Why Don't Rich People Stimulate the Economy?

I first heard the lie from Nancy Pelosi: unemployment compensation gives the best stimulus bang for the buck. If you give an unemployed person a check, he will spend it which will create jobs. The logic is an obvious failure though because with all the people currently receiving unemployment, we should be growing the economy like crazy! As a matter of fact, unemployment just went from 9.7% to 9.8% so we now have MORE people out of work even though we pay unemployment benefits for 99 weeks.

The current debate over extending the Bush tax rates leads me to question the sincerity of liberals who think unemployment compensation is truly stimulative. Suddenly, they're concerned with the deficit. Their tact now seems to be that rich people paying less taxes doesn't stimulate the economy and actually raises the deficit. Are they serious?

First, let's be clear about something: no one is receiving a tax cut. The current debate is only about a tax increase. If nothing is done about the expiring tax rates, everyone's taxes will be going up starting January 1. If the tax rates are extended, then everyone's taxes will merely continue at the current rate. No one's taxes are going down no matter what happens. The debt problem we have is due to the reckless spending that's been going on. If tax rates continue at the same rate as now, it has ZERO impact on the deficit. I wish the alternative news outlets like CBS, NBC, MSNBC, etc, would get that right.

But even if this were a tax cut, there's a question I'd like to ask liberals: What do you think rich people do with their money? Seriously, what do you think? Do they invest it in stock? Do they take vacations? Do they start businesses? Do they buy fancy cars? Do they buy fancy homes, nice clothes, or eat at expensive restaurants? The obvious answer is that they do all of these things. So under what premise is it that liberals claim this doesn't stimulate the economy? Who do you think works in the hotels where the rich people vacation? Who builds the cars that rich people buy? Who builds the homes or makes the clothes or serves the food where rich people spend their money? Who works in the businesses that rich people start?

People spending money is what makes an economy – and rich people have the most money! The impact of the dollars they spend is significant. It creates jobs.

Now, don't get me wrong, poor and middle class people who spend money create jobs as well but their impact isn't the same. Many people who are out of work will try to “tighten their belts.” They try to save their money and pinch their pennies. They might not buy a new car, for example, but may buy a used one instead. When someone buys a used car, nothing new has been manufactured. Also, an unemployed person might not take the vacation he had planned. He might put off the home remodel or even the home repairs. Unemployed people tend to only spend their money on the necessities. It is because of these things that the economic impact of their spending is much more narrow.

I once heard a liberal say in an online debate that the rich only get their money by taking it from the poor. Can they not see the lunacy in such a statement? If I have a product to sell, I don't even try to sell it to people who don't have money to buy it. How can I get rich off people who have no money? In order for me to make money, I have to offer some good or service that someone else who has money wants to buy. It's a win-win proposition: they get a good or service and I get money. It's the American way!

Allowing tax rates to go up in a tough economy like this is insane. Don't let the liberals' attempt at class warfare fool you. Even if only the rates on the “rich” are raised, the poor people – the ones who need jobs the most – will suffer as well.