Don't Get Fooled Again

During my freshman year at William & Mary, my freshman seminar class had a debate between a country lawyer Democrat and an Wall Street Republican.  In the debate, the Republican crushed the Democrat when he attacked Bill Clinton over the weakening dollar.  Now, the beating didn't occur because the Republican was right, but rather because the Democrat didn't have the foggiest understanding of economics.  And when the Republican came to our class the next day, I managed to get the Republican to admit he was bullshitting about the weakening dollar because he knew the Democrat had no knowledge of economics.

From that moment on, I realized that if Democrats were going to win debates about the economy, they have to know economic theory, or else they'll get rolled by Republicans.  And finally, we're in a situation where knowledge of economics is a good thing, and we end up getting cowed by the Republicans again.  This tweet by John Boehner is the single most ignorant thing about the economy ever.  He wants to create jobs by cutting government spending. . .Ugh.

Here's the problem with Boehner's prescription - we're not in an inflationary cycle, we're in a deflationary cycle.  Yes, the Budget Deficit is huge, and normally that would mean that there would be large inflationary pressures, but there aren't.  Inflation is phenomenally low at 1% (ish), and the economy still sucks.  That's because we have a demand side recession - businesses and customers aren't spending - rather than a supply side shock - where there's no money to invest.  Or, think 1940's instead of 1970's.  So cutting government spending is like giving a laxative to someone who has diarrhea - its only going to make things worse because now no one will be spending.

Cutting taxes is a less stupid idea, but not exactly brilliant either.  Again, there is no problem with the money supply - if anything, there is too little money in the economy right now, so increasing the monetary supply through tax cuts won't help at all.  It might encourage some people to spend a little more, but not enough to help.

No, the only thing that will work here is a massive increase in domestic spending.  Maybe not New Deal big, but close.  That way, government spending will increase overall demand, and people will have jobs, etc.  Now, I understand the whole, if we spend it, we'll end up spending it for a lifetime theory, so write in Sunset clauses into the spending legislation.  But do something.

And ultimately that's the problem - right now there's no Democratic leader who's saying this.  They're all cowed by the GOP rhetoric on the economy, even the dumb rhetoric.  If I was Obama, I would make this case in a national address every single week until Congress passed the right legislation.  Of course, what I'm saying is exactly what Paul Krugman, a NOBEL PRIZE WINNER IN ECONOMICS has been saying for the PAST YEAR AND A HALF, but what the fuck to we know.  Ugh.

About Those "Illegals" Not Paying for Stuff. . .

On the way to work today, I heard some douchebag (who's probably a San Diego elected official) talk about how the County has to spend all this money to provide services to undocumented immigrants for free because undocumented immigrants don't pay taxes. . .

I call bullshit.

Not on the fact that undocumented immigrants use services (they do), but rather that undocumented immigrants don't pay taxes.  That's bullshit, pure and simple.  California gets its tax revenue from three basic sources: sales taxes, property taxes, and income taxes.  Let's go down the list, shall we, and see what taxes undocumented immigrants do and don't pay.

Sales Taxes: California has a mandatory sales taxes - every item purchased in the State of California (save a few necessities) is subject to a sales tax.  While theoretically the tax is levied on businesses, the cost of the tax is passed directly to consumers.  Now since undocumented immigrants buy stuff in California, they are subject to sales taxes, and PAY sales taxes, just like EVERYONE ELSE.  Oh, and counties like San Diego have their own sales taxes, which again, undocumented immigrants pay.

Property Taxes: All real estate is subject to property taxes - every year a percentage of the property's value is paid by the owner of the property to the County governments, and then sent up to Sacramento.  Like any tax, an owner of private property can pass that cost onto his customers - in this case any tenants he/she has - by increasing the rent.  And that's exactly what most property owners do.  Given that there is no barrier to owning or renting property in the United States (save cost, of course), undocumented immigrants either own property, or rent property.  When they do, they pay property taxes.

Income taxes: Of all the taxes that are paid in California, only one - income taxes - can be avoided by undocumented immigrants, in theory.  After all, undocumented immigrants can get paid under the table, and thus the employer can avoid paying taxes.  But given that low income workers don't get paid much (and are thus subjected to lower income tax rates), this isn't such a big deal.  Oh, and counties don't collect income tax.  Additionally, an undocumented immigrant can call the State of California and get a taxpayer ID number so that they can, in fact, pay taxes, which many do because reputable employers require that sort of thing.  In other words, while this is the tax that undocumented immigrants can avoid paying, many don't, but even if they didn't, income taxes on low income workers are negligible. 

To summarize, death and taxes are inevitable, even for undocumented immigrants. So let's drop the whole "they're getting services that they don't pay for" routine.  If undocumented immigrants buy things, or rent property, which they undoubtedly do, they pay taxes.