In November of 2010, the United States voted into office a sweeping number of Republicans who made a pledge to cut spending and reduce the deficit. They honestly believe that cutting spending rather than growing the economy is the best way forward for our nation. I have pointed out numerous times that a growing workforce is more effective than deficit reduction. Republicans have lied to the American people for 30 years. They believe that reducing taxes increases jobs, which is untrue. Wages and economic demand increase jobs, not tax cuts.
In a prior post I pointed out that the United States is one of the least taxed countries in the world. Only 24% of our GDP was taxation in 2009, yet our unemployment rate in 2009 was over 9%. In Denmark 48.2% of GDP were taxes, yet unemployment in that country was a little over 4%.
The Republicans that are in office now are following the same path as England. The U.K. has taken drastic measures in regards to austerity and the result has been a screeching halt to economic growth. This is due to the fact that business can only grow and hire when economic demand increases.
Economic demand comes from consumers, those consumers can be, private citizens or the government. When the private consumer has less money, their economic impact to grow the economy plummets, this is when the government should step in and increase consumption in order to increase economic demand.
England began to lift their foot off the gas late in 2010 and now their economy is barely moving, “Bank of England deputy governor Charlie Bean seemed to dampen expectations of an imminent rate hike when he warned the economy could be on the verge of a “durable slowing”’
All governments contribute to GDP. The old saying that Government doesn’t create jobs is a lie perpetrated by the right wing.
According to ,”>Business Insider,
Real federal government consumption expenditures and gross investment decreased 7.9 percent in the first quarter, compared with a decrease of 0.3 percent in the fourth. National defense decreased 11.7 percent, compared with a decrease of 2.2 percent. Non defense increased 0.1 percent, compared with an increase of 3.7 percent. Real state and local government consumption expenditures and gross investment decreased 3.3 percent, compared with a decrease of 2.6 percent.
If we want to really grow our economy, the government must step up its spending. We saw what happened in England when they cut demand from government and it’s not good for working people across their country.
Grow our economy first then once private citizens have enough disposable income, cut spending back to pre-recession levels. Until then, it would be devastating. Hopefully the GOP watches England and notices the error of their ways.