More Blather about Who’s Doing the Most for the Economy
Posted by hyperpat on November 3, 2006
The latest unemployment numbers came out today, showing another decline in the jobless rate and a fair number of new jobs added to the economy. Naturally, politicians from both sides are immediately seizing on these numbers to bolster their cases for re-election, with the Republicans saying these are great numbers, an affirmation of their economic and tax policies, while the Demos say these numbers are too weak, and hide the fact that there are still way too many people stuck in low-paying jobs, that all the benefits of the Republican policies are going to the ‘rich’.
So who’s right? They both are. It’s been known for a long time that tax cuts of almost any stripe eventually lead to an expanding economy. The current rise in employment can therefore be at least partially attributed to the Bush tax cuts of several years ago (employment is a very lagging indicator – almost the last thing to show results from economic policy changes). But it is also true that much of the gain in average income for Americans is concentrated in the upper 20% of the population, and our economy is moving to a much more service oriented one, as opposed to a manufacturing model, so many people, even though they have jobs, aren’t getting paid enough to really live comfortably, as many service jobs are at the low end of the pay scale.
I have some real problems with how the Demo’s define ‘rich’, however. My income is defined as being in the top 10% of the country, and the tax code reflects this – I’m at the next to highest tax bracket. But am I really rich? I’d have to say no: cost of living in this area is much higher than most other areas of the country, I’m spending almost 50% of my after-tax income on housing, and while I’m managing to save a little bit, it can only be done by following a pretty rigid budget, with darn few luxuries. I still need to work, and any extended time off due to illness would put me in severe financial difficulties. If the Demos really want to revise the tax code to be more equitable for everyone, then some serious consideration needs to be given to indexing the tax rates and levels to the local cost-of-living index. And they darned well better do something about the Alternative Minimum Tax, which was originally intended to force those with very high incomes to pay at least some taxes, but is now snagging almost 20% of the population, and without revision that percentage will skyrocket next year.
At the other end of the pay scale is my eldest son. He makes just over the minimum wage for this state (which is higher than the national minimum wage), and finds that he has barely enough to put food on the table, even living in shared housing, driving a fifteen-year old economy car, and his only ‘luxuries’ come from me. Now this isn’t unusual for someone attending college (his tuition is another of my expenses, and I can’t even come close to writing all of that off on my taxes), as it’s difficult to get any kind of good paying job when that is not your prime focus, when cracking the books really has to take priority. But it points up the fact that in this area the Demos are right – the minimum wage should be increased, that too many people have jobs that don’t pay enough to either live comfortably or be able to put some away for later retirement or as a rainy day fund. The Republicans will say that increasing the minimum wage will cause the employers to eliminate some jobs, and the poor will be even worse off because of this, but the historical data on prior increases in the minimum wage don’t reflect this.
Net score: Republicans 0, Democrats 0.