UI Dems/UI Republicans Showdown: Job creation — UDems


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On Thursday, members of the UI College Republicans offered their solution to job creation in the first twice-monthly exchange. Today, the University Democrats respond.

The middle class is key.

The best way to create jobs is to create a situation in which people have the money to buy goods. There is an economic debate known as the supply-versus-demand debate. For those readers that don’t know about this debate, I’ll explain.

The supply side promotes the idea of decreasing income taxes on the wealthiest 5 percent of Americans because supply siders believe they drive economy. Demand side of the debate says that the economy is driven by the other 95 percent of Americans, the consumers. There are valuable points to be made on both sides of the debate, and both sides should show each other the proper amount of respect. But that doesn’t mean we can’t politely disagree.

As Robert Reich, the former secretary of Labor, said on Thursday, “Yes, I respect the supply side, but they are still wrong.”

Reich sees increasing economic inequality in the United States as the root of the problem. Right now, the top 5 percent of the country controls 37 percent of the purchasing power in the United States. This creates an economy that is prone to booms and busts because “the rich splurge and speculate when their savings are doing well but then pull back,” leaving the rest of the country in a lurch and picking up the mess.

We are prone to agree with Reich and, interestingly enough, so is history. During the time period between 1947-1977, the United States favored “demand side” economics. During this time, the income tax for the wealthiest 5 percent of Americans was around 60 percent and during President Eisenhower’s administration (a Republican and by no means a liberal) the income tax for the wealthiest 5 percent was 90 percent. The nation grew, unemployment was down and the median wage increased. These are also known as “the good old days.”

Taxes weren’t the only thing lifting up the economy.

The domestic policies of four Democratic presidents and two Republican presidents helped. They stimulated the economy by building schools, hospitals, low-income housing and roads. During the period between 1981 to the present day we have seen a complete reversal of these policies. The wealthy have received tax breaks, and their lawyers find endless loopholes in the tax system. The middle-class wages began to stagnate in the late-1970s, and more and more families began to go into debt in order to sustain their family’s quality of life. This trend of placing the economic burden on the low and middle class is completely unsustainable.

The best way to create jobs is to learn from our past and follow the policies that worked during the Era of Great Prosperity (1947-1977). We need to recognize that our economy of more than 300 million people is a consumer economy. When the wealthy get tax breaks, they save them for a rainy day. When the low- to middle-class Americans gets a tax break, they use it to buy food, clothing, and school supplies for their children.

President Obama needs to do three things: 1) Increase taxes on billionaires; 2) Decrease taxes on the middle class; 3) stimulate the economy through public works.

We recognize these ideas aren’t popular in a Republican Congress. Let’s see if Congress can “man up” to the challenge.

— University Democrats

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