is that Romney isn't even offering up a plan. He has stopped pushing the far right agenda and is now saying basically that he will do nothing other than to simplify our tax cut - without cutting any taxes. Even Romney has given up on trickle down. Can ANYONE tell me what Romney's plan is?