18 September 2011
President Obama’s American Jobs Act has put his opponents in tight spot. In broad outline, the president’s bill gives payroll tax breaks to families and to businesses that hire the unemployed. In addition, it increases investment in repairing an aged American infrastructure that is among the worst in the industrialized world. The bill calls for no additional debt spending that would increase the deficit. Obama’s opponents are finding it is a delicate matter to oppose the bill because they have long championed tax cuts as the best way to create jobs. Moreover, it is practically impossible to argue that our crumbling roads and bridges don’t need to be fixed.
Where the Republicans are looking for traction in opposing Obama’s plan is in how he wants to pay for it. Obama would end tax loopholes for the extremely wealthy. Asking the rich to contribute would harm the economy, Republicans say, because the rich would have less incentive to invest. As House Majority Leader Eric Cantor said, ” I hope that the president is not suggesting that we pay for his proposals with a massive tax increase at the end of 2012 on job creators.” Economist J.K. Galbraith summed up their thinking this way: “The poor do not work because they have too much income; the rich do not work because they do not have enough income. You expand and revitalize the economy by giving the poor less, the rich more.” It is the central idea behind a theory called supply side economics, trickle down economics, or Reaganomics.
Supply side economics is nothing new. Back in the late 19th century it was called the “horse-and-sparrow theory”. It was a colorful metaphor that represented regular folks as sparrows and rich folks as horses. If you really want the be kind to the sparrows, you shouldn’t feed them. Rather, you should increase the horses’ rations. The more oats you feed to the hoses, the more oats will pass through their intestines undigested for the sparrows to find in the road.
Is there hope that the President’s opponents will pass Obama’s American Jobs Bill? Perhaps. They must be thinking how grim their 2012 election prospects would appear with bumper stickers reading “let the poor and the middle class eat shit.”