Wednesday, April 15, 2009

Tempest in a Tea Party

Want to know who in your community lacks a basic understanding of economics? See who attends your local tea party today. Pay particular attention to any elected officials on hand. Support of this movement is a clear indicator they are not qualified to lead given our current economic crisis.

The chief complaint is the massive deficit from all the government spending. Our government is out of control, or so the organizers of this nonevent would have us believe. The truth is that President Obama and his high-caliber team are very much in control and if you ask me, doing everything they can to end this downturn as rapidly as possible.

The simple economic truth is that spending by consumers drives our economy. The more we spend, the better it is for business. When businesses do well they retain or even add employees, continue buying raw materials to make products, and pay taxes to fund our government.

When consumers stop spending, businesses stop production. If spending slows long enough, factories close, employees are laid-off, and the downward spiral begins. More lay-offs mean even less spending by consumers, which leads to more unemployment, et cetera, et cetera, et cetera.

Huge numbers of consumers have stopped or reduced spending. To keep the economy alive, the federal government has significantly increased spending to offset the decline in consumer spending. The big question is whether or not the increase in government spending is large enough to not only stop the downward spiral, but to turn the economy around. Cutting government spending now would just make a bad situation much worse.

Yeah, we'll all have to pay more because it's not realistic to cut taxes with a big deficit. The Taxed Enough Already acronym for the tea party today suggests to me that the very wealthy are behind this movement. After all, they are really the only group facing tax increases. When they make 400 and 500 times as much as the average worker, as is the case with most CEOs today, they should pay more. And until all the Bush tax cuts, they did.

Another possibility is that the anti-Obama movement is hoping to scare elected officials enough that they will cut spending, thereby guaranteeing that our President will fail. Careful what you wish for. If you think things are bad now, let this movement succeed and see how bad things get, fast. It's enough to make anyone...

The Crotchety Old Man

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