Election Disadvantage
Ext – Tax Cuts Hurt Economy
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- Romney’s upper class tax cut hurt the economy
- Romney will hurt short term economy – tax cuts and budget cuts
Ext – Tax Cuts Hurt EconomyRomney tax cuts increases the deficit, hurts the middle and lower classKrugman 12 (Paul Krugman, PhD from MIT, writer for NYT, Nobel Prize winner in Economics, 6/15/12, NYT, “Policy and the Personal,” http://www.nytimes.com/2012/07/16/opinion/krugman-policy-and-the-personal.html?ref=paulkrugman) The story so far: Former President George W. Bush pushed through big tax cuts heavily tilted toward the highest incomes. As a result, taxes on the very rich are currently the lowest they’ve been in 80 years. President Obama proposes letting those high-end Bush tax cuts expire; Mr. Romney, on the other hand, proposes big further tax cuts for the wealthy. The impact at the top would be large. According to estimates by the nonpartisan Tax Policy Center, the Romney plan would reduce the annual taxes paid by the average member of the top 1 percent by $237,000 compared with the Obama plan; for the top 0.1 percent that number rises to $1.2 million. No wonder Mr. Romney’s fund-raisers in the Hamptons attracted so many eager donors that there were luxury-car traffic jams. What about everyone else? Again according to the policy center, Mr. Romney’s tax cuts would increase the annual deficit by almost $500 billion. He claims that he would make this up by closing loopholes, in a way that wouldn’t shift the tax burden toward the middle class — but he has refused to give any specifics, and there’s no reason to believe him. Realistically, those big tax cuts for the rich would be offset, sooner or later, with higher taxes and/or lower benefits for the middle class and the poor. So as I said, this election is, in substantive terms, about the rich versus the rest, and it would be doing voters a disservice to pretend otherwise. Romney’s upper class tax cut hurt the economyBlodget 12 (Henry Blodget is co-founder, CEO and Editor-In Chief of Business Insider, 7/11/12, “ANALYSIS: Mitt Romney's Tax Plan Will Help Rich People And Hurt Most Americans,” http://www.businessinsider.com/mitt-romneys-tax-plan-2012-7?op=1#ixzz215CpGCiX) But it's important to note that Mitt Romney's plan will be vastly more helpful to the richest 1% of Americans and the rest of America's "ownership" class than it will be to average Americans. It also won't help fix the economy. Why? Well, for starters, the current tax rates on the country's highest earners are already very low relative to most of the last century. Second, the country's richest people--like Mitt Romney himself--make a huge amount of their earnings from capital gains and dividend taxes, which are at record lows. (As has been widely discussed, Mitt Romney paid a 14% tax rate on the $22 million he made in 2010. His tax policy would ensure that he keeps paying that rate.) So, Mitt Romney's proposal for personal taxes will help the country's highest earners much more than other taxpayers. And since the problem with the economy is not that the richest Americans don't have enough money--they do--but instead that the vast American middle class, which contributes most of the spending in the economy, is broke and deeply indebted, putting even more money in the hands of the richest Americans won't help the economy. It will just put more money in the hands of the richest Americans. What is less obvious is that Romney's big proposed tax cut--chopping the corporate tax rate from 35% to 25%--will also be a boon to the richest Americans, because they're the ones that own most of the country's corporations. And this tax cut also won't help the economy--because, again, the problem with the economy is not that corporations can't afford to hire people and make investments. Corporations can afford this. Today's corporate profit margins are the highest in history, and corporations already have so much cash that they don't know what to do with it. Again, the problem in the economy is that the corporations' end customers--the hundreds of millions of people in America's middle class--are broke. So there's no reason for corporations to hire anyone else or make additional investments--because American consumers can't afford to buy more products even if the corporations make them. Moreover, far from American corporations paying usurious taxes relative to the rest of the world, our companies actually pay relatively low tax rates--because most companies take full advantage of dozens of corporate tax loopholes. So, although Romney pitches his corporate tax cut as a way to "make America more competitive," it will really just make certain Americans--and certain foreigners, those who own American corporations--richer, by inflating the value of the corporations. And it won't help the economy. In fact, by increasing wealth inequality in the country, it may well hurt it. Ext – Tax Cuts Hurt Economy Romney will hurt short term economy – tax cuts and budget cutsBlodget 12 (Henry Blodget is co-founder, CEO and Editor-In Chief of Business Insider, 7/11/12, Business Insider, “And Now Let's Analyze Mitt Romney's Plan To Fix The Economy...” http://www.businessinsider.com/analysis-mitt-romneys-plan-to-fix-the-economy-2012-7?op=1#ixzz215Cd1e59) Romney's plan contains some good ideas about how to change some things for the better, along with a bunch of clunkers. But the plan will not "fix" the economy, at least not in the short term. By cutting government spending, the plan will actually hurt the economy in the short term--by putting more people out of work and reducing personal incomes (and spending). Cutting the corporate tax rate will also reduce government revenue, which will likely offset any helpful impact on the deficit from the government spending cuts. So the plan also won't help the deficit and debt problem, at least in the short term. (The idea that corporations will use the money they're saving on taxes to make new investments and hire more people is misguided. It is based on fundamental misunderstanding--or misrepresentation--of what is wrong with the economy. Corporate profit margins are already at record highs, and corporations have cash coming out of their ears. If corporations could generate a great return by making more investments and hiring more people, they would already be doing this. But the corporations aren't doing that. Why not? Because their customers--consumers--are still hurting.) Lastly, the plan includes no "stimulus" or other mechanisms that would give the economy a shot in the arm and persuade corporations to start hiring people again. 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