Robert Reich -- if I said it, who needs proof?

Former Secretary of labor Robert Reich is out with a piece denouncing the possibility of corporate tax cuts for business of the sort which is supposedly about to be advocated by the President. Reich first argues against passing the Research and Development tax credit which he claims will cost $100 billion. Then he argues against the proposal to allow 100% of investment between now and the end of 2011 to be written off immediately. Reich says this proposal would ultimately cost $30 billion. The essence of Reich's argument is this:

"The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.

In any event, small businesses don’t have enough profits against which to use these tax credits and deductions, and large corporations are sitting on over a trillion dollars of profits and don’t need them."

Strange, isn't it, that Reich knows why consumers are not buying. Is there any data on this issue? If so, Reich isn't saying; he is just making pronouncements. Also, how does Reich know that reducing the cost of new investments would not lead to an increase in those investments? It seems basic economics that cutting the price for something leads to more of it being bought. One would think that Reich would know this to be the fact. Indeed, if Reich had any data that supported his view, one owuld think that he would set it forth.

Still, the key to understanding Reich comes when he advocates that the funds used here would be better spent by giving the money to states and local governments to support continued employment of state workers. He is just out shilling for the public employee unions.

Indeed, Reich manages to write this whole piece without ever once mentioning that the investment tax credit for R&D has been in place for more than 30 years. If it is not extended, the result will be a tax increase. This is not a tax break for business, it is simply continuing the long time situation that was even in place when Reich was in the cabinet. Can it be that he does not realize this? I doubt it. I just assume it is more double talk from Reich.