Friday, July 29, 2011

Supply Side Economics, Honest Tea Partiers, and Unicorns

Outspoken freshman Tea Party Congressman Joe Walsh (R-IL) has loved to bash President Obama and Democrats about spending.  He is famous for saying:
“I won't place one more dollar of debt upon the backs of my kids and grandkids unless we structurally reform the way this town spends money.”
How noble.  Unfortunately a man is measured by his deeds, not by his words.  It seems according to a court filing made public Tea Party darling Walsh paid only limited child support between November of 2005 and March of 2008, and stopped paying altogether after that point. Unpaid obligations and interest combine to $115,294, the filing claims.  Walsh apparently also loaned his campaign $33,500 but did not have funds to pay for his children’s food, clothing, and care.  Further, Joe has paid himself back at least $14,200 for the loans he gave himself. Again, he failed to make any child support payments to Laura from these returned loan proceeds.  I guess Life’s Been Good to him.
Speaking of Tea Party Heroes and Heroines, our favorite bat shit TP’er Michelle Bachmann is at the top of the charts.  The Social Conservative anti-government ding bat is for smaller government but takes farm subsidies.  She likes to criticize First Lady Michelle Obama, but says her family is off limits during the campaign.  She fully supports fellow Congressman Paul Ryan’s plan which calls for an increase of $7Trilion in debt, but says she won’t vote to raise the debt ceiling.  She says she if for freedom, but is against gay and lesbian rights.  So is Batshit Bachmann a hypocrite, a liar, a fool, or an ignoramus?  How about all of the above?
Ex US Treasury Secretary Robert Rubin’s column in today’s Financial Times was a sound analysis of what our leaders need to be doing to solve our long term deficit and debt problems.  Rubin says “It is imperative, for both the nearer term and the longer term, that we meet the deficit commission’s goal of $4,000bn of deficit reduction over roughly 10 years, which would first stabilize and then begin to reduce our debt to gross domestic product ratio.  That program must include room for public investment in areas critical to our economic future, a balance of revenue increases and reductions in all categories of spending that enables the government to provide the services and safety net that most Americans expect (albeit with appropriate reform), and an effective date two or three years from now to allow time for recovery hopefully to take hold.”
Want to know why politicians can’t figure out how to create jobs?  Simply because 70% of our economy is driven by consumer spending and the American consumer is not spending.  Our household savings rate is hovering above 5% compared to -2% leading up to the Great Recession.  Our property bubble debt fueled spending spree kept the economy chugging along until the bubble burst and suddenly Americans needed to repair the personal balance sheets.  So as long as you keep the tax rates low for the richest Americans and keep giving businesses tax loopholes and subsidies, the supply side economic theory will be proven to be a myth because it is all about demand.  Consumer demand.

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