Cutting Government Creates Jobs Like Cutting Taxes Increases Revenue

A “report” from Republican staff of the Joint Economic Committee says that the path to job creation is cutting … the very things that create jobs. This is like saying that cutting taxes increases revenue. We know how that worked out, and the job-consequences of budget cuts are going to be just as disastrous.

Sometimes you can cut through ideology by looking at what actually happens in the real world. Reagan cut taxes: huge deficits resulted. Clinton raised taxes, the deficits went away. Bush cut taxes, we went back to huge deficits. And you can see the same thing when you look at government spending and jobs. England and Greece are trying austerity, and their economies are sinking as a result. In 1937 the United States learned this lesson, succumbing to deficit cutting which choked off the recovery from the depression. On the other hand, the “stimulus” boosted the economy, held off a depression and created millions of jobs — but not enough jobs to overcome the Bush years. Here is the chart — note the obvious effect of the stimulus and of the end of the stimulus on the jobs picture:

Cut Cut Cut To Grow Grow Grow?

Republicans say that cut cut cut leads to grow grow grow. Their prescription is to cut taxes to “reduce uncertainty” which they say will result in job creation. Never mind that Clinton raised taxes and then the economy boomed. Then Bush cut taxes and then gave us the worst job-creation record in decades, even before the recession started! From The Hill, GOP study backs ‘cut and grow’ but says new jobs could take time,

House Republican leaders on Tuesday released a study that they said shows their “cut and grow” strategy will boost the economy.


The study argues that reducing uncertainty about future taxes will increase household spending and business investment, spurring growth and hiring.

House Majority Leader Eric Cantor (R-Va.) said the report shows “less government spending means more private sector jobs.”

Just how will “certainty” about tax cuts create jobs?

The study argues that “non-Keynesian effects” result from government budget cuts. It says households expecting future taxes to pay for government spending will purchase more homes and durable consumer goods once uncertainty about future taxes is erased.

Right, knowing that taxes will be lower, people will go out an “purchase more homes.” The people funding the Republicans will just go buy an 8th house with their tax savings. And maybe a Maybach or two. Plutonomy in action!

No Path To Jobs

Laying off teachers and firefighters is not the path to jobs. Cutting government cuts the very things that nurture the soil in which business can thrive. We need a modern infrastructure to compete in world markets, but they are cutting back on infrastructure spending. We need a well-educated population to grow the economy, but they are cutting back on education.

Cutting is clearly not the path to more people having better-paying jobs: Congress takes aim at jobs program,

Becky Thompson of Sioux Falls turns 72 next month, and she is quietly grateful that she has a job working in the computer lab at Experience Works, an agency that helps older workers find employment.

. . . But now she and other older workers are worried that all this – the training, the support, the camaraderie – will disappear in the next round of budget cuts.

That’s because more than 60 percent of Experience Works’ budget comes from the Senior Community Service Employment Program, the only federally funded job training program for low-income seniors – and one of many programs targeted for reduction in the Republican spending bill that passed the House last month.

Economists, Analysts, Everyone Says Budget Cuts Will Kill Growth

Isaiah Poole summed it up in, More Than 300 Economists Repudiate Right-Wing “So Be It” Economics,

Today the Economic Policy Institute and the Center for American Progress jointly released a statement signed by nearly 320 economists from around the country, including Nobel Prize winners Kenneth Arrow and Eric Maskin, former Vice Chairman of the Board of Governors of the Federal Reserve System Alan Blinder, and former Chair of the President’s Council of Economic Advisers and Director of the National Economic Council Laura Tyson.

That comes a day after Mark Zandi of Moody’s Analytics released a report that estimated the House budget cuts would result in a loss of 700,000 jobs by 2012. That finding evoked a “so what?” from House Majority Leader Eric Cantor that was remarkably in line with the dismissive “so be it” comment that House Speaker John Boehner made earlier in February in response to concerns that budget cuts would result in job losses.

If people had good jobs that paid well the deficit would be a heck of a lot lower than it is. People would be paying taxes instead of collecting unemployment. Cutting the things that create jobs is certainly not a path to creating jobs. England is learning this, our Congress is not.

No Job Creation Programs At All

Republicans have held the Congress for months but have not introduced a single job-creation program. In GOP Bait And Switch On Jobs, Anne Thompson lays it out,

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The House Republicans have developed a track record of bait and switch when it comes to their approach to job creation.

Last week, House Republican leadership released a PowerPoint by Congressman Paul Ryan that they are using to educate the Republican Caucus on their top policy priorities. Ryan laid out the “Jobs Deficit” as the number one challenge facing America in his very first slide. Yet he failed to focus on jobs until the very last slide, which reads: “Keep taxes low; spur job creation and growth.” Not quite the robust plan we need to put millions of Americans back to work.

Is There At Least A Secret Plan?

Is appears — and this kook “study” confirms — there is no real plan for jobs. But is there at least a secret plan in operation?

Secret plan? When they said that cutting taxes increases revenue they knew it wouldn’t — they had a hidden agenda. They knew better than to actually believe that cutting taxes would actually increase revenue to fund the government. They said so. The resulting deficits were the agenda. The plan was to “cut their allowance” and “starve the beast” to create a debt crisis, then demand that government cut back the things it does to protect and empower We, the People.

What is the agenda behind this job-destruction agenda? If there is a secret agenda behind destroying so many American jobs — and the ability to create new jobs that pay well — then what is it? They can’t be crazy enough to destroy the economy just to increase their 2012 electoral odds, can they? On the other hand, no one has ever finished the sentence, “Republicans aren’t crazy enough to …” without being proven wrong.

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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