Want to Beat Supply-Side Economic Arguments? The Proof Is Right In Front Of You!

Democrats have a unique opportunity right now to challenge conservative economic policies and frankly aren’t taking it.

We often hear the lament that big corporations are profiting more and more, but this complaint is always framed from the perspective of restoring relative fairness.

This is a laudable concern, but Democrats are missing the fact that current conditions provide a final, decisive body blow to the supply-side economic theories espoused by Republicans — corporations are making massive profits right now and not investing in growth!

Fundamentally, supply-side economic theory rests upon the belief that rising corporate profits will necessarily be reinvested into expanding business.

Profits are growing at an astounding rate now:

via Business Insider

And yet job growth, while positive, is sluggish. Businesses are merely sitting on their massive profits.

This is devastating for Republicans because it creates a “because” problem — when you take the argument to the “because” level, it falls apart. They cannot respond that greater tax cuts are needed for the economy. To say that presumes that greater tax cuts are needed because current taxes don’t provide corporations with ample profit to invest. But the money is RIGHT THERE. Businesses just aren’t spending it to expand and grow. The status quo gives lie to the entire theory.

This is distinct from the argument of Democrats  that the economy needs more stimulus. In that case, we need more stimulus because current government spending is not creating public sector jobs. That’s true.

Democrats can disconnect high profits from being a panacea for economic growth and bludgeon the GOP for economic naiveté, charging that the Republicans simply don’t understand how the economy works when they say that, automatically, “profits = growth.”

If Democrats spent less time arguing that higher profits are “good” or “bad,” and more time gutting the idea that profits automatically spur growth, Republican economic policies could be undermined without eliciting charges of class warfare.

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