image THE THINKING OF A RINO, PART III/ DISCUSSION OF FAILED “TRICKLE DOWN” ECONOMICS

This is my third posting trying to explain why I can write the way I do while being a registered republican. I describe my self as a Colin Powell/ Bob Dole republican which means that I am no longer a real republican. The tea party members would call me a “RINO,” someone who is a republican in name only. Personally, I have vowed that I will not vote republican while the tea party segment continues their strangle hold in the US Congress and elsewhere, where almost nothing is accomplished without their approval.

For this blog’s topic, I’ve decided to focus on their dogma of “no new taxes,” which is harming our country by not allowing for even smart, strategic investments like upgrading our current crumbling infrastructure. I have been arguing in my prior two blogs that not investing in our infrastructure for the past few years while the interest rates have been so low; when Americans including our Veterans have been desperate for good paying jobs and when most financial experts assert that the return on this investment would pay huge future dividends, borders on criminal neglect by our legislators.

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NO NEW TAXES DOGMA BY TEA PARTY

This mind set carries over to when these same folks spout the myth that cutting  taxes for businesses will automatically result in business growth, increase in revenues which will then result in more jobs. This is often referred to as the “trickle down” theory.

There is a recent perfect example of what happens to a U.S. state when the republicans decided to put this philosophy into practice. The state is Kansas which finished the fiscal year (2011) with reserves of over $200 million ended up in the red after the republican legislators slashed taxes in 2012.

As per the 1/11/15 Money section of a CNN article titled, “Kansas tax cuts  on trial amid huge budget deficit,” the author writes:

“On Monday (1/12/15), the state’s legislature will take on the daunting task of trying to find hundreds of millions of dollars to balance the state’s budget, which is facing a shortfall of $280 million for this fiscal year.”

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“A big reason for the predicament, experts say: Some of the largest tax cuts in the state’s history, signed into law in 2012 by (republican) Governor Sam Brownback. One of the biggest cuts: The profits of small businesses and partnerships were made tax-exempt.”

“The tax-cut package (enacted in 2012) was supposed to boost the Kansas economy and small businesses. Problem is, that hasn’t happened.”

According to a 7/15/14 Forbes article, the author, Howard   Gleckman writes:

“From 2013 to 2014, income tax revenue dropped by far more–by $713 million. And that brings us to the bottom line. Since the first round of tax cuts, job growth in Kansas has lagged behind the U.S. economy. So have personal incomes. While more small businesses were formed, many of them were merely individuals taking advantage of the newly tax-free status of those firms by redefining themselves as businesses.”

“The business boom predicted by tax cut advocates has not happened, and it certainly has not come remotely close to offsetting the static revenue loss from the legislated tax cuts.”

“One can argue whether cutting taxes is a good thing. One can argue about whether government is too big. One can even argue about whether low taxes increase business activity. But one cannot credibly argue that tax cuts increase revenue or even pay for themselves. They didn’t for Ronald Reagan. They don’t for Sam Brownback. They won’t for the next politician who tries—whether he (or she) is in Washington, D.C. or in some state capital.”

imagesICLCJ2ZB income inequality women holding signThis grandmother who is no financial genius understands that while I need sufficient revenues to pay my bills, I also need to invest in the infrastructure of my home by making sure my appliances, electrical, plumbing, air conditioning and heating systems are maintained; updated and replaced. If I do not take these steps, eventually, I will not have a livable house that I can sell. I need sufficient funds to do all of the above and not just to pay the minimum amount of bills to get by each month.  If I did not have sufficient savings to pay for essential maintenance, then I would have to borrow monies. As long as I could repay the loan, this would be a wise step to avoid the added costs of damage to a home during a storm because a roof has not been replaced or repaired over a long period of time. The Tea party folks would probably expect me to operate my budget like they plan the government to function. Their idea of a budgeting plan would be for me to pay the minimum bills owed each month with no investment of any kind which is in line with their hard line attitude of ” no new taxes,” which also translates into no more revenues for essential and obviously necessary expenditures.  Any housewife can tell you, this type of budgeting will cost you dearly in the future and will pale in comparison to the dwindling deficit.

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On 2/24 HUFFINGTON POST BLOG,  the author, Carl Gibson writes:

“This Billionaire Governor Taxed the Rich and Increased the Minimum Wage — Now, His State’s Economy Is One of the Best in the Country.”

“When he took office in January of 2011, Minnesota governor Mark Dayton inherited a $6.2 million dollar deficit and a 7 percent unemployment rate from his predecessor, Tim Pawlenty, the soon-forgotten Republican candidate for the presidency who called himself Minnesota’s first true fiscally-conservative governor in modern history. Pawlenty prided himself on never raising state taxes — the most he ever did to generate new revenue was increase the tax on cigarettes by 75 cents a pack. Between 2003 and late 2010, when Pawlenty was at the head of Minnesota’s state government, he managed to add only 6,200 jobs.”

“During his first four years in office, Gov. Dayton raised the state income tax from 7.85 to 9.85 percent on individuals earning over $150,000, and on couples earning over $250,000 when filing jointly — a tax increase of $2.1 billion. He’s also agreed to raise Minnesota’s minimum wage to $9.50 per hour by 2018, and passed a state law guaranteeing equal pay for women.  Republicans like state representative Mark Uglem warned against Gov. Dayton’s tax increases, saying, “The job creators, the big corporations, the small corporations, they will leave. It’s all dollars and sense to them.”

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“Between 2011 and 2015, Gov. Dayton added 172,000 new jobs  to Minnesota’s economy — that’s 165,800 more jobs in Dayton’s first term than Pawlenty added in both of his terms combined. Even though Minnesota’s top income tax rate is the 4th highest in the country, it has the 5th lowest unemployment rate in the country at 3.6 percent. According to 2012-2013 U.S. census figures, Minnesotans had a median income that was $10,000 larger than the U.S. average, and their median income is still $8,000 more than the U.S. average today.”

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“Forbes even ranked Minnesota the 9th best state for business  (Scott Walker’s “Open For Business” Wisconsin came in at a distant #32 on the same list). Despite the fearmongering over businesses fleeing from Dayton’s tax changes, 6,230 more Minnesotans filed in the top income tax bracket in 2013, just one year after Dayton’s tax increases went through. As of January 2015, Minnesota has a $1 billion budget surplus, and Gov. Dayton has pledged to reinvest more than one third of that money into public schools. And according to Gallup, Minnesota’s economic confidence is Higher than any other state.”

“Gov. Dayton didn’t accomplish all of these reforms by shrewdly manipulating people — this article describes Dayton’s astonishing lack of charisma and articulateness. He isn’t a class warrior driven by a desire to get back at the 1 percent — Dayton is a billionaire heir to the Target fortune. It wasn’t just just a majority in the legislature that forced him to do it — Dayton had to work with a Republican-controlled legislature for his first two years in office. And unlike his Republican neighbor to the east, Gov. Dayton didn’t assert his will over an unwilling populace by creating obstacles between the people and the vote — Dayton actually created an online voter registration system, making it easier than ever for people to register to vote.”

“The reason Gov. Dayton was able to radically transform Minnesota’s economy into one of the best in the nation is simple arithmetic. Raising taxes on those who can afford to pay more will turn a deficit into a surplus. Raising the minimum wage will increase the median income. And in a state where education is a budget priority and economic growth is one of the highest in the nation, it only makes sense that more businesses would stay.”

“It’s official — trickle-down economics is bunk. Minnesota has proven it once and for all. If you believe otherwise, you are wrong.”

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MINIMUM WAGE INCREASE (LIVING WAGE)

I am a proponent of a minimum wage increase anywhere from $11.00 to $12.00 per hour with an automatic annual rate increase tied to the rate of  inflation. It is my opinion that if  2016 state ballots included the voter option to increase hourly wages that voters would be incentivized to show up at the ballot box in droves.

The average working American wages have been stagnant for 25 years. Wages for those without a college degrees, have remained  flat. Census figures show the median household income in 2012 is no higher than it was 25 years ago. According to a news commentary on “Good Morning Joe’s on October 9, 2014, the minimum wage per hour adjusted for inflation was $10.75 in 1975 versus today’s $7.25. Workers’ median wages are lower than in the early 1970s.

Meanwhile, many of the expenses associated with a middle-class life style have increased beyond inflation. This includes college tuition, whose skyrocketing cost has laid siege to a bedrock principle of the American Dream: that your children will do better than you did.

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A 2014 poll conducted by the Washington Post and the Miller Center at the University of Virginia found 40 percent of those calling themselves middle class felt less financially secure than they were just a few years ago. Forty-five percent said they worry “a lot” about having enough money stashed away for retirement, and 57 percent said they worry about meeting their bills. Less than half said they expect their kids to do any better.

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Yes, companies are making record profits by increasing productivity without major increases in worker pay scales and in additional hiring. The folks earning wages in the one percent category have seen their wages increase by multiple percentage points. The average worker who needs sufficient funds to keep up with the cost of living in order to be able to purchase the goods big business sells, has been loosing ground. It is disgusting to read  the following headlines as spread in the New Jersey Star Ledger by Tom Haydon on August 26, 2014: “Woman who worked in four jobs, overcome by fumes, dies as she naps in car. He continues, “Maria Fernandes worked four jobs, including shifts at two different Dunkin Donuts. Often she drove from job to job, stopping along the road to catch a couple hours sleep, police said. She kept a container of gasoline in her 2001 Kia Sportage because occasionally she ran out of gas, authorities said. Early Monday, the 32-year-old Newark woman pulled into a lot off Route 1 & 9 in Elizabeth for a nap. She apparently left the car running and was overcome by carbon monoxide mixed with fumes from the gas can that had overturned, police said. Fernandes was found dead in the car about eight hours later. New Jersey has tens of thousands of people working multiple jobs, said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University in New Brunswick.”

“These are are folks who would like to work full-time but they can’t find the jobs,” Van Horn said. “They wind up in these circumstances in which they are exhausted. More commonly it creates just an enormous amount of stress. Many people have been forced to work two or three part time jobs after losing a full-time position in the recession of 2008. The federal Bureau of Labor Statistics estimates that 7.5 million people nationwide are working more than one job, Van Horn said, and those jobs still leave people with less income than their full-time work.”

4 comments

  1. So my question remains, how do you remain affiliated / registered as a Republican? The party has lost its way and willingly moved further and further to the right with no end in sight.

    • I am in my mid 60’s and over time, I find that changes do happen over time. Eventually, I am hoping that the republican party will figure out that they cannot continue to win while being beholden to the tea party folks. Mr. Bloomberg gets this and this is why he is donating monies to moderates. Big business is even getting this and this is why they are sitting on Governor Mark Pence.

      I am rather set in my ways. If I vote, and there are two candidates that are competent and decent people, I will and do vote democrat. But like, a Colin Powell and a Bob Dole, I still do not want to give up hope. Over the years, I have had a really close friends who were shocked I voted for President Obama and I have not budged. I’m afraid I don’t like being labeled or pigeon holed.

      I ask people not to look upon all republicans via examples like the Senators Cruz and Cotton. Like Senator Ted Kennedy who worked with many republicans, for him it was just important to get things done. Even republicans admired this quality in a man and many became his friends.

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