Category Archives: jobs

Economic Growth: Tax Cuts or Taxing and Spending Increases?

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President Obama made his position clear in his State of the Union address (as if it wasn’t clear from his performance these last three years, already).  He wants more spending, and he wants to “pay” for it by increasing taxes on the hated rich.  He couldn’t find the energy to spend more than a sentence or two on spending cuts in his SOTUS; although he did find plenty of “green” energy for spending and tax hikes.

Indeed, when it comes to actually reining in government’s use of our money, Obama has been the czar of chimeras and false flags.  As the House Budget Committee Chairman, Congressman Paul Ryan (R, WI) has put it:

We have learned already that the president who’s had three years to try and propose real solutions to fix our fiscal crisis is ducking it….  He formed commissions and super committees, so he sort of outsourced the leadership only to decry their results.

Indeed.  Obama’s committees and study groups (I don’t share Ryan’s disdain for Obama’s use of them, per se; when one is ignorant of a subject, asking experts for advice is entirely appropriate) actually did generate some ideas worth serious discussion and which could have served as points of departure for real reform.  But for Obama, they were merely cynical tools of distraction; he blew off their recommendations without so much as a fare-thee-well.  And he’s been clear about how seriously he takes his own ideas.  Obama yukked it up over his “shovel ready jobs” chant:

…shovel-ready was not as shovel-ready as we expected.

Obama does have his apologists.  Third Way think tank’s Jim Kessler insists:

[W]hen you’re in the middle of a recession it’s very dangerous to stop priming the pump.  You know, you need to get escape velocity, get out of the atmospheric pull of recession, break loose and then let the economy go loose.

But what Kessler, et al., don’t understand is that that “atmospheric pull” actually is government interference in our economy.  We can’t “get escape velocity,” to mix metaphors, with the government’s enormous sea anchor dragging us back.

How has Obama’s Progressive policies of higher taxes and more spending been working out?

His first installment, nearly a trillion dollars’ worth, failed to reduce unemployment or deliver the shovel-ready jobs he promised.  Of course he’s demonstrated how seriously he took his “shovel-ready” claim, even as he was making it.  His profligate spending, while succeeding in exploding the Federal deficit and the Federal debt—which now our grandchildren will have trouble paying down—beyond anyone’s worst nightmare at the start of the Panic of 2008, have done nothing else but hold back a normal cyclic recovery that has been struggling since the official end of that recession in the spring of 2009—nearly two years ago—just as similar Keynesian foolishness did for the Depression.

For his second try, he wanted to spend even more, and now he wants to raise taxes on a narrow group of Americans of whom he disapproves.  Ryan suggests checking the numbers.  Doing so exposes the depth of Obama’s cynicism in continuing to push for higher taxes.

All these tax increases that the president is talking about, they only cover 8 percent of his proposed spending increases. The other 92 percent of the president’s spending increases are borrowed money.

Ryan is being polite.  Those 92% are actually fantasy money—that’s the level of seriousness with which Progressives take other people’s money.

Here’s an alternative: reform our tax structure, including reducing rates, closing loopholes, and ending subsidies and credits.  To paraphrase Ryan’s argument, with Progressive tax increases hitting small businesses disproportionately (and hitting all of us—individuals and businesses of any size—too hard, simply by existing), comprehensive tax reform is far better than arbitrarily and capriciously raising taxes.

And then cut government spending to below the tax revenue generated.

One step currently under consideration, with both Republican and Demoncrat support, is the continuation of the temporary payroll tax holiday.  But this is a chimera; it will produce no effect on our economy.  It will, though, continue defunding an already dysfunctional Social Security system.  With the Progressives already having agreed that a 2 percentage point cut in taxes is good (and with Obama originally calling for a 3 percentage point cut in payroll taxes for both individuals and businesses), Republicans are blowing an excellent opportunity to begin serious reform.  The better place to put these cuts is as permanent income tax cuts for individuals and businesses, and as a first step toward larger income tax cuts and tax reform, generally.

Arthur Laffer suggests a more specific tax reform in a column in The Wall Street Journal.  As Laffer points out, and as thinking Americans have understood for a long time,

Jobs and wealth are created by those who are taxed, not by those who do the taxing. Government, by its very nature, doesn’t create resources but redistributes resources.

Laffer goes on to suggest that a flat tax is the optimum reform.  Although he uses Newt Gingrich’s version (an optional 15% flat tax for individuals, with the option being to continue paying under the present system, and a 12.5% flat tax for business) as his example for discussion, Laffer’s point is generally valid.

Laffer argues

Fairness in taxation means that people and businesses in like circumstances have similar tax burdens.  A flat tax, whether on business or individuals, achieves fairness in spades.*  A person who makes 10 times as much as another person should pay 10 times more in taxes.  It is also patently obvious that it is unfair to tax some people’s income twice, three times or more after it has been earned, as is the case with the death tax.

The current administration’s notion of fairness—taxing high-income earners at high rates and not taxing other income earners at all—is totally unfair.

Progressives—led by Obama—argue that it’s the rates that have to be progressive in a fair tax system, not just the amounts actually paid.  But concern with rates paid rather than amounts paid fails to achieve equal treatment at the start—at the point of equal opportunity; “progressive” tax rates only look to create equal outcomes, after the differing levels of ability, work ethic, and so on have been applied by the people involved, folks who behaved voluntarily according to their own imperatives.  Progressive rates punish hard work and success while subsidizing lesser effort.  There’s no fairness in this.

Finally, as Laffer points out,

[A] flat tax proposal is not revenue-neutral, nor should it be.  If there’s one truism in fiscal policy, it’s this: Wasteful spending will always rise to the level of revenues.  Whether you’re in Greece, Washington, D.C., or California, overspending is a prosperity killer of the first order. [A] flat tax…would put a quick stop to overspending and return America to fiscal soundness.

 

*I fully anticipate that Laffer will be called racist for using this term, and I’ll be similarly accused for repeating it.  Understand, though: only a racist will actively look to create racism where none exists, so he can cry, “Racist!”

Unions and Economic Well-Being

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As Indiana moves toward becoming the 23rd Right to Work state—that is, a state in which its citizens no longer have to join a union, or pay union dues or part of union dues as a condition of finding work—the unions are weighing in on this risk to their awesome political and fiscal power.  Indeed, the unions are so opposed to this fundamental freedom of citizens to seek their own Happiness that they’re preparing to do everything they can to disrupt the National Football League’s Super Bowl, which this year is to be played in Indianapolis.  Jeff Combs, organizing director for Teamsters Local 135 in Indianapolis, assures us

You can tell them we’ll take the Super Bowl and shove it.

Brad Holloway, of the International Brotherhood of Electrical Workers Local 481, warned that electricians may engage in work slowdowns.

And teamsters gathered at Indiana’s statehouse last week to protest while wearing T-shirts with 46—symbolizing the 46th Super Bowl—crossed out on the back.  The unions are looking for a national stage for their protest, and they’re sure to find one with this tactic.  But is it a stage they want?  And in a state whose unemployment rate is 9%, a half-point worse than the terrible national average?  Investors.com offers some statistics from the National Institute for Labor Relations Research concerning the relative economic well-being of Right to Work states vs. union states.

It seems that Right to Work states had a better than 28% growth in real personal income vs. a shade under 14% growth in union states between 2000 and 2009.  Per capita income in the last year of the period, adjusted for states’ costs of living (so that income in California, for instance, could be compared directly with income in North Dakota), was $35,500 in Right to Work states vs. $33,400 in union states.  Right to Work states experienced a nearly 21% growth in real manufacturing GDP vs. just 6.5% in union states between 2000 and 2008.

And there’s this: Bureau of Labor Statistics data indicate that Right to Work states added 1.5 million private sector jobs in their states, a 3.7% increase, while union states lost 1.8 million jobs, a 2.3% decline, between 1999 and 2009.

Go for it, guys.

Hasn’t Our Economy Been Managed Disastrously Enough?

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Congressman Dennis Kucinich (D, OH) considers that the oil and gas businessmen are greedy b*stards, and they cannot be trusted.  He wants to put their business’ profits under government control—and not just any part of government; he wants to cut the Congress out of the picture and set up another Board for President Obama.  He’s joined by five more Democrats.

The Democrats, worried about higher gas prices, want to set up a board that would apply a “windfall profit tax” as high as 100 percent on the sale of oil and gas, according to their legislation. The bill provides no specific guidance for how the board would determine what constitutes a reasonable profit.

This “Reasonable Profits Board” is intended to control gas profits in the industry.

Further, in an amazing display of economic ignorance, the bill Kucinich proposes actually requires, in all seriousness, that it’s the oil and gas companies who must pay the tax.  They really don’t believe that the cost increase would be passed on to the customers.  They really don’t understand that the tax, and the cost bump to the end user, would simply depress the business’ ability to fund their own operations, expand hiring, search for more oil and gas supplies, conduct R&D, and so on; and it would similarly reduce consumers’ ability to put food on their tables and pay their rents.

But it’s all for a good cause.  Kucinich earmarks the taxes for funding alternative transportation programs when oil-and-gas prices spike.  This is just ridiculous on its face.  If those “alternative transportation programs” were any good, they wouldn’t need government subsidies—your tax monies—to compete in the market.  Just look at how the Obama High Speed Rail boondoggle, including the California bullet train, for instance, have turned out.  See who’s left holding the bag for that “alternative transportation program” stuff and nonsense.

I’m a bit confused by another aspect of this proposal, though.  It’s a lot of trouble to get such legislation passed these days, especially with unruly Republicans running amok in the House.  It would be a lot easier just to have the EPA issue a rule.

The other Democrats who are pushing this invasion of the free market are these

  • John Conyers, Jr. (D, MI)
  • Bob Filner (D, CA)
  • Marcia Fudge (D, OH)
  • Jim Langevin (D, RI)
  • Lynn Woolsey (D, CA):

All six need to be replaced at the 2012 election, if not in the Democratic Party primaries leading into the election.

Keystone XL: Too Many Jobs

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Take some of them out.  President Obama has chosen to kill the Keystone XL pipeline project, which aside from contributing to reducing our dependence on overseas (literally—and so especially vulnerable) oil, would have generated some 20,000 jobs in the near term and a few hundred thousand long term jobs from work in follow-on and associated enterprises.

Naturally, it’s those evil Republicans, who imposed an arbitrary deadline on his “environmental” assessment process, that are to blame, he says.  Of course, he ignores the fact that the environmental assessment—which had already taken three years—was complete, and that’s why it was in the State Department’s hands in the first place last fall, when he first tried to duck the question.  What’s arbitrary is his decision to cancel the project, a decision that he thought needed to be delayed for more than a year that has now been made fully a month ahead of a deadline set solely to stop his stalling.

It’ll be interesting to see the justification Obama is required by law to provide Congress to explain his decision (which explanation he would have been required to provide had he approved the pipeline, also).

In the meantime, we have these Alinsky-esque obfuscations to keep us distracted.

When President Obama took office, the United States imported 11 million barrels of oil a day. The President has put forward a plan to cut that by one-third by 2025 by…transitioning to a wide range of clean energy technologies [among other means].

and

[T]he Department of Energy’s (DOE) Loan Guarantee Program has already supported more than 40 clean energy projects….

Clean energy projects like Solyndra, Beacon, Evergreen Solar, AES Eastern Energy LP.

The White House goes on:

[T]wo of the Administration’s programs – the DOE Loan Guarantee Program and the EPA’s Mercury and Air Toxics Standards – will create more than 10 times the amount of jobs generated by the Keystone XL pipeline, which will only generate a few thousand temporary jobs.

The DoE’s Loan Guaranty Program’s effectiveness can be seen above.  The EPA’s Mercury and Air Toxics Standards already are costing jobs as coal-fired electricity generating plants are shut down, eliminating jobs permanently in those closed plants.  The EPA’s program also is costing jobs at the small businesses that depended on those plants for their power.  These jobs are lost, at best, for the intermediate term, until the businesses can restart when new plants come on line in a few years—for those businesses that can restart.  Yes, the EPA’s Standards will provide jobs for the conversion and compliance tasks mandated—but it’s these jobs that are the temporary ones.

Obama has opened another front in his class warfare election campaign: this time between his overzealous “green” backers and (erstwhile) working Americans.

Regulations of our Government

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Kevin O’Brien of The Plain Dealer has already addressed this particular aspect of an over-regulatory government, so I’ll just quote heavily from his editorial.  It seems our illustrious Labor Secretary, Hilda Solis, is the one who’s at it for our government, this time.  Per Solis, kids aren’t to be allowed to work on the family farm, anymore.  They might catch a blister, poor dears.

It seems Solis’ answer to this problem is to

…prohibit hired workers under 16 from operating almost all power-driven equipment unless they have been “enrolled in a vocational education program in agriculture under a recognized state or local educational authority or in a substantially similar program conducted by a private school.”

So, let’s see: a VoTech program is better equipped to train a minor in operating farm equipment than is the farmer who owns and operates that equipment.  Last I looked, VoTech programs don’t have many tractors, or balers, or plows, or harrows, or….  Those are mostly down on the farm.  On what basis would we expect a school to train the use of farm equipment or tools when they don’t have any?  There’s that Federal government logical thinking.

Solis insists that kids working on the farm have a higher fatality rate than kids working elsewhere (wait—there are kids working?  Where are Solis’ child labor laws?  Certainly, they’re not working in their schools as part-time janitors…).

But as O’Brien points out,

[The kids are] a lot less vulnerable than children who have to walk through a bad neighborhood after their shift at McDonald’s….

Solis goes even further:

…prohibit young people from doing any work that would take them more than six feet above ground level or engaging in any activity that would expose them to “unpredictable animal behavior.”

But tree climbing for recreation is OK—or is government going to intrude into my backyard and ban that, too?  The neighbor’s dog doesn’t like me, either—but he’s pretty predictable.  Never mind that; as O’Brien points out, sometimes you have to work more than six feet off the ground.  Ha lofts in barns, for instance.

As Senator Ben Nelson (D, NE) points out, though, this sort of rule is inimical to the welfare of farming and of rural economies.  Solis’ rule could

…change the structure of family farms and have a negative impact on the education of the next generation of farmers.

This proposed rule is another example of Washington being out of touch with Nebraskans’ values.  The Department of Labor should kill this rule before it destroys important traditions in rural America and hurts the farm economy.

One out of every three jobs in Nebraska is tied to agriculture.  We need to increase opportunities for our family farmers and ranchers to strengthen our rural economies, not threaten them with new, unneeded regulations from Washington.

Of course, Solis could have another class of laborer in mind for these jobs.

As O’Brien describes this from his own childhood, actual learning by the young worker would be lost to such rules:

I learned a tremendous amount about animals in those years, and a fair amount about people. I chased things. I got chased by things. I learned that work — even sweaty, smelly, dusty, tiring work — could be fun.

and

Along the way, I learned to differentiate among things and activities that deserved respect, things and activities that were actually worth fearing and things and activities that were no big deal if you handled them properly.

These are lessons that aren’t available in any school or VoTech program.  These are lessons that only can be learned through doing.

As O’Brien points out, though,

…a little time on the farm would have done Hilda Solis some good. She spooks too easily….