We've naturally heard a lot about jobs, taxes and government in the last several months.
Perhaps the most confusing thing I've heard lately is that if sequestration goes into effect in its current incarnation, the government, which in the eyes of many cannot, by definition, "create jobs," is going to effectively eliminate jobs due to automatic cuts in defense spending.
Which in turn rather directly implies that private, defense-sector jobs do come from the government. After all, who buys tanks, submarines, and airplanes from the private-sector contractors that make these things? If the taxpayer-provided money goes away, apparently so, too, do private-sector jobs. The market is the government.
Another confusing thing is taxes. If the Bush-era tax cuts expire, as there were intended to do, taxes go back up to the levels we had during our last economic good times. If the payroll tax cuts expire, taxes go up further on the middle class, which would most likely dampen demand further.
We know some want to keep taxes where they're at for the middle class to avoid the negative impact on consumer spending
Yet we're also hearing about "revenue-neutral" tax cuts, although no one can seem to explain how these remain revenue-neutral without raising taxes on the middle class, which is, again, something that directly impacts consumer spending, ie demand, the engine of the U.S. economy.
If deficits do actually matter, how do we avoid massive spending cuts if we're not increasing revenue? And how do we increase the job, and income-tax base, if we're not putting demand first and foremost? Revenue-neutral tax changes that don't impact the deficit really only make sense economically in our current context if they're stimulating demand. Unspecified cuts to demand-stimulating deductions like mortgage interest can't be stimulative, can they?
The answer to many is "entitlement programs," those things like Social Security and Medicare that we all pay into, making them something else besides "entitlements."
And yet, these sources of income and assistance that we've all paid into also directly affect consumer demand for medical goods and services, and how much money is left over to spend on other things.
What I think all of us want is more consumer spending on the things we make, and the services we provide, which means more demand, more jobs, and more profit. We're seeing the very clear link between demand, jobs, and profits illustrated via the military budgetary cut concerns.
The biggest economic issue in this election should be the simple reality that we don't increase jobs, payrolls, and profits without increasing demand, particularly middle-class demand (the biggest group of consumers). Proposals that don't pass this simple test aren't going to help move the economy forward any faster than it's already been growing.