Posted by WARREN MOSLER on September 17th, 2010
Obama reiterated the talking points he has been pushing for the last two weeks. Borrowing $700 billion to pay for a tax cut for “millionaires and billionaires” doesn’t make any sense, especially when one considers the evidence that the wealthy are far more likely to save than spend their tax cuts, thus providing very little stimulus to the economy. The cost-benefit analysis just doesn’t work.
Since he doesn’t understand monetary operations he doesn’t realize that if the money isn’t going to be spent there is no point in taxing it with regards to aggregate demand.
He’s giving the wrong reason for ‘taxing the rich.’