Creating Jobs in America – A Few Suggestions

by Jack Lee

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#1. Many employers are waiting to see how this Health Care bill of 2010 will impact their bottom line and they’ve put a freeze on hiring. The bill has become a jobs barrier and the timing couldn’t be worse. It’s not too late to recall this ill conceived and not-so-universal-healthcare bill, and revisit it later when the economy is back on track.

#2. We need a policy that is targeted at creating good jobs, not entry level jobs that are government make work projects, like digging a hole and then filling the hole. This means we must take a look at what is holding back the creation of good jobs in the private sector. I’m talking about jobs that will last, jobs that pay a decent salary and benefits.


#3. Back to minimum wage for moment. That too needs another look. People who are beginning their entry into America’s work force are finding it difficult to get hired if their contributions don’t meet the value test. The employer won’t hire them because the minimum wage is too high for that position. A whole lot of kids under 18 were knocked out of summer jobs thanks to the high minimum wage law. This hurts their motivation, it decreases the money flipped over in a community and it has hurt productivity.

#4. Next, many cities attract new business by offering incentives, like a free sewer hook up or deferring the city taxes for a year or two. Why not do that for new corporations? Give new companies a zero tax break for the first 3 years, this will give them a better chance to get rolling and it will encourage new business because of the lower start up cost.

#5. A few days ago we read about the Gibson Guitar Company being raided by the feds for using some wood from India that is illegal for resale by Indian law. There was a better way to handle that than closing down Gibson for this investigation. This isn’t the first company to be branded a criminal by Obama and shut down. This criminal action against an otherwise honest business needs to stop. Lets work it out in civil court if need be and only use criminal actions for the most extreme cases. We have too many laws and regulations that intimidate business that exist and scare away other potential businesses before they even start; this area needs a thorough review.

#6. There is one area of commerce that really does need criminal investigation in order to renew confidence in the stock market. The coordination between multi-billion dollar funds that can and do manipulate the market needs oversight. The market makers, hedge funds, etc., have been getting away with murder for far too long and it’s caused more than one serious run on the stock market. We don’t need new laws, we just need new people with a serious interest in protecting investors. Fire the old dogs who have so often let us down.

7. The stimulus money was a failure. It would be nice if Obama admitted it. The money went into pockets it was never intended and helped people who didn’t need it. It was rife with waste, fraud and abuse. Few if any of the people who stole money by fraud from the taxpayers have ever been charged with a crime. That part is an insult to injury. If our leaders ever resort to handing out billions again they need to be committed to a psychiatric institution for our own protection.

Job creation is only part of the solution. European and Asian stock markets have the jitters because of our runaway spending, and so are a lot of us on the home front. We see the rabid spending as a serious threat to the stability of the dollar and adding to the national debt for generations to come. Europeans and Asian markets see it as yet another reason not to invest in America! That’s bad. The debt problem can’t be underscored enough. Its dangerously high and growing. We’re running close to the edge of a giant cliff and we must pull back. The much needed cuts, reforms and overhauls to federal agencies has not been forthcoming, not by any significant degree at least. Until Congress gets serious, voters will continue to rate them with an over 90% disapproval and they will keep demanding replacements with courage and integrity.

I don’t think this current President is going to take my suggestions seriously – but, who knows, maybe the next GOP president will? I can hope that there is a change.

I SAY…IF YOU WANT JOB CREATION…VOTE THEM ALL OUT IN 2012.

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28 Responses to Creating Jobs in America – A Few Suggestions

  1. Pie Guevara says:

    Re: The stimulus did not go to the people who create jobs, but rather to the people who hoard money. Hence, NO JOBS!!!!

    A simpleton answer that fits a simpleton narrative. Of course it is far more complex than that. Heck, that assertion isn’t even part of the real equation, the real events, in short, reality. It is utter nonsense.

    Keynesian theory directed that a burst of new government spending would take up some of the slack in aggregate consumer demand. It didn’t. Why?

    The bulk of the stimulus package was not spent on government infrastructure spending or other government purchases. Much of the 800 billion dollars was evaporated by large state and local government grants. That money was mainly used to reduce borrowing and so did not result in an increase in purchases.

    In short, transferring deficits from state to the federal government had zero effect in stimulating the economy.

    In effect much of the stimulus money was spent on short term problems (like state bailouts) instead of long term solutions.

    Nearly none of the spending went for the heavily promised “shovel ready” projects.

    What little money did go to shovel projects was wasted by government interference and badly aimed purchases.

    For example, a review in the WSJ noted “a federal contractor said he was told to use smaller, nonstandard tiles that are harder and more expensive to install in order to increase the cost of the project. That way, the government could claim the money was moving out the door faster. The famous Milton Friedman line about government ordering people to dig with spoons to employ more people comes to mind.”

    That is Obamanomics in a nutshell. Spoon ready.

    Contrast Obamanomics to stimulus spending by China.

    John B. Taylor writes —

    Local governments in China apparently did increase infrastructure spending in 2009 following the stimulus package. Why didnt these governments simply reduce borrowing as did U.S local governments? Professor Chong-en Bai of Tsinghua University gave me the best answer using simple economic reasoning: the local governments appeared to behave more like liquidity constrained households than permanent income households. In China, local governments do not have much access to capital markets. They get their funding mainly from the central government, including loans from the central bank, and of course only for projects that are approved by the central government. At any point in time local governments are submitting new infrastructure projects for approval; some are being rejected and some are being accepted. If the central government wants to increase infrastructure spending by the local governments all it has to do is lower the acceptance criterion, instruct the central bank to provide the funds, and the volume of projects increases. This is apparently how the stimulus worked in China.

    The Chinese Communists are doing better than the inept, warmed over, Keynesian-Marxist liberal doofus in White House. How do they do it? By getting government the heck out of the way and actually encouraging business by encouraging loans for projects.

    Amazing. Simply amazing.

  2. Tina says:

    Q: “The republican plan to give further tax breaks to the hoarders will not create jobs.”

    The Republican plan would include more than tax breaks. The Republican plan would also eliminate draconian regulations, halt EPA/Holder harrassments, stop Obamacare, and create incentives for business to repatriate to America.

    Getting Democrats to support these plans is another matter, but it is exactly what is needed to get the golden goose back on its feet so jobs can be created.

    Your error, and problem, is that you think of American corporations in terms of the few.

    MOST American corporations are not GE. Most are medium and small businesses. They will create jobs if the government positions itself as supportive rather than antagonistic, expensive, wasteful, and unpredictable.

  3. Tina says:

    Jack you are so right in your assessment…here’s an example of what the Obama government is doing that doesn’t work:

    http://www.overdriveonline.com/ata-letter-supports-no-hours-rule-changes/

    In a letter to the Office of Management and Budget, the American Trucking Associations last week urged the Obama administration to live up to its promise to relieve the burden of unnecessary regulations as it considers changes to the hours-of-service rules.

    Late last year, DOTs Federal Motor Carrier Safety Administration proposed costly changes to truck drivers hours-of-service rules which, if finalized, would result in reduced wages for hundreds of thousands of drivers, significant administrative and efficiency costs for trucking companies, and most importantly, billions of dollars in lost productivity, wrote Dave Osiecki, ATA senior vice president of policy and regulatory affairs

  4. Libby says:

    This bogus and transparent and highly corporate attempt at blackmail is freakin’ pitiful.

    If an employer needs bodies, it hires them. If it can’t pay them on down the line, for whatever reason, it fires them.

    Any pending regulatory changes ain’t stoppin’ nobody from doing nothin’. It’s just a lot of petulant snivelling which, by the way, makes it very clear, yet again, how much the effort (let alone sacrifice) corporatocracy is going to put into our economic recovery.

    And why is Amazon makin’ all these whiny noises about collecting sales taxes? We’re gonna pay ’em, and we’re going to pay the cost of the software upgrades too … so just shut up and get it done.

  5. Tina says:

    John B. Taylor quoted by Pie: “…and of course only for projects that are approved by the central government.”

    This is why there are big beautiful new ghost towns in parts of China. They build cities without incentive for anyone to move to them…no jobs>

    Ahhh…the wonderful world of central planning!

    However, otherwise, point well taken.

  6. Tina says:

    Libby: “This bogus and transparent and highly corporate attempt at blackmail is freakin’ pitiful.”

    Your assessment is extremely pitiful! It may may apply to a few big corporate giants but not your average small to medium company. The giants can afford to play the kind of games you suggest, and wait out another election cycle, but less high profile businesses, the bulk of business in America, are finding it hard just to stay open and some are not making it, period.

    “If an employer needs bodies, it hires them. If it can’t pay them on down the line, for whatever reason, it fires them.”

    This should be your first clue that something is wrong! Employers not only DON’T NEED to hire workers, THEY HAVE BEEN FORCED TO LET THEM GO!

    “Any pending regulatory changes ain’t stoppin’ nobody from doing nothin'”

    And you know this from your own vast experience as a business owner, right?

    “makes it very clear, yet again, how much the effort (let alone sacrifice) corporatocracy is going to put into our economic recovery.”

    Corporations aren’t in the “sacrifice” business. They could solve the problem if they weren’t being strangled.

    In fact, so-called shared sacrifice is exactly what is holding us all back…business is being sacrificed on the twin alters of REDISTRIBUTION and FUNDAMENTAL TRANSFORMATION.

    “And why is Amazon makin’ all these whiny noises…”

    Ask Amazon…better yet go into business yourself and find out, for once, what all the whiney noises are about.

    …and then we can stand back (and laugh) to see whether you would take all the crap government dishes out and just “shut up”.

    Libby just take it and pay up? Hardly…she’d be pitching fits to beat the band!

  7. Pie Guevara says:

    Contrast Obama and the Democrats failed Keynesian based stimulus with President Reagan’s antirecession and pro-growth measures in 1981.

    The difference is striking.

    Under Reagan marginal and corporate tax rates were lowered and the growth of nondefense government spending was slowed.

    In a little over a year the ever increasing stagflation of the Nixon and Carter eras was over. The US economy grew more than 9% after 18 months and continued to expand at rates exceeding anything expected by rate models.

    While the usual gang of socialist, big government Keynesian cheerleaders harangued “trickle down” with jeering sound bite rhetoric what both Reagan and Thatcher applied was the considerably more complex economic model of Friedrich August von Hayek.

    The results were spectacular. The long abused and ignored Hayek gained the world wide respect and recognition he had long deserved in economic circles. Suddenly socialist academicians who championed Keynes were scratching their heads.

    With in two years representatives of governments from all over the globe flocked to the UK and the USA to attend seminars and academic gatherings to learn how application of Hayekinan theory by Thatcher and Reagan managed such an astounding turn around in so short a period.

    Now, under Obama, Keynesian theory has had a come back. It is called “New” Keyensian in order to distinguish it from the poor modeling used by the old, failed, Keynesian principles. But it still depends upon government controlled management and micro-management of the economy.

    As the Obamanomics has shown, the “New” Keynesian theory is just as much ineffective garbage as the old.

    The “New” Obama and Democrat stimulated stagflation is upon us.

  8. Harold Ey says:

    “We need a tax code where everyone gets a fair shake and everybody pays their fair share,” he said. “And I believe the vast majority of wealthy Americans and CEOs are willing to do just that if it helps the economy grow and gets our fiscal house in order.”

    The above quote in Obama’s address to Congress on 9/8/2011 is the one that really got my attention. Why is it with 47% of Americans NOT paying any taxes at all, how is he going to justify additional taxing of Corporations and ‘Wealthy’ (will/can someone clearly define/justify this ambiguous position of ‘wealth’) and letting the 47 percentile of nonpayer’s slide. I do not see any one capable of earning a above average income (read Wealthy) gullible enough to swallow his hypocrisy with any conviction at all. Obama is still the lopsided thinker of ‘put it on the backs of the producers, for the benefit of who? Government feeders? who helped vote him in! Really his speech was nothing more that a bid for reelection, pure and simple he will continue to divide this country until we fail completely. Also the repetitive mention of ‘I am sending this Congress a plan that you should pass right away. It’s called the American Jobs Act’ is the most negative divisive statement I have ever heard any political hopeful regurgitate repeatedly. If anything, congress must ‘PASS ON IT’ until it contains a fair and balanced approach to resolve the current jobless nature this country has fallen into. A continuing abyss created in depth by a shallow thinking seated President with no real direction, nor the apparent capability of leadership. Additionally congress is no bed of rose petals either.

  9. Pie Guevara says:

    Re Tina’s: John B. Taylor quoted by Pie: “…and of course only for projects that are approved by the central government.”

    This is why there are big beautiful new ghost towns in parts of China. They build cities without incentive for anyone to move to them…no jobs>

    Ahhh…the wonderful world of central planning!

    However, otherwise, point well taken.

    Fair enough. But these ghost towns were being built on a huge scale long before the current economic climate hit like a ton of bricks. When the world wide downturn hit, suddenly China was faced with the economic reality that “if you build it, they may not come”.

    Nevertheless, the Communist (get that, Commies no less!) answer was to actually spend money on new projects by making it easier for business to get operating capital has worked. I thought that was interesting.

    Just as a point of information, a project could be anything from a new a industry, new technology, new agriculture, whatever. It doesn’t necessarily mean to build high rise condominiums and business buildings, parks, hospitals, etc. in an empty town.

    My bet is that those ghost towns are a temporary set back. Time to buy real estate in China!

    (Oh, just kidding.)

    Evidently, Totalitarian Chinese Commies are better are encouraging business development and economic growth than the inept, half-baked, warmed over Marxist-Keynesians in the administration.

    I never thought I would live to see that day!

  10. Tina says:

    Q: “You are getting closer to the truth. Good for me!”

    Go ahead and pat yourself on the back if it makes you feel good but I’ve been this close for a few decades now…didn’t really need you.

    “It was ANOTHER guitar manufacturer who called the feds on Gibson.”

    Source? Remember, you are supposed to be a stickler for truth.

    ” So they bribed congress and got regulations passed that would keep the medium and small corporations–their competition–down.”

    I’m fairly certain that Gibson is one of the big dogs in this fight.

    My guess is its the GREEN LOBBY in cahoots with big government Democrats that’s playing this tune.

    The obama re-election team, along with the Democrat Party re-election team wanted a big environmental story to make Obama necessary for another term.

    Gibson represents the entrepreneur, the independent businessman, the EVIL POLLUTER, and it needs to be taken down! To be made an example. In this way the stupid American people will vote for Obama to save the planet.

    “Now, in your other posts, you write that you are all for this kind of this so-called “level playing field.”

    Note to our many wonderful intelligent readers: Quentin often fails to read for content and meaning. Thats a nice way of saying, “he makes stuff up in his head”. You can verify for your self whether Quentins assessment of my position is accurate by reading theorugh the blog.

    I have never been in favor of lobbying that results in complicity or coertion. I don’t support quid pro quo arrangements, in fact I attempt to expose them when I can.

    I am supportive of every Americans right to petition his representatives and that includes people who are in business or who represent organizations of special interest.

    It is the responsibility of our elected officials to listen to their constituents and make decisions based on what is best for America. This takes a high level of integrity and resolve that won’t manifest unless the people demand it. It is up to the people to monitor their representatives and vote them out if they are found to involve themselves in quid pro quo arrangements.

    “Now, don’t you think you’re being just a little disingenuous–or completely out of touch with reality…blah blah blah”

    No. You might want to take a second look at some of the positions you have taken while writing on Post Scripts.

  11. Pie Guevara says:

    If Mr. Colgan spent half as much time writing for his own blog as he does writing disjointed and weird, tracts in the comments section of Post Scripts he might actually gain a readership.

    Re the post:
    You are getting closer to the truth.
    Good for me! etc.

    Questions:

    Does Mr. Colgan ever take a good look at what he writes before he posts it?

    What has Mr. Colgan been smoking today?

    Can Mr. Colgan prove he is not a mental case?

    (The above questions were derived from Colgan comment posts in other threads.)

    The subject was job creation and how the stimulus failed. I thought Jack Lee’s list was excellent and certainly not deserving of your bizarre rants about hoarding and competition squashing stifling job creation is tenuous at best.

    800 billion evaporates and it is the fault of GE, GM, and IBM.

    What hogwash.

  12. Toby says:

    Clearly Q does spend half as much time on his own blog. He gets lonely and tired of spewing hate to himself so he comes here. He should be kissing the @ss of PS, without PS no one would have a clue who the sad little man is.

  13. Pie Guevara says:

    Oops, that sentence should have read —

    The subject was job creation and how the stimulus failed. I thought Jack Lee’s list was excellent and certainly not deserving of Colgan’s bizarre rants about hoarding and competition squashing stifling job creation which are tenuous at best.

    Sorry about that.

  14. Tina says:

    Quentin: “I am not going to waste time on a telling you my sources just so that you can launch one of your fallacious ad hominem attacks against my sources.”

    Like I give a rats rear end about your sources…the point was that you claim to be a stickler…and yet YOU demand to know the facts…you are a bully about facts!

    “Your guess is that it’s the green lobby. You don’t know???”

    BULLY!!!! I know it at least as well as you know that it’s some other special interest group…there are millions of them and all of them chewing away on the ears of our representatives…so what!

    “What you don’t want to face is which party they used for the first six years of this decade to do the exact same thing!’

    And what you don’t want to face is that alternately holding your breath till you turn blue and yammering about how it’s both parties doesn’t make you more effective. It also doesn’t change anything. You get to be right about how everyone but you is wrong…good for you…wow what a contribution!

    Pick the party that most closely matches your own ideas and philosophy and get in the game. (Since you’re just a poser punching for the left you might as well)

    “Maybe some day, you will actually DO something about it!”

    Like you are doing something about it, Quentin?

    Sorry…I must have missed the headlines!

    From my perspective your big solution seems to be to insult and lie about people who are attempting to share information and opinion for consideration.

    Bullying isn’t what I’d call a brilliant plan. Who would listen to such a man? Who would bother to click on his blog much less leave a comment there? You seem to think you are the one exception in all of humankind…a special person, untouched by the everyday trappings of political involvement. It would be funny if it weren’t so pathetic.

    What’s the point in insulting others and making enemies with such abandon? What drove you to become such a niggling contrarian? It wouldn’t be so bad if you were at least consistent in your positions…but you are not!

    Meanwhile, whatever value there might be in reading what you think and know is lost in the falderol and gew gaw.

    Question of the week…WHO IS this person? With or without PS, I doubt if anyone knows, including Q.

    By the by…have you any relatives in the South? I read an article on the oil moratorium and job losses by a professor named Colgan…he was articulate and interesting.

  15. Pie Guevara says:

    Re Tina’s: “What’s the point in insulting others and making enemies with such abandon? What drove you to become such a niggling contrarian?”

    My guess is he has issues with his father he has never resolved.

  16. Pie Guevara says:

    Ya know, I think you folks should take a well deserved break from the tiresome Mr. Colgan.

    He never really brings anything to the table except for a constant stream of half-baked insults and proclamations that are only designed to puff up his own ego.

    The fellow is an obnoxious, narcissistic kook. Can you imagine what he must really think of himself to write these ridiculous, self-aggrandizing, tedious little condescensions of his daily?

    So, why not just take a break? Let him concentrate on his own blog for awhile.

    Block anything he submits for, oh say, two months. Don’t even read it. If you have a filter on your blog inbox just apply it and automatically delete anything he sends.

    I really do think you should give yourselves a break. Would you put up with a neighbor sending his obnoxious, troublesome, brat kid over to your house every day for free baby sitting?

    Consider letting Chris and Libby play over on Quentin’s blog too. They are, for the most part, just Quentin Lite.

  17. Libby says:

    We gettin’ to ya?

    You’re just gonna have to toughen up … and work on your rhetorical skills, because Q states a fact perfectly apparent to anybody who can read: your posts consist largely of invective, on the childish side, that persuades nobody of anything … except, of course … but we won’t go there.

    “The above quote in Obama’s address to Congress on 9/8/2011 is the one that really got my attention. Why is it with 47% of Americans NOT paying any taxes at all, ….”

    The rich are to be kept by the poor? Didn’t I do the math for you on this one already? And think what Jesus would have to say about this. Aren’t you ashamed to live in a country where 47% of the population is too poor to pay taxes? (Which is bogus nonsense anyway, promulgated to sooth the consciences of rich folk who don’t intend to pony up, howsoever.)

    And on a Sunday too.

  18. Tina says:

    Libby: “The rich are to be kept by the poor?”

    How is this even remotely possible in today’s world? In what way do you envision the poor “keeping” the rich? Explain yourself!

    “Aren’t you ashamed to live in a country where 47% of the population is too poor to pay taxes?”

    AREN’T YOU ASHAMED! For the last sixty or seventy years progressive ideas have permeated into every area of American life…our government, our legal system, our media, our social fabric, our churches, and yes, our schools. It is all of this progressivism that has shaped the lives of the poor. The well off and the rich HAVE paid…and paid and paid and paid…trillions in taxes… and none of the programs have helped the majority to a better education and a better life.

    Sorry Libby but your ideas just don’t work…in fact they do great harm. No amount of money will replace a good solid traditional education, solid moral values, high hopes and expectations for our young, training in personal and civic responsibility and a solid understanding of the value of the freedoms our natiion guarantees each of us.

    “And on a Sunday too.”

    Spoken by our favorite smug control freak.

  19. Pie Guevara says:

    (EDITORS NOTE WE ALL MUST PLAY NICE – NO NAME CALLING, JUST DEBATE)

    See what I mean? Quentin Lite.

    Evidently I really touched a nerve with Libby by tossing the crap she and others spew in this forum on a regular basis right back at them.

    Funny how that works.

    I just thought the good folks at Post Scripts deserved a break from (snip) you, Libby.

    That’s all.

  20. Tina says:

    One more thought Libby…take your complaints to the top lady! The O man has funneled millions and millions of dollars to big corporations, banks, and unions and NONE of them is poor! The poor, particularly in the black community, is suffering terribly with high unemployment, expensive gas, and higher prices for groceries and necessities.

  21. Pie Guevara says:

    Yeah, I was wondering about that too, the poor are keeping the rich?

    Perhaps Libby will expound on that some day.

    You pretty much covered it Tina. I know why you keep Libby around. She lobs a spit ball and you knock a homer every time.

    That follow up query “Didn’t I do the math for you on this one already?” was a hoot. Was that classic Libby at her most weirdly smug or what?

    And then the Jesus thing.

    Like I said, Quentin Lite.

  22. Pie Guevara says:

    Re Quentin Colgan’s: “I am not going to waste time on a telling you my sources just so that you can launch one of your fallacious ad hominem attacks against my sources.”

    Is that a hoot or what? Weren’t we recently treated to a Colgan rant about Fox News? He attacked both an aging WWII veteran and Fox News. It is rare for Mr. Colgan to make a post that does not contain an ad hominem attack.

    Now he turns around with this sort of whine?

    Too funny.

  23. Libby says:

    Substantive rebuttal, anyone?

  24. Pie Guevara says:

    Substantive rebuttal to what?

    To engender a substantive rebuttal implies that some sort of substantive postulate has been made.

    I haven’t seen one.

    And I seriously doubt if any will be forthcoming.

  25. Post Scripts says:

    Pie…lol…you sir never cease to amaze. excellent comments!

  26. Libby says:

    “AREN’T YOU ASHAMED! For the last sixty or seventy years progressive ideas have permeated into every area of American life…our government, our legal system, our media, our social fabric, our churches, and yes, our schools. It is all of this progressivism that has shaped the lives of the poor. The well off and the rich HAVE paid…and paid and paid and paid…trillions in taxes… and none of the programs have helped the majority to a better education and a better life.”

    And how, exactly, does his rebut the fact that 47% of the nation’s citizens are too poor to pay taxes (if it is a fact)? This is blather. Blather that seems, again, bent on ignoring another fact: 30 years of Reaganomic econonmic policy … whereby the rich have paid less and less and less with every passing decade, until now, when they pay virtually nothing.

  27. Tina says:

    Libby: “And how, exactly, does his rebut the fact that 47% of the nation’s citizens are too poor to pay taxes…”

    You cannot be this dense. Had they not been kept in the dark and fed progressive bulls*#%, enticed onto the public dole (for generations), and stuffed into poor performing schools a good number of them would be earning a lot more.

    “…30 years of Reaganomic econonmic policy … whereby the rich have paid less and less and less with every passing decade, until now, when they pay virtually nothing.”

    Talk about blather! You progressives find one or two examples where the tax code works in a rich guys favor and you immediately DECIDE that all wealthy people pay nothing…what a leap! LIES like that are cheaper than cheap.

    “30 years of Reaganomic econonmic policy … whereby the rich have paid less and less and less…”

    Our readers should have factual information. I recomend this article by Richard Rahn at CATO. I have excerpted a portion, you really should read the entire article:

    http://www.cato.org/pub_display.php?pub_id=3059

    Tax Cut Facts and Fantasies

    by Richard W. Rahn

    1980, President Carter and his supporters in the Congress and news media asked, “how can we afford” presidential candidate Ronald Reagan’s proposed tax cuts?
    Mr. Reagan’s critics claimed the tax cuts would lead to more inflation and higher interest rates, while Mr. Reagan said tax cuts would lead to more economic growth and higher living standards. What happened? Inflation fell from 12.5 percent in 1980 to 3.9 percent in 1984, interest rates fell, and economic growth went from minus 0.2 percent in 1980 to plus 7.3 percent in 1984, and Mr. Reagan was re-elected in a landslide.

    To have an honest debate, it is important to know the facts. Claims are made that a tax cut will “cost” $700 billion or so, over 10 years. Such numbers are almost meaningless. First, they tend to be static revenue estimates, which assume no change in behavior because of the tax cut, which is totally unrealistic. Second, gross domestic product (GDP) is expected to be approximately $140 trillion over the next 10 years, which means the proposed tax cut is approximately one-half of 1 percent of total national product (in static terms). Even though political commentators, like David Broder of The Washington Post, refer to the tax cut as “massive” (March 30, 2003), it is almost too small to be meaningfully measured.

    The correct way to measure tax revenues and government outlays is as a percentage of gross domestic product, in the same way the burden of your home mortgage is directly related to your income. You may be shocked to learn that even though federal government tax revenues and spending have increased almost twentyfold in the last 40 years, they have barely budged as a percent of GDP.

    For instance, federal tax revenues were 17.5 percent of GDP in 1962 and were an almost identical 17.9 percent of GDP last year. Over this 40-year period federal tax revenues have never been lower than 17 percent (1965) or higher than 20.8 percent (2000) of GDP. Likewise, federal expenditures have ranged from a low of 17.2 percent (1965) to a high of 23.5 percent (1983) of GDP over this same 40-year period.

    Despite the fact that federal revenues have varied little (as a percentage of GDP) over the last 40 years, there has been an enormous variation in top tax rates. When Ronald Reagan took office, the top individual tax rate was 70 percent and by 1986 it was down to only 28 percent. All Americans received at least a 30 percent tax rate cut; yet federal tax revenues as a percent of GDP were almost unchanged during the Reagan presidency (from 18.9 percent in 1980 to 18.1 percent in 1988).

    What did change, however, was the rate of economic growth, which was more than 50 percent higher for the seven years after the Reagan tax cuts compared with the previous seven years. This increase in economic growth, plus some reductions in tax credits and deductions, almost entirely offset the effect of the rate reductions. Rapid economic growth, unlike government spending programs, proved to be the most effective way to reduce unemployment and poverty, and create opportunity for the disadvantaged. (emphasis mine)

    Nobel Prize-winning economist Robert Lucas presented an important paper in January of this year, in which he says: “There remain important gains in welfare from better fiscal policies, but I argue that these are gains from providing people with better incentives to work and to save, not from better fine tuning of spending flows.” Mr. Lucas found that reducing capital income taxation from its current level to zero (using other taxes to support an unchanged rate of government spending) would result in overall welfare gains of “perhaps 2 to 4 percent of annual consumption, in perpetuity.”

    President Bush’s proposal to eliminate the double tax on dividends is a good first step but, if we would remove all taxes from productive savings and investment, such as taxes on interest and capital gains, almost all Americans including the poorest would see their real incomes grow at roughly twice the present rate — forever. Those who oppose tax cuts on savings and investment because they think the rich would benefit are in fact punishing the poor. (emphasis mine)

  28. Libby says:

    “When Ronald Reagan took office, the top individual tax rate was 70 percent and by 1986 it was down to only 28 percent.”

    Like I said.

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