Our Political Leadership Is Struck Deaf, Dumb & Blind Over Jobs Creation. What To Do?
The profligacy of the Republican economic policies of the last decade continue to bite the U.S. in the collective ass as the painfully slow recovery from the Bush Recession seems to have stalled with consumers reluctant to spend, companies reluctant to hire and banks reluctant to loan.
Long story short, those policies (which many congressional Democrats went along with), were perversely simple: Keep lowering taxes for the wealthy, keep deregulating financial institutions, keep cutting back on job-creating infrastructure improvements, keep looking the other way as the middle-class got gouged, and keep telling the lie that the largess of the rich would trickle down and somehow end up in the pockets of ordinary Americans. All while fighting two wars that sucked the federal treasury dry.
With the private sector paralyzed, or unwilling to do anything beyond rewarding shareholders in the case of the many corporations flush with cash, the only recourse for jobs creation — which is the key to stopping the economic flat lining — is the federal government.
But President Obama, who looks increasingly like a shoo-in for a second term and seems reluctant to peddle the bold ideas that might spur job growth, while Republicans continue to sing from a frayed hymnal that declares that cuts in federal spending will spur private jobs investment.
If you had the keys to the kingdom what would you do to foster jobs creation?
13 Responses to “Our Political Leadership Is Struck Deaf, Dumb & Blind Over Jobs Creation. What To Do?”
Well, first of all, it’s not the federal government’s task to “make” jobs.
If I had the keys, I’d address the bigger picture: I would simplify the tax code, remove all the special-interest-benefitting features in it, even end the home mortgage deduction (moooo — sacred cow!), and apply a single rate (which is the proper thing to do) to taxable incomes for individuals. Corporate taxes, reduce to OECD average.
That’s probably the best thing that could be done truly to support job creation, even though the real issue here is overdue tax reform.
Putting government (which is overhead!), especially the federal government, in its proper place (doing as little as possible) would also help greatly — Much less bad interference and a big reduction in a fat, huge amount of overhead in the economy.
That’s the sensible approach; liberals with interests at stake would abhor it.
DLS:
I respectfully submit that in this instance, not unlike the Great Depression, it is the government’s obligation to make jobs, whether directly or indirectly.
I fail to grasp how a single rate tax code will translate into jobs creation. Please elaborate.
I read somewhere that this last year there has been an increase of 1,000,000 millionaires in the US over the last year. So there’s plenty of wealth in this country for job-creation, it just isn’t happening.
(My engineering friend who works for IBM recently told me that a huge percentage of their work is being farmed out to engineers in India for about a quarter of the price of cost of an American, equivalent engineer.)
I read “Freakonomics” last year, and they discussed how over the last several decades the tax base has decreased to where somewhere up to $50,000 in income is hardly taxed anymore. I think Pete Peterson makes the same argument in his book “Running on Empty” a few years back, so I agree with DLS regarding some modification of the tax code, although I don’t know how the numbers would play out as far as actual revenues.
I salute any on the right for being willing to even discuss taxes as a revenue-generating solution to our massive deficit.
I personally feel that the easy-to-cut things like public education, libraries, national park funding, and various research grants that add so much to our collective lives pale in the comparison to what could be cut from a $690,000,000,000 yearly budget for our defense department, especially in the guise of “spreading freedom.”
JeffP:
Agree to all except the notion that people making less than $50,000 are hardly taxed at all.
That would be me and I owed Uncle this year. And last year and last year . . .
Agree with the gist of what DLS said although we would argue over the specifics. The government should not be in the job creation business, they should provide an environment that facilitates job and economic growth. Right now the economy has enough weakness I doubt the government can do much.
Much of the weakness stems from an overvalued housing market and extension of bad credit, two problems I don’t see the government having much control over. I don’t see it so much that the banks are unwilling to make loans but that they are less willing to take risks, something that is a desirable reaction but that will hurt the economy for a while.
From a policy standpoint the trouble is finding the sweet spot, ie enough taxation to maximize revenue without hurting the economy, enough regulation to prevent more events like we’ve seen the past few years but not so much as to discourage growth, etc, etc. This means an approach somewhere between the extremes of either party.
Shaun Mullen wrote:
1. I disagree, especially if it’s the government you are referring to. I’ll add that we gave the Dems the chance to do a stimulus, actually gave them permission and even encouragement to spend a huge amount of money, and in addition to overspending, they misspent the money. How would anyone who is not opposed to government make-work on political or philosophical grounds not be opposed instead because of such a poor record, poor experience? (Would these jokers help or hinder an effort to put people on the Moon if it were undertaken now?)
2. There is no mystery here. In addition to lessening the encumbrances and unnecessary set of incentives and disincentives that details in the tax code create, there’s also the cost reduction from reduced accounting needs, whether from removal of tax code jump-through-this-hoop items or from the tax code being simpler (as well as more ethical with a single rate).
Note about your quibble with Jeff P. Yes, lower-income people still often pay things like sales taxes in addition to the obvious FICA.
(You know, the FICA that would have to be raised to 25 per cent to make Social Security and Medicare truly solvent, i.e., an honest FICA tax rate.)
DLS:
Simplifying the tax code will do zilch except put more people out of work, in this case accountants.
And you do not come close to making a case that single payer will be a jobs-creation engine. Some people may pay less in taxes, there may be some disincentive to not try to cheat Uncle, but otherwise the game remains pretty much the same.
I just don’t see that tweaking or otherwise fine-tuning the tax code is the solution.
Note that this lower income columnist is not talking about sales taxes. In fact, I live in a state where there are no sales taxes. As a single person with no dependents and extremely few deduction options, I take it on the chin unfair and square, but I don’t complain because America needs a wealthy elite immune from the adversity that the mere mortals who live on Main Street suffer.
This economy if failing to create jobs for 2 reasons. First, too much of the money resides at the top. The bottom of the economic scale that provides 2/3rds of the money spent on actual goods and services doesn’t have any money to spend anymore. So the companies that are trying to sell stuff are having a hard time trying to sell stuff, and they can’t grow. The rich have done too good a job siphoning money from the bottom of the economy into their own pockets, without using that wealth to create anything other than new derivatives markets which are essentially and profitable economic circle jerk for the wealthy, but doesn’t actually make anything.
Second, he banks have tightened credit up to the point where loans for new businesses are simply not being given out. We bailed their asses out with the understanding they would get back to the business of being banks. Instead of loans, they simply used tax dollars to consolidate by buying other banks to make their numbers look good, which is ironic because banks being too consolidated is kinda how we got into this mess,their stocks go up, without actually giving loans even to qualified customers. This is the primary source of new wealth generation in this country and its dried up.
Capitalism is good. It stimulates the movement of money which is what makes things happen. However its natural tendency is to make the flow of money go up, which is fine unless the system is being gamed to such an extent that all that money stays there and never goes back down. Which is what we have today. The gov’t has to step in at this point or the economy is doomed. The money at the top must be redirected to the bottom like during WWII, which the rich will fight tooth and nail. This is also ironic because it helps them in the long run.
slamfu:
Well said, especially how redistributing income helps the rich in the long run.
The private sector only wants to optimize business profit. Conservatives cheer this and claim that it will inevitably help everyone. No, it won’t. Optimizing profit in today’s world means automation of any jobs that can be automated and sending as many of the others overseas as possible. When all businesses that can chase these ideas do so it decimates the ranks of consumers with disposable income in the United States. Very few of the truly wealthy in this country actually care if their pursuit of wealth benefits anyone but themselves and their family. OK. Nothing really wrong with that. But don’t lie to the public and claim that this approach to capitalism will still benefit them. It will benefit so few that it can’t keep up with the jobs eliminated in pursuit of that vision. But the average conservative is so taken with their ideology about capitalism’s perfection and government’s evil that reality will never get through to them.
I love how the left keeps talking about the need for more government infrastructure spending. It is a state issue, not a federal issue and many deep blue states have shown how bad they are at it.
Currently, state and local government exists to make payroll for their existing employees. That any state provides any level of services is just a bonus after the states have made payroll.
When governments at all levels get more serious about providing services to citizens instead of providing jobs to core Democratic groups, then maybe everyone can talk about job creation, infrastructure, or governance. But since the Democrats are more worried about keeping people on the government payroll before providing value, then there is no point in talking about what the government can be doing.
The government has much to do with money flowing to the top. Interest rates at 0% helps banks keep paying out record bonuses even in our lagging economy. The concept of “too big to fail” has lowered those banks’ cost of raising capital, while raising normal banks’ costs.
State restrictions on doctor licensing and practice have allowed them to make about twice what they do in any other country, which costs everyone else more.
Farm subsidies, with a less than useless ethanol industry, make us pay more for food, even while subsidizing it.
Even while they’re wringing their hands over a lack of investment, congress still keeps useless restrictions on angel investors, meant to keep them from competing with banks.
The student loan program is getting abused by institutions, while pushing the cost of higher education up, and putting bigger burdens on the graduates. It’s now the biggest form of personal debt, ahead of credit cards.
Add in war and the war on drugs, and you can see that we have too many large mis-allocations of resources. You can’t fix these things with tax policy (even though it’s long overdue), stimulus plans, or make work.
Shaun Mullen wrote:
Do you really believe (against everything that exists) that simplifying the tax code would not improve economic conditions?
What do you mean by “single-payer”? (federal health care for all) I have to chuckle at that, given that it’s holy to so many liberals. Moreover, I’d like to know how anyone derives from what I’ve written, that “single-payer” is involved. (“reducing overhead” does not count at all; I was referring to the tax code, and was talking about changing it to have a single TAX RATE.)
It is fundamental reform that I recommend, not “tweaking,” etc.
As to your last paragraph, it’s good for chuckles, but that’s all.