On November 16, 2012, I was asked to add commentary to Bill Moyers' “Group Think: Fiscal Cliff” blog.
In my post, “Jobs and Growth, Not Austerity”, disputed the common argument that tax cuts for the rich create jobs. In reality, the wealthy are more likely to spend on foreign goods or to save, rather than spur domestic consumption or investment. Middle and working class consumers need increased buying power to increase growth, and that the government can make this possible by extending unemployment insurance and tax cuts for low and middle income households. I propose four measures included in the Economics Policy Institute’s Plan to reduce the federal deficit while spurring growth:
· Extend Emergency Unemployment Insurance (EUI) for the long-term unemployed;
· Gradually phase out the temporary payroll tax cut and increase the earned income tax credit so that lower middle class people will be paid for the increase in payroll taxes;
· Allocate federal expenditures for infrastructure spending;
· Raise top tax rates to about those in the 1990s in order to pay down the debt.