Post by Alias Post by Jake
It is insanity to raise taxes when we are in a recession unless your
intent is to cause a depression. Businesses will be less likely to
hire new people if they expect taxes to be increased. Get a clue.
So where are all the jobs that the Bush tax cuts were supposed to
OK, let's get back to history, here.
1) When the Bush tax package was put into place, the unemployment rate
in the US was in the high 4% range. This was higher than the
artificially-low (due to the dot-com boom) 4% logged in 2000 but *well
below* both the ten- and the twenty- year averages. A tax cut under
those conditions is not going to stimulate the private job market ---
you're too close to "full employment."
2) Thus, the Bush tax package was *not* implemented for the purpose of
stimulating the private jobs market. The Bush package was a return of
capital. The nation was awash in surplus left over by the dot-com boom
tax receipts, and when government has a surplus, it *should* do one of
two things --- either return the money to the taxpayer or pay down the
debt. Bush chose the former, which AT THE TIME was a completely
defensible course of action.
3) Unfortunately for him, the ability to defend that course of action
ended fairly quickly, as the dot-com bust and 9/11 mucked up the idea
that we were going to be in perpetual surplus. This is when Bush made
his first error ---- looking at declining tax revenues and a war, he
should have reversed his tax package. He did not.
Now, on to your question, although it's not a relevant one considering
the above context:
In a global economy where the cost of labor is substantially lower in
other parts of the world *and* where trade barriers are lowered *and*
where remote management is enabled electronically *and* where
unemployment is running well above the 20 year mean, lowering marginal
rates *does* stimulate the private job market, but it is at least as
likely to stimulate the creation of jobs abroad as it is domestically.
So, messing with marginal rates isn't the answer.
What *is* the answer is a PERMANENT (none of this temporary crap ---
that doesn't get the attention of business) tax policy for decreasing
the cost of domestic employment over some baseline. How to write that
properly is tricky, but if written properly, is necessary to offset the
advantage of cheaper labor pools overseas.
Obama has put *something* like this in his "jobs plan", but as usual,
he's screwed the pooch by structuring it so its (a) temporary and (b)
only advantageous for small businesses and (c) a tax credit rather than
an expense-line deduction.
If a small business has enough demand to warrant hiring, they would hire
anyway, AND small businesses aren't the ones who are shipping jobs
overseas; that's what the LARGE businesses are doing, and large business
is where the demand is right now. So, the program will increase the
deficit 33B and do nothing for hiring the way it's structured.
So, even Dems are voicing strong skepticism such as:
“I think it’s unlikely to be effective,” Sen. Kent Conrad (D., N.D.),
chairman of the Senate Budget Committee, said at the time. “If you think
about it, businesspeople are not going to hire people to produce
products that are not selling. Who is going to hire in the auto industry
if you give them a $3,000 credit to make cars that people are not buying?”
Sen. John Kerry (D., Mass.) concurred, saying the employer tax credit
would likely have a negligible impact on job creation. As did Sen. Ben
Nelson (D., Neb.). “There’s a question of whether that puts the cart
before the horse,” he said. “If I don’t have enough customers for my
product, hiring more people is not going to help, and tax credits are
not going to be to my advantage.”
“I don’t know anybody in business who hires an employee because they
will get a tax break,” said Rep. Mike Thompson (D., Calif.). “They hire
employees because they have work to do.”
“Surely, the Treasury can come up with a better way to promote job
growth,” an exasperated Rep. Lloyd Doggett (D., Texas) told Treasury
Secretary Tim Geithner during a hearing. Even liberal economists
couldn’t bring themselves to back the president on the issue. “It sounds
good because it’s for small businesses and job creation,” Dean Baker of
the left-leaning Center for Economic and Policy Research told Time
magazine. “But basically, you are paying companies to hire workers that
would have been hired even if you hadn’t handed out tax breaks.”
Get a clue yourself.
Well that certainly WAS a thoughtful response...right up to your last line.
Look. I agree that EVERYONE disagrees first of all. No question there.
So. Do NOTHING? As the Republicans espouse. Oh wait. They simply want to
cut more taxes and social programs. THAT'S a novel approach by them is it
not? If tax breaks tied to hiring doesn't work...there will at least be
increased revenues. Not enough of course...but to paraphrase the famous
quote...a billion here, a billion there, and soon we're talking real money.
At the very least, let's make it LESS profitable to move jobs offshore. I'm
also agreeable to protectionist trade policies to counteract those in other
nations that hurt the US to address the imbalance in trade.
You never DID address the question of course. When...EVER...did cutting
(taxes OR programs) actually HELP to spur employment? At the very
least...spending on things like infrastructure will create jobs. It's not
like there is a dearth of work to be done.
The Republicans have one clear goal. Several have stated it clearly. Their
ONLY interest is in making this administration look bad. No matter how many
Americans that hurts. That IMO is akin to treason.