The Next Republican Talking Point - WRONG!

Most recessions last a maximum of 26 months. The only way this one will last longer is if the Democrats/President/Obama Administration mess it up.

I don't believe the above sentences but there are Republicans who are already beginning to say it. And they're wrong.

As we've written in an earlier post, there's a legitimate concern about the current economic course our country is taking, in the sense that it could ultimately cause inflation. But it can't cause the recession to last longer.

Without going into a wholesale re-stating of the prior blog, you can't make a recession last longer by more -- or even excessive -- spending. You might ultimately cause inflation as a result. You WILL cause the new debt to be a burden (though economists disagree with each other on how big that burden will be) on future generations. But it's impossible to make a recession last longer by pouring more money into the economy and creating new debt.

The GOP and their ventriloquist's assistants will say that by increasing taxes on those earning $250 thousand and more per year, job creation will be stifled.

That also makes no sense.

First, as conservative economists rightly say, corporations don't pay taxes. Second, did you ever know any employer who hires people (s)he's not related to, unless there's a need or a profit to be gained by that hiring?

Let's look at those two issues a little more carefully.

On the subject of corporations paying taxes, the answer is simple -- they don't. Corporations (or LLCs or proprietorships for that matter) are a pass-through mechanism. They get charged a tax but they add that cost onto the cost of their products. This becomes obvious with sales tax, but except in rare circumstances, all taxes get passed on in the form of higher prices.

Second, let's examine the claptrap about taxes or a higher minimum wage causing the creation of fewer jobs.

If I'm an employer, I don't hire someone because I want to do the employee some good. If I can, that's nice and a really good side effect. But, I hire that person because (s)he can make me more money than I'm paying in salary and benefits (or I'll soon be out of business and properly characterized as an idiot). If I'm running a fast food restaurant and paying $9.00 an hour in salary and benefits to an employee, I'd darned well better be making more than $9.00 an hour on that person's labor.

If I'm not, I'll fire that person or never hire her/him in the first place.

Another fallacy with the argument is that the tax "increase," which is actually not an increase but a return to the way things were before Bush's tax-cuts, isn't set to occur until 2010 or 2011, at which point the economy is expected to be recovering. Does anyone not think Obama is smart enough to delay the ending of the tax cuts if the economy's not recovering yet?

The problem, if there is one, with the recovery plans is that they're more complex than can fit into a slogan. But the reality is if this recession lasts longer than the average one, it's partly because of what President Bush and a friendly Congress have done, and partly a matter of things happening that weren't under their control, or anyone else's.