On Politics: The Logic of the Illogical

As an editor, I constantly have to watch for author statements that are illogical. Unfortunately, that practice doesn’t stop at the workplace door; it carries over to election-year politics and makes me a wary consumer of political talk.

What brings this to the fore is a recent statement by the Republican (expected) nominee for president, Mitt Romney. As reported in the New York Times (“Romney Seeks Obama Apology for Bain Attacks,” by Michael D. Shear, July 14, 2012, electronic edition, p. 31), Mit Romney said on Fox News:

You just had very bad news on the economic front, with now 41 straight months with unemployment above 8 percent.

Romney made this statement in support of his demand that the Bush-era tax cuts on the income of the top 2% of earners be made permanent and not be allowed to expire come January because these 2-percenters are the job creators and to raise their taxes would destroy job creation!

This has been a constant refrain of the Republicans and the Romney campaign. What I would like to know is, “Where are these jobs being created?” In publishing, the jobs are being created in India, not America. In America, editors are both losing work and being forced to accept lower wages as a result of this migration of jobs from America to India. I do not see John Sargent, CEO of Macmillan, or Markus Dohle, CEO of Random House, or the CEO any of the other major American publishers — all members of the 2% club — promising, in writing, to create new American jobs if their personal tax cuts are preserved.

In response to a recent solicitation I received asking me to make a campaign contribution in support of Romney and the Republicans, I wrote back with this offer:

I will make a contribution if you will answer these questions directly and without obfuscation: If keeping the tax cuts on the wealthiest 2% of American society will create jobs as you claim, why haven’t those jobs been created in the past decade while the Bush-era tax cuts have been in place? Why, if these wealthy 2-percenters create jobs, did we have significant job loss during the current life of their tax cuts? How many new American jobs have the Koch brothers, and John Sargent (Macmillan CEO), and Markus Dohle (Random House CEO) guaranteed — in writing — to create within the next 12 months (and how many new American jobs did they create over the past 4 years) as a direct result of the reduced personal rate of taxation they received from the Bush-era tax cuts?

I am still waiting for a reply, and I’m not holding my breath.

The reality is that the claim that reducing taxes for the wealthiest 2% of Americans increases American jobs is illogical, whether made by a Republican or a Democrat. It is a remnant of the flushdown economics of the Reagan era and ignores the fact that jobs grew under Reagan only after Reagan increased taxes and continued to grow (with resulting budget surpluses) under Clinton when tax rates were both raised and significantly higher than under the Bush-era tax cuts and current rates.

Interestingly, Obama, who should be attacking this kind of illogic, doesn’t seem to fight back by demanding that Romney and the Republicans put their cards on the table face up. It seems to me that Obama should be demanding real numbers from the Republicans. Make the Koch brothers pledge in writing to either create 100,000 new American jobs within 6 months of the election if the tax cuts are extended — regardless of whether they are extended by Romney or Obama — or agree to pay a $5 billion penalty. Require other 2% recipients — such as the John Sargents and the Markus Dohles — of the benefits of the tax cut to make the same pledge to create a specific number of new American jobs or pay a significant penalty, and have enough of them make the written pledges so that American unemployment will be reduced to less than 2%. Then I’ll buy the argument that these are the job creators, as will all other Americans!

The reality is not only will the 2-percenters not make such written pledges, but that they are not job creators. They are money makers and obligated to make as much money at as minimal a cost as possible, which means exporting American jobs if it is cost-effective to do so, which is what they have been doing all through the Bush-era tax cuts.

I have noted that Romney and the Republicans are very careful to talk about “job creation” but not “creation of American jobs”. The implication is that the jobs that the 2-percenters create are American jobs; the reality may well be different.

The Republican rhetoric also ignores the realities of the business world. Consider the recent $7+ billion loss suffered by JP Morgan Chase as a result of bad trades. The losses were incurred by a small group of individuals but already threaten the jobs of thousands of ordinary employees who had no connection to the loss-making trades or the division of Chase that made them. Yet, Romney and the Republicans want to give Jaime Dimon, CEO of JP Morgan Chase, a tax break because he will “create” new jobs. What will he do? Hire another valet? Tax breaks for Dimon have no effect whatsoever on whether JP Morgan Chase hires or fires employees.

How much more misleading can the Republican discourse be? Not much, but it sure makes for good bullet points on Fox News. Most of the 2-percenters are employed by a corporation or a foundation or some other business organization whose job-creation decisions are made independently of the personal finances of these 2-percenters. Yes, there are some exceptions, but not many.

The Romney-Republican argument on taxing the top 2% of Americans belies another premise of their presidential campaign: to-wit, that Romney really understands how jobs are created. Jobs are created by the masses spending more money and buying more goods and services, not by a 2-percenter suddenly deciding to trade in last year’s Lamborghini for this year’s model. Economic recovery is not in the hands of the few; it is in the hands of the masses, which is why consumer confidence measures are so important.

It isn’t clear to me what it will take to get voters to look beyond the twitteresque rhetoric and demand that politicians put up or shut up. Nor is it clear to me what it will take to get the Obama campaign to put the Romney and Republican campaigns’ feet to the fire. But in both instances, I hope that such a test occurs because the decision we have to make in November could be catastrophic for America if it is the wrong decision, especially if it is a decision made on platitudes rather than fact.