It's the Weak Demand, Stupid

Paul Krugman debunks the conservative/teabagger red herring that CRUSHING REGULATIONS, "uncertainty," highest taxes ever, and President Obama's perpetual bruising of bankster and executive fee-fees are to blame for our faltering economy:

Listen to just about any speech by a Republican presidential hopeful, and you’ll hear assertions that the Obama administration is responsible for weak job growth. How so? The answer, repeated again and again, is that businesses are afraid to expand and create jobs because they fear costly regulations and higher taxes. Nor are politicians the only people saying this. Conservative economists repeat the claim in op-ed articles, and Federal Reserve officials repeat it to justify their opposition to even modest efforts to aid the economy. 

The first thing you need to know, then, is that there’s no evidence supporting this claim and a lot of evidence showing that it’s false. 

[...] 

Isn’t there something odd about the fact that businesses are making large profits and sitting on a lot of cash but aren’t spending that cash to expand capacity and employment? No. 

After all, why should businesses expand when they’re not using the capacity they already have? The bursting of the housing bubble and the overhang of household debt have left consumer spending depressed and many businesses with more capacity than they need and no reason to add more. Business investment always responds strongly to the state of the economy, and given how weak our economy remains you shouldn’t be surprised if investment remains low. If anything, business spending has been stronger than one might have predicted given slow growth and high unemployment. 

But aren’t business people complaining about the burden of taxes and regulations? Yes, but no more than usual. Mr. Mishel points out that the National Federation of Independent Business has been surveying small businesses for almost 40 years, asking them to name their most important problem. Taxes and regulations always rank high on the list, but what stands out now is a surge in the number of businesses citing poor sales — which strongly suggests that lack of demand, not fear of government, is holding business back.

Republicans and Very Serious People do not want to listen to this reality, but prefer to live in their own contrived Randian fantasy land, because subscribing to facts and reality would mean embracing a demand-side, Keynesian view of economic policy, which is inherently at odds with the snake oil that they traffic on a daily basis. And we all know that what really ails America is that corporations and banksters and plutocrats don't have enough free money.