Demand Side Economics

The supply economics of the Reagan era has taken quite a beating. Today we are about 1 year into the biggest demand side economic experiment ever attempted. We are going to see that it simply does not work particularly when the demand is created by giving people who don't pay taxes the money to create the demand. The government can't create a sustainable demand with this policy because it would be akin to having a $787 billion stimulus package every year. On the other side of the coin, encouraging people to invest will provide the impetus to get the credit markets moving again. Setting the capital gains tax at a permanent 15% would net the US government $15 on every $100 in profits generated. That could go a long way to closing the federal deficit gap. The other option, demand side, is to tax the American people until there is no more income to tax. One year into the demand side economic experiment we don't have anything to show for the money we spent except for higher unemployment. The Treasury Secretary who 1 year ago was telling us the jobs would be coming in 2009 is now saying they should start to pick up in the spring of 2010. When it doesn't happen again, and it won't, perhaps some people will start to pay attention. I doubt it though. Too many are still mesmerized by the orator despite the realities his policies bring.