On Tax Cuts, Jobs and Promises Promises

Candidate Romney is not promoting a unique and original economic idea based on his experience and wisdom obtained as a businessman and CEO at Bane Capital (misspelling is intentional on my part.)

Tax cuts intended to increase revenue which then generates jobs and leads to a  healthier economy is a tried-and-failed conservative talking point that was seriously attempted by both Ronald Reagan and G.W. Bush.

Candidates Romney and Ryan are asking Americans to let Republicans try it one more time, promising results that have proven to be essentially un-achievable using the failed formula.

What follows, if we buy into the tax cut, jobs and fairy tale idea is the implication that higher taxes in and of themselves are the principle impediment of economic growth.

This all sounds pretty but in reality, as do most theoretical plans that assume so much more than can be delivered, the very volatile and unpredictable facts of human nature disallow any serious expectation of control over the results of such a massive experiment in which risk is but a minor tool and outcome will be a result of ideologically controlled micro-management.

Economic stimulation prompted by tax cuts then is supposed to drive up revenues to pay for the tax cuts. This is the crux of Candidate Romney's worn out Republican promise that famously failed with the Reagan and Bush implementations.

Following the Reagan and Bush Sr. failures - to the chagrin of Republicans - Bill Clinton took a measure to reduce the deficit that certainly was not helped much by the failed experiment. Clinton's deficit reduction act contained the "largest tax increase in history."

Conservatives responded hysterically with hand-wringing outrage about a major step backward from the forward movement of trickle-down economics (more famously described originally by Bush Sr. as Voodoo Economics.)

But the result was a dramatic increase in revenue – far more pronounced than the eventual increases in revenue that had come to pass under Reagan.

Romney and company might insist that economic growth drove up those revenues, but such a notion would have to oppose the basic tenets of tax cuts as the cause of greater revenue and more jobs.

Clinton raised tax rates at the highest level and guess what? The economy looked more like what Romney promises by doing the opposite of what worked. The economy proved itself to be more than a mere responder to faulty tax-cut notions.

Worse, tax cuts which cause budget deficits aren't the real thing. They essentially amount to deferring tax revenue which might normally be used to act responsibly, affording an opportunity to function more readily in a pay-as-you-go mode.

Tax cuts only put off keeping the bills current by putting off when they get paid. That might be the corporate welfare way but it is not a method that has proven to be a winner with all the mom and pops and kids and grandkids who have learned the hard way that it's better to pay as you go.

Call it what you will, "trickle down," "voodoo" or "teapickle" the idea Romney and Ryan espouse is to hand more money to the rich who will then wisely and unselfishly invest in business and create jobs. It hasn't worked before and in a worsened national economic circumstance where holistic and preventative medicine is needed, Romney/Ryan want to break out the leeches and generate more bleeding.

Why?

What the wealth-bearing capitalists do with tax cuts is theirs to decide, theirs to own, and theirs to keep or risk as they see fit. I doubt that we'll see investment in new businesses, expanding businesses, new equipment, research and development or anything else if there's no demand.

Demand is what moves people to both buy and sell. Receiving a tax cut is insufficient motivation to pour that gift revenue into products and services for which there is little demand, enthusiasm and most-significantly, ability to purchase, use or consume.

Why would a tax-cut recipient invest in greater production capacity if no one is out there with money to spend? Not to mention all the other lucrative things you can do rather than risk investing in something that might create more jobs ...  because you are a grateful and patriotic capitalist who is willing to put the money where the conservative mouths say it should be put.

Why invest in job-creation enterprises when you can invest in commodities, foreign exchange and government bonds? Or you can buy stock for the sake of stock, which in and of itself does not represent a new job but rather, someone else's cash cow.

My bottom line is not the idea that higher taxes will always benefit the economy. Such would be the political mirror image of the assumptions made by tax-cut politicians.

The truth of the matter seems to be that the correct blend of hands-off and hands-on management is the key to leadership. That one learns to drive the massive, bulky hard-to-steer economic wide-load tractor trailer by actually driving it.

If among candidates you can find someone who has done that without himself tipping over the equipment, you are better off.

The alternative is taking a chance on the other ... who CEO-drove a comparative economic tricycle but  who now tells us that he can climb on the big one, put the pedal-to-the metal and accelerate using the failed and discredited tax-cut ideology of the past.

And he wants use to rehire that same maintenance crew that for the past four years has accomplished nothing but obstruction.