Economics 101 From Obama

Members of the Republican party insist that Jesus in his Sermon on the Mount was discussing the importance of ensuring those with wealth retained their money in order to create jobs–for themselves. Republicans maintain the importance of cutting expenditures, reducing taxes on the wealthy and this will lead to peace and prosperity. Of course, the austerity approach is being followed in Great Britain and the result  is a stagnant economy, no drop in unemployment and no greater prosperity. Economics 101 teaches that if one reduces money entering the economy, there is less money circulating and less money to spend which results in fewer goods being sold and fewer workers being hired.

President Obama stated the argument for avoiding cutting. “We simply can’t cut our way to prosperity. Cutting spending has to go hand-in-hand with further reforms to our tax code so that the wealthiest corporations  and individuals can’t take advantage of loopholes and deductions that aren’t available to most Americans. And, we can’t keep cutting things like basic research and new technology and still succeed in a 21st century economy.”

In other words, one cannot cut to get prosperity.