If People Can Buy More, Companies Can Sell More

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I was listening a bit to a Senate committee hearing on the economy today and the Republicans were once again claiming that threatening to shut down the economy or actually doing it won't really be much of a problem for very long if nobody notices and that the federal government debt, corporate regulations, the cost of Obamacare (the Affordable Care Act) to business and high tax rates are the real problem. I wonder what planet they're on.

The stock market's Dow Jones Index is doing quite well, despite the recession.

Corporate After Tax Profits are doing great.

Comparing the U.S. economy to the U.K. economy, where they've exerted more austerity with less government spending, we're doing very well.

And, corporations may be complaining of higher costs from regulations and Obamacare, but their effective tax rate is very very low.

They really don't have much to complain about. But, ordinary workers do. Since the mid-1970s the income of this country has been going more and more to a smaller number of people and those with smaller incomes are barely holding even.

You may be wondering, if they're making so much money, then why aren't they expanding their factories and hiring more the way companies have always done. They're employing foreigners at lower wages, even in Socialist countries, to avoid paying the U.S. tax rate and make more profit.

It would seem like a simple thing to fix -- just end the tax deduction they use to keep their overseas profits from being taxed at U.S. rates (or after some adjustment for the taxes they pay in that foreign country). Democrats tried to do just that a couple of years ago. Senator Mitch McConnell, and all the Republicans, said "No". They filibustered the bill and killed it.

They say we have to cut the budget deficit (and we do) and never raise taxes on the rich. But, Pres. Obama has been working with them to decrease spending to bring the deficit down.

Some people have been arguing for an increase of the minimum wage to restore it to the level of 1968 (adjusted for inflation). Conservatives (and unfortunately, some Democrats) have said "No".

If people have more money they could buy more and companies who can sell more will expand their plants and hire more people to produce. And, if companies didn't find it profitable to send jobs overseas they might hire more (currently unemployed) American workers.

So, if you want to know why the economy isn't doing better, ask Republicans when they'll stop holding it back.