"The government will generate more revenue and that revenue will be used to pay down the deficit."That, in a nut shell, is his belief. That, in a nut shell, is the Republican's economic model. Not $10 in cuts for $1 in tax. Nothing of the sort other than leave the "job creators" alone and let the money roll in to the government from their investments.
In theory, that seems plausible, but in reality it does not work that way.
Here is why. Let's look at the reality of the right now. If lower taxes mean more investment which creates new and better jobs for Americans, then the money that has been taxed at this lower rate should currently be used to create new jobs. If that is how the Rubio model is supposed to work, then that is indeed what we should be seeing, you know, the reality.
If the Rubio model is valid and will work to pay down our deficit and debt, then the actions by those who are taxed the lowest, the ones who invest - the "job creators" - should be dumping that untaxed money - their lower taxed income they get to keep because they pay 15% and not 36% or 39% - into the economy and a net increase of new tax payers should be the reality we see.
Here is, instead, what the reality is that we currently see. If Mitt Romney, a guy who wants to lead us and will put the Rubio model into play, benefits from a decrease in his tax burden under the guise that he is a "job creator" then shouldn't his actions - the reality - show us the benefits in the form of new tax payers?
I'll get to the question on if it is the responsibility of guys like Mitt Romney to create jobs in a later post. Right now I am trying to see if the Rubio model is valid.
What were the actions - reality - of Mitt Romney? If he is a job creator and needs to be unhindered with any additional responsibility for our country's current and former bills so that he will invest. And if that investment is the keystone of the Rubio economic model for creating new tax payers which will "generate more revenue and that revenue will be used to pay down the deficit," do the actions match the rhetoric?
Here is what columnist John Young has to say about Romney's investments and how they relate to job creation. It is titled "Mitt Romney: Job Killer." That does not sound to promising if guys like Mitt Romney are needed to make the Rubio model work. Remember, Rubio states numerous times in the interview that growth is the only way. When asked by Stewart how that will take care of the deficit and debt, Rubio responds that investment creates new tax payers. "Tax increases don't generate growth," Rubio states. "If you leave it in the economy they will use it."
Here is the question I would ask Rubio. Use it how? Not theoretical, but in reality. We are coming to a point where two competing goals are coming into play. Does Romney's investments need to produce jobs to make the Rubio model work, or does Romney's investments need to generate growth for himself?
This is not an argument on greed, although an argument as to how much we owe our fellow citizens could be made, that's not what I want to look at in terms of the validity of running a government predicated on the idea of needed revenue from "growth only" which is dependent on investment that creates new tax payers which leads to more revenue for their taxed income.
Here is how a guy like Romney invested his money. According to John Young:
For better (investors) or ill (your neighbors), Romney's company, Bain Capital, was absolutely a huge player in employing the fine people of India. Now, we all know that outsourcing boosts corporate profits, and lowers prices for services or products. Of course, the same can be said for illegal immigration. It's all part of the "global economy" to which we are all shackled.This is a reality. Investing in India was good for Bain Capital but it did not create any new tax payers needed for the missing revenue we need here. Doonsbury also brings up this issue in today's comic.
This is where the competing interests collide and why the Rubio model of "growth only" will not work. What is good for the investor is paramount in the current US model. Here is another problem on why untaxed money is not used for growth that creates new tax payers:
One thing to say about the type of business that made Romney drip with wealth while so many tread water, is that it reflects an economy whose course is increasingly difficult to change.
Take big-box retailers. Bain Capital is credited with helping office-supply giant Staples, among others, get through rough times. Retailing behemoths are a way of life for Americans today. At the same time, they arguably are the biggest reason why the U.S. economy is so hard to steer anew when things go awry. Our nation has much bigger, and much fewer, retail employers than in previous generations.What's the problem with that? How does this void Rubio's "growth only" model? According to John young:
Two massive factors — outsourcing and oppressive big-ness — tie policymakers' hands when they try to do something about the economy. And both factors have made a lot of money for a few in the moneyed — Romney-ed — set.If the "lot of money" is going to folks who we will need to depend on to make a growth only model for government tax revenue work, then these folks will need to change their current business model to stop outsourcing and employee more Americans. And what is the chance of that happening? It's not greed as much as it is this reality of thinking: I am willing to do only so much for those around me, after that, you are on your own and my responsibility ends.
So if I am willing to do X and X + 5 is needed, where does the +5 come from? It's not coming from guys like Romney = guys we call the "job creators." He is a beneficiary of a system that is stalked in his favor at the expense of others. Did Romney invest that $5.46 million in activities that helped his country or helped himself? We know how Bain Capital made its money and we also know Romney put his money into the Cayman Islands.
Now it gets tricky. If we accept that it is perfectly okay for Romney to do what he wants to with the money he legally made, that what he is required to pay in taxes is all he must do, then the Rubio model will not work because it is dependent on Romney investing what is not taken as a tax into activities that generate new American tax payers. And that, looking at Bain Capital's business model, is contrary to what generates wealth for their investors.
Rubio and Romney believes that the current tax structure is adequate and that he has done all he is required to do. Romney's obligations to the US have been met:
“I pay all the taxes that are legally required and not a dollar more. I don’t think you want someone as the candidate for president who pays more taxes than he owes.” (1)"Legally required" and "not a dollar more" are perfectly fine for the individual, but we have a country where the individual's fellow citizens are not doing well. We have a country who cannot meets it current obligations - deficit - and keeps piling up more and more debt, whose interest payments go to guys like Romney and China. Romney and his cohorts pay only X when X+5 is required. Rubio will accept no other model that may require guys like Romney to pay more than X. If that - tax increase - is off the table how do we address our problems if the dependent variable - the Mitt Romney "job creators"- are not investing their money in areas that create American Jobs which creates American tax payers to produce the revenue we need? Phew! Out of breath on that one...
The question I would ask Rubio is: What if guys like Ronmey don't - or will not - invest their untaxed money into growth that creates new American tax payers? Should we force Romeny to only invest in projects that generate new American jobs?
If it is not Romney's responsibility to "pay one dollar more" and it is not the responsibility of Romney to invest in companies that create American tax payers, who's responsibility is it to get the government the +5 it needs? The reason we have such a problem is because of the business model guys like Romney use to generate their personal wealth and the power they hold to create laws and policies that benefit them personally. They have no further obligation, as in "not a dollar more."
And yet Rubio believes that these guys are the way out of our mess if we just leave them be and "close the loopholes." Romney wants to become president and control an economy that he has benefited from and sees no reason to change. That's like the wolf guarding the hen house:
While the U.S. government tries to balance its books, offshore corporations and people with the means of sheltering their wealth deprive the Treasury of those dollars, though they benefit from the "land of the free" in every way. (2)Rubio will accept no tax increase on guys like Romney believing them to be the job creators needed for the "only growth" model to succeed. Yet the deficit grows and the debt grows, and guys like Romney grow richer at the expense of their fellow citizens.
If Romney is not investing in endeavors that generate new American tax payers, why would we expect any of his cohorts to be doing the same?
So who does have the obligation to pay down the deficit and the debt? If not Romney, who?
Next post: If not me, then who?