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Why republicans can’t create jobs

– E. Hughes

In last week’s presidential debate, Governor Mitt Romney pitched himself to Americans as the “Great Republican Job Creator”, citing his record as an astute businessman and his ability to make a buttload of money. Fiscally, republicans believe in lowering taxes, buffing up funds for national defense, and cutting funds to the poor. Of debate, between President Obama and his republican opponent Mitt Romney is whether business owners earning over 250,000 annually deserve a bigger tax cut than the middle class.

Republicans assert that cutting taxes for businesses will boost the economy and create jobs while President Barack Obama believes closing loopholes allowing corporations to pay fewer taxes and raising income taxes on the wealthy will solve the budget crisis and create jobs. The presidential election will come down to who Americans choose to believe.

 What will Mitt Romney do to create jobs and will he fare better than President Obama? Further, since when is the President of the United States of America expected to become a job creator?

 Do tax cuts create jobs?

 Short answer, no. Governor Romney is genuine when he says he will do his best to create jobs by cutting taxes on the wealthy – which wouldn’t be an entirely bad concept, if it actually worked. Mitt Romney is not a bad guy, he’s just misinformed.  Tax cuts don’t create jobs, a balanced budget does.

 When the federal government is unable to pay its bills, it’s forced to borrow, creating a deficit. The larger the deficit, the more the government has to pay back at a higher interest rate.  The current deficit is over 1.1 trillion dollars and getting higher. We could blame the current president, but deficit has climbed every presidential term since the Civil War, with few exceptions.  The United States has had 70 annual deficits between 1900 and 1997 (source: Whitehouse.gov and GPO.GOV Budget 2000 – Citizens Guide). How does the federal deficit impact job creation? When the government overspends, it’s forced to borrow from private capital markets, competing with businesses in need of loans and families who need loans for homes, cars and other goods, driving up interest rates (Source:GPO.GOV  Budget-2000-Citizen’s Guide). Fewer loans to start or expand businesses, results in fewer opportunities to create jobs.  

 We are currently spending about 3.5 trillion dollars on the federal budget (Source: http://debtclock.org) with nearly 1.2 trillion dollars in deficit. The last surplus was a projected 4 trillion dollars during the Clinton Administration. Many will note that the federal deficit didn’t decrease during this period, which is a common misunderstanding.

 Deficits are not supposed to turn into surpluses. Nor are surpluses supposed to pay off the deficit. Surpluses allows the President to pay the federal budget. Deficits grow when we don’t have enough money or a surplus to spend with. So we “BORROW”.

When the federal government had a surplus, we were able to pay the federal budget which allowed the U.S.to pay off our deficit at a lower interest rate. It’s like a credit card, basically… your rate increasing or decreasing depending on the amount of risk.

 When we don’t have a surplus or enough money to pay for the items in our budget (Social Security, Medicare, Entitlements, National Defense/Military Spending, the Deficit), we BORROW again, increasing the debt.

 The key is balancing the budget, creating a surplus, so that we can pay our expenses, and slowly chip the deficit away. It’s like the surplus is the money in your bank account and the deficit that we borrow from is the credit card (with the high interest rate) that you never want to use. That’s how the government works. We don’t take the surplus and use it to pay off the federal deficit so the debt would remain the same regardless of a surplus. Also,Clinton did not achieve his first surplus until 1998, which was only 86 billion dollars, the first surplus since 1969.

 Democrats believe Americans should pay more taxes in order to create a surplus to pay our expenses . Republicans think they can have it all. They don’t want to collect income taxes, but still want money to fund wars and defense. So they cut spending on the poor, social security and other entitlements.

 Congress has a say so in the budget and when both parties get their way, the republicans get their defense budget and tax cuts, and the democrats get their entitlement programs for American citizens, we’re left without enough money to cover our expenses, which invariably, leads to borrowing and a bigger federal deficit.

 With a projected 4 trillion dollar surplus, we wouldn’t take that and erase the federal debt. We would use it to cover future expenses while paying the debt slowly at a lower rate.

 The United States hasn’t seen a surplus from a republican president in the past century.  In fact, the largest deficits were created during republican terms. President Obama is one of few democratic presidents not to see a reduction in the federal deficit because many of his policies are largely conservative. Also bear in mind that he inherited two wars, a trillion dollar deficit, and a sour economy from his republican predecessor George W. Bush.

 Is it possible to concede that a republican president can balance the budget, reduce the deficit, while lowering taxes, and sponsoring multiple wars? Entitlements for the poor use a small percentage of the federal budget, with social security using the greatest share of the budget, so even with a cut to entitlement programs, we won’t see a balanced budget.  You have few choices, like cutting defense spending or social security programs. Two programs we can’t do without so we’re left with raising taxes as the only option.

 The Clinton Administration provided the model for a fiscally responsible federal budget and a projected surplus for today’s economy.  The Bush Administration depleted the surplus to a 450 billion dollar deficit in under two years, the largest in history at the time. Bush Sr. left office with an 85 billion dollar deficit, Reagan a 55 billion dollar deficit also the highest in U.S history at the time. In conclusion, it is unlikely that the Republican Party, under its current policies, can reduce the federal deficit or create jobs. – E. Hughes


Whitehouse.gov and GPO.GOV Budget 2000 – Citizens Guide



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