The Big Lie: Job Creationism

The Big Lie: Job Creationism

The Big Lie: Tax cuts for the rich pay for themselves by creating jobs for the middle class.

The Truth: Tax cuts for the richest have a devastating effect on the economy by creating fiscal deficits and fueling income inequality.

Mitt Romney’s campaign has been ripe with a putrid old lie that America’s right wing has been reheating and serving up for years: We understand how the economy works and thus we know how jobs are created!

But when you poke at what the GOP is actually serving, you realize that this collapsed soufflé displays a certain disconnection from reality. The Republican right is stuck with a cult-like devotion to a big lie that has been disproved again and again.

Despite all evidence to the contrary, despite their loud talk of debt and deficits as a “cancer” that will destroy America, Republicans cling to the belief that tax breaks for the rich create jobs. Call it Job Creationism.

The myth of Job Creationism goes like this: Ronald Reagan’s tax cuts created an economic miracle in the 1980s that lasted through the Clinton years and would have worked in the Bush era except Clinton had ruined everything by enjoying his Reagan windfall too much.

Both Reagan and George W. Bush’s tax cuts left us – to paraphrase George H.W. Bush — in deep voodoo. After the Republicans manufactured these massive debts and were then ousted by voters, they decided the bills must be paid immediately with cuts to government services and benefits. Why? Because deficits start to matter as soon as Democrats take office.

If Republicans are so concerned about debt, why not just raise the top tax rates back to where they were during the economic booms of the 1950s, or at least the 90s?

Because in the Job Creationist doctrine, tax increases on the rich – sometimes known as tax increases on small business owners — always kill jobs. Even though they only affect a fraction of actual small businesses.

Job Creationists swear by this dogma, despite the fact that Bill Clinton – facing what now seems like a quaint $300 billion deficit – raised taxes on the rich. Right-wingers falsely called it “the largest tax increase in history” and promised economic doom. What followed was the largest sustained economic boom in American history. Then George W. Bush lowered taxes by trillions and the result was the worst decade of job creation in generations.

Federal taxes as a share of gross domestic product have not been this low in sixty years.



If tax breaks were a magic tonic that created jobs, we would be booming again. We are recovering, but millions are still out of work. Even while emerging from a financial crisis, however, America under President Obama has created jobs faster than President George W. Bush did in either of his terms. And that growth has occurred despite huge cuts in government jobs.

How? Tax cuts for the 95% of Americans who aren’t rich.

When it comes to stimulating the economy, what’s always most effective is helping those in need. Unemployment insurance and food stamps have a far higher multiplier effect on growth, while tax breaks for the rich often sit in bank accounts. If cutting taxes on the rich creates jobs, those jobs are overseas.

Yet the other effect of Job Creationism is even more destructive. According to a new study by the non-partisan Congressional Research Service, tax breaks evidently worsen income inequality.

Right before the financial crisis of 2008, the top one- tenth of one percent of American households took in a larger share of income than at any time since the last Republican businessman  presided over a huge financial crisis in 1929 – when Herbert Hoover occupied the White House.

Before Reagan’s tax cuts for the rich in the 1980s, the top one-tenth of one percent”s share of the economy hovered below five percent. Since 1985 their share of the income has never been below five percent. Often it has reached over ten percent.

Those numbers reveal the true goal of  Job Creationism is revealed. The point has never been to create jobs or to cut the deficit — Romney’s plan would hurt the middle class and radically explode the debt. The point has always been and always will be to make the rich richer.

At the very top, Republicans only play dumb. They know exactly what they’re doing.

Photo credit: PBS Newshour/Flickr

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