NATIONAL DEBT IS FEEDING GROUND for WEALTHY PARASITES according to Supply Side economics it should create jobs (except that no because demand is what creates jobs)
Supply Side Economics:
Pretend that we are still on the Gold Standard and lie to the American people claiming that the Government has fixed money supply and that this can run out (something that is impossible for a government that creates its own money) but make people falsely believe that money is in short supply...then do when you control the government: borrow as much as you can from the bankers, doesn't really matter what the terms are, as long as it's not so outrageous that your countrymen kick you out. (Reaganomics and Bushonomics)
Then spend that money in whatever way you want, preferably in ways that favor the rich, such as Wars, union busting, undermining labor movements around the world, making the world safe for "pro-business" (ie. pro-exploitation) governments, bailing out institutions of the rich.
Finally, now LIE TO THE PEOPLE AND MAKE THEM BELIEVE that all the money is spent, get the poor in your country to pay back the money, with a hefty interest, to the rich who control the banks. And if they can't pay? Well, slash all social programs. Say austerity measures are all we can do at this point. Make the unemployed beg to be exploited."
"RENTIERS". This is the fancy, eco-geek way of saying there are people who sit back and make money off of the current system without doing much except lobbying the government to maintain their benefits. In the current system, the US economy needs large pools of capital that will buy government debt to finance the economy. These people don’t really do much except collect principal and interest payments on the national debt. That’s their job and function in the US economy. Ever wonder why the Republicans were so interested in passing a capital gains tax cut? Now you know. The current national economic structure needs people who are willing to buy US debt. Therefore, we need to encourage that behavior with a tax code that benefits people who buy government bonds. The problem is this structure becomes self-defeating. As the government issues more debt, it needs more people to buy bonds. To do that, it continues to cut taxes to make government debt a more attractive investment, which in turn increases the use of debt to finance the US government. And around and around the cycle goes.
Starting with Reagan in 1980, the Republican Party embraced and implemented "supply-side" economics. The central theory of supply-side economics was politically an easy sell: if the government cuts tax rates – especially on the wealthy – the wealthy will feel more inclined to earn more money. This will encourage the wealthy to make even more money. This will lead to higher tax revenue, which will more than offset the loss of revenue from the initial tax cuts. The central problem is no matter how you look at the results, they didn’t work as advertised.
Reagan started the implementation in 1981, cutting upper-income taxes from roughly 70% to 50%. But a funny thing happened. Tax revenues were stagnant for 4 years from 1981 to 1984. For the years 1981-1984, revenues from individual taxpayers were (in billions) $285, $297, $288 and $298, (click on historical budget data) respectively. While the double-dip recession is partially responsible for the first two years, the economy came out of the recession November 1982. Yet for two more years, the rich didn’t feel unencumbered enough to increase their work efforts. At the same time, discretionary spending increased from $307 billion to $379 billion – an increase of 29%. This discrepancy between revenues and receipts then continued for the rest of Reagan’s presidency. Here is a chart from the St. Loius Federal Reserve that shows the discrepancy. Expenditures are blue and receipts are red.
There are three problems with Reagan’s overall economic policy. The first is the massive amount of debt he incurred for economic growth (which we’ll get too in a minute). The second was Reagan did not implement the other side of conservative fiscal policy – cutting spending. The third problem was the US did not achieve a super-human rate of national product growth. The median quarterly change in GDP during Reagan’s tenure was 3.85%. This is a good rate of growth. But the cost was substantial because to achieve this growth Reagan used debt which the US has not paid off.
Bush 43 has attempted the same policy with the exact same result. Bush 43 has cut taxes twice. Yet revenue from individual taxpayers has not increased sufficiently to make-up for the loss in revenue. Revenue from individual taxpayers was $994 billion in 2001 and $1.08 trillion in the third quarter of 2006. However, Bush 43 has increased discretionary spending from $649 billion in 2001 to $967 billion in 2005. As a result, the gap between federal revenue and spending is similar to Reagan’s graph.
On the chart above, notice the scale for revenue on the right is $100 billion less per line than the expenditure line on the left.
As with Reagan, the US has achieved a good rate of economic growth, but hardly super-human in level. In short, as with Reagan’s economic plan, the growth achieved is insufficient to stimulate the economy to high enough levels to make-up for the loss in revenue.
The end result of all of this is simple: Reagan and Bush have mortgage our economic future with debt. Now Obama must do three things INCREASE DEMAND thru STIMULUS SPENDING making the DEBT WORSE but still stimulating the DEMAND while increasing TAX REVENUE to cut down the DEBT or the FRUIT OF THE WEALTHY parasites as well as continuing to make more possible cuts into the DEBT without sacrificing the vulnerable.