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Why The GOP’s ‘Job Creators’ Are Hard to Find

If you’re a “job creator,” raise your hand. It would be nice to know who you are, exactly.

Republicans negotiating with President Obama over a fix for the nation’s debt problems have been rolling out the heavy buzzwords lately, and there must have been a fresh memo about the sonorous ring of “job creators.” House Speaker John Boehner repeatedly decries tax hikes on job creators, with congressional colleagues such as Paul Ryan and Jeb Hensarling forming a job-creators chorus behind him. House Republicans recently published a “Plan for America’s Job Creators” (but not for everybody else, presumably) and if you’re an aggrieved job creator, you can let House Majority Leader Eric Cantor know what’s bugging you by filling out a brief form at http://jobs.majorityleader.gov/.

The trouble is, job creators are an endangered species these days. The biggest problem in the U.S. economy, in fact, is a shortage of job creators to reward and protect. Companies are barely hiring, and there are about 7 million fewer jobs now than there were at the end of 2007, when the Great Recession began. Part of the Republicans’ plan is to lower taxes, streamline regulation, open more trade and take other steps that will stimulate job creation. But we’ve already tried some of that, including several rounds of tax cuts since 2008. Most job creators are still hiding.

Big companies employ a lot of Americans, but over the last few years they’ve been better at job destruction than job creation. Between 2007 and 2010, companies with more than 1,000 employees shed about 2.6 million jobs, according to the latest data from the Labor Department. Many big companies have rebounded sharply from the recession, with impressive profits and a lot of cash on hand. But even some of the most successful big companies aren’t doing much job creation–not in the United States, anyway. Here are a few examples:

General Electric, which is run by the same Jeffrey Immelt who chairs President Obama’s Council on Jobs and Competitiveness, axed 32,000 jobs worldwide between 2007 and 2010, according to information from GE’s annual reports. About 22,000 of those lost jobs were in the United States. No job creation there, even though GE earned about $12 billion in profits in 2010.

Exxon Mobil has added about 2,800 jobs worldwide since 2007, but the giant oil firm doesn’t break out how many of those new hires work in the United States. Since Exxon earns nearly 70 percent of its revenue from overseas, it’s a good bet that’s where most of the new jobs are, too.

Wal-Mart has added about 40,000 jobs in the United States since 2007, largely because the discount retailer has been a beneficiary of pinched consumers desperate to save money. But it has added about 150,000 jobs overseas during the same time–nearly four times the U.S. tally. Still, Wal-Mart seems to be one company that can legitimately call itself a job creator.

IBM has added about 40,000 employees since 2007, but like Exxon, it doesn’t say where. About 65 percent of IBM’s revenue comes from abroad, and that’s where almost all of its revenue growth has come from since 2007. IBM’s U.S. business is actually down from 2007 levels, so it’s possible that most or all of IBM’s new hires have been overseas.

Big companies, in fact, aren’t considered a big source of new jobs. While they generate a lot of profits, they also tend to be mature enterprises more likely to swallow other companies and consolidate market share, which tends to eliminate jobs, not create them. “It’s the job of big firms to shed jobs,” says Carl Schramm, CEO of the Kauffmann Foundation, which promotes entrepreneurship. “Big firms want to lower costs, which means lowering labor costs.”

Young firms, Schramm says, account for virtually all net job creation in the U.S. economy over the last 30 years. That’s because startups that survive their first couple of years tend to be vibrant, fast-growing companies that create new industries and hire a lot of new workers. Think Microsoft and Oracle in the 1980s, and Amazon, eBay, and Google in the 1990s. Today, new technology-based firms like Facebook, Twitter, Groupon, Zynga, and LinkedIn represent one of the fastest-growing sectors of the U.S. economy. However, they’re the last companies that need any kind of tax relief–and they’re not about to ask for special treatment from Washington, either. They became transformative companies without Washington’s help, and they’d like to keep it that way.

Politicians routinely extol the virtues of “small business,” but that’s not really where the job creators are, either. Conventional small businesses–dry cleaners, nail salons, delicatessens, independent professionals like lawyers and doctors–tend to be important pillars of their communities, but they also come and go without generating a lot of new jobs, on balance. During the third quarter of 2010 (the most recent quarter for which there’s data), firms with fewer than 20 employees eliminated 34,000 jobs, according to the Labor Department. The biggest gains were among firms with 500 to 999 employees, which created 37,000 jobs.

So if Republicans want to modify the tax code to reward and encourage job creators, they need to come up with a scheme that offers the lowest tax rates to fast-growing startups, some medium-sized firms, and a few select multinationals. Of course, they might prefer to lower taxes on everybody who could be a job creator–because that includes almost everybody. If you ever spend money, that makes you a job creator, in the most expansive sense of the phrase, since somebody gets paid to provide whatever you buy. But then we’d have to figure out whether to reward American consumers for helping create jobs in China, Japan, Sri Lanka, or wherever the imported goods they purchase come from, or to reward  people who spend money that helps create American jobs. So if you buy a Lexus made in Japan or Gucci loafers made in Italy, you’re not really a creator of American jobs and you shouldn’t be eligible for favorable tax treatement. But if you have your kitchen remodeled by a local contractor or go to a chiropractor for back pain, you qualify. It’s not so easy being a job creator. Or locating one.

By: Rick Newman, U. S. News and World Report, July 13, 2011

July 14, 2011 Posted by | Big Business, Congress, Conservatives, Consumers, Corporations, Economic Recovery, Economy, GOP, Ideology, Jobs, Politics, President Obama, Republicans, Small Businesses, Taxes, Unemployment | , , , , , , , , , , , , , , , , | Leave a comment

Can You Handle The Truth?: What The Public Doesn’t Understand About The Debt Ceiling

When a CBS reporter asked President Obama why a  recent poll shows that 69% of Americans don’t want the debt ceiling lifted, he responded by stating that “professional politicians understand the  debt crisis better than the general public.” As I heard the words come from his lips, I knew there would be outrage  on the right, and the left and certainly the right again!

The problem is, the president was right; ahem,  correct.

When posed with the question, “If you have a credit  limit and have  maxed out your credit card, should you raise your credit limit  so you  can spend more?”   Americans  respond with a resounding “NO!” as would I  if that were the question.

But here is the real question:

As an American, did you know if we do not raise the  debt ceiling and  go into default, that thousands of Americans will lose their  jobs? And  a 9% unemployment rate will be something you’ll hope for? Or that   programs like Homeland Security will be cut which I’m sure will make any   terrorist organization smile.

How about home owners and small business owners  longing for the  days of 2008? And that double dip recession the Republicans  were trying  to scare you about? Well, it certainly would happen. Speaking of   money, our bonds will be worthless; and if you think that TARP and the  bailout  were bad, that’s just an appetizer for the domino effect not  raising the debt  ceiling would have on Wall Street, perhaps worldwide;  just look at what  happened with Greece.

I mentioned that the president was right when he  said Americans  don’t know as much about the debt ceiling crisis as a  professional  politician; and I do believe that.   When some of the nation was  outraged or offended by his remark, I could  hear Jack Nicholson saying,  “The truth, you can’t handle the truth!!”

We need only   look at our own television viewing habits to see  evidence to support the president’s rhetoric.  Let’s take a  little  quiz shall we?

  1. Were  the Bush tax credits meant to last forever?  Answer: No, just ask the authors of the  legislation.
  2. When  is the president planning on removing those temporary  credits? Answer: 2013 and  beyond, not a massive tax cut taking place in  August.
  3. How  many times did President George W. Bush raise the debt ceiling? Answer: 7 times.

And where was the Republican outrage then? Answer: they didn’t have a  Democrat in the White House up for re-election!

OK…now a few more…

  1. What  former governor’s daughter was on “Dancing With The Stars?” Answer: Sarah Palin.
  2. What  was the verdict in the Casey Anthony trial? Answer: Not guilty.
  3. Who  was voted off (pick one) American Idol, The Biggest Loser or  The Bachelorette?  Answer: I don’t know, I was too busy paying attention to  the debt crisis.

The point is, most Americans would’ve been able to  easily answer the  latter three questions. We were glued to our T.V. sets during the  Casey  Anthony trial; not to CSPAN and the ratings prove it.  So don’t be  offended, the president’s not  saying you’re dumb. He is simply saying  you don’t have the time to spend 40-60  hours a week to do a job you  elected him and Congress to do.  Oh, and by the way, the latest poll  shows 47%  of Americans (Rasmussen) don’t want the debt ceiling lifted;  see even the CBS reporter proved the president right with his question.   Love that!

By: Leslie Marshall, U. S. News and World Report, July 13, 2011

July 14, 2011 Posted by | Congress, Conservatives, Consumers, Debt Ceiling, Debt Crisis, Deficits, Economic Recovery, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Jobs, Middle East, Politics, President Obama, Republicans, Right Wing, Small Businesses, Unemployment | , , , , , | Leave a comment

A Fear Of Breaking “The Pledge”: Are Republicans And The Tea Party Serious?

This is not the Congress where I worked in the ’70s and  ’80s.  This is not the same caliber of  leader, especially on the Republican side, that our country has been accustomed  to over decades. In the past, people like Eric Cantor and Michele Bachmann were  marginalized. They were not respected by their own party, let alone rewarded;  they were relegated to the back bench.

It would have been a joke if someone predicted that a cable  queen like Bachmann could raise $14 million for a House race or that South Carolina Rep. Joe Wilson could raise over $2 million in a matter of weeks as an  obscure member, after screaming at the president, “You lie!” at a State of the  Union address. The notion that someone such as Bachmann would be so popular in  polls and be in a position to win Iowa would have been unthinkable a few short  years ago.

But more important than these personalities and their extreme  positions is what they have done to the Republican party.

We have a unique opportunity to truly turn this nation  around.  President Obama, and it appears Speaker of the House John Boehner, were ready to truly change the direction of the country.  In the past, I believe we could have made it  work—with a Reagan, an O’Neill, a Mansfield, a Baker, a Dirksen.  It is a long list.

But, sadly, the absolutism of no revenues—every tax cut,  even temporary—is now permanent.  Taxes  can only go down… sort of like housing prices can only go up! Pledges to  Grover Norquist are absurd, shortsighted, and counterproductive.

I truly wonder whether the extreme wing of the Republican  Party wants to solve our problem or just play politics with it; is this just  beat Obama and the democrats at all costs, the country be damned? Or is it an  adherence to an ideology that is inflexible, a fear of breaking some “pledge?”

Regardless, the over $4 trillion budget fix is achievable—not popular—but achievable. It takes both parties to accept political  responsibility.  I wonder, though, if you  asked a Tea Party member or a liberal democrat, “Would you sacrifice your seat  in Congress to achieve real fiscal responsibility, to turn the nation around?”  would they say “yes?”  After all, why did  they run for office in the first place? To be serious, to accomplish big  things, I would hope.

A number of years ago a group of us were with Sen. Paul  Sarbanes.  He was retiring after a  long and distinguished career in the House and Senate. One person asked him  what was the biggest change he had seen in his 40 years.  Sarbanes said that people come into  office now with their minds made up; they are afraid to change or to listen to  the other side.  He pointed out that when  he first came to the Senate, there used to be real debate on the issues of our  time and that minds would be changed.   There was a different spirit of cooperation and compromise and true  listening. Relationships across the aisle were forged. There was give and take. There was an opportunity to come to an agreement without a total win-lose  mentality.

If there ever was a time in our nation’s history to return to  that spirit, it is now.

By: Peter Fenn, U. S. News and World Report, July 13, 2011

July 14, 2011 Posted by | Congress, Conservatives, Debt Ceiling, Deficits, Democracy, Democrats, Economic Recovery, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Politics, President Obama, Republicans, Right Wing, Tax Increases, Taxes, Tea Party, Voters, Wealthy | , , , , , , , , , | Leave a comment

How Can Anyone Take The GOP Seriously: The Dismal Republican Record On Taxes

“In the present weak economic climate,” a group of conservatives, including Newt Gingrich, wrote in an open statement, “we believe that to restore the health of the economy and put Americans back to work, America should follow a course against high taxes and federal spending.”

The White House was unmoved. “Republicans may feel they can’t go to voters after supporting a tax increase,” one administration official told the New York Times. “We’ve got to convince them that the situation won’t be as devastating as it would be if the tax bill is sabotaged.”

The latest moves in the debt ceiling debate? Not quite: The administration was Ronald Reagan’s, and the year was 1982. With his previous year’s landmark tax cuts having exploded the budget deficit, Reagan had reluctantly backed a tax increase to bring it back under control, prompting a minor conservative uprising led by then Rep. Jack Kemp and which included then backbench House member Gingrich. “You can’t have the largest tax cut in history and then turn around and have the largest tax increase in history,” one conservative rebel groused.

Right-wing economists issued dire forecasts. Arthur Laffer, widely described as the father of supply-side economics, warned that the bill would “stifle economic recovery” and “lengthen and deepen the recession.” The president of the U.S. Chamber of Commerce wrote that the tax hike would “curb the economic recovery everyone wants,” adding: “It will mean a lower cash flow as more businesses pay more taxes, with a depressing effect on stock prices. It will reduce incentives for the increased savings and investment so badly needed to improve productivity and create more jobs.” As Bruce Bartlett, an early supply-sider and Reagan aide who has since recanted the faith, noted last month, “It would be hard to find an economic forecast that was more wrong in every respect.” Real gross domestic product grew at 4.5 percent in 1983 and 7.2 percent in 1984, while unemployment fell from 10.6 percent in December 1982 to 7.1 percent in 1984.

Just about the only thing the conservative rebels got right back in 1982 was Gingrich’s comment to the New York Times that the skirmish was the “opening round of a fight over the soul and future of the Republican Party.” Looking back, the extent to which the conservatives won the fight within the party while losing the war with economic reality is fairly astounding. In the nearly three decades since, the Republican feeling toward tax increases has moved from Reaganesque dislike but acceptance (he signed tax increases into law in seven of his eight years in office) to their current, blindly absolutist position flatly opposing any tax increases at all, even in the face of spiraling deficits and possible economic default.

Witness comments like House Speaker John Boehner’s that “raising taxes is going to destroy jobs.” The rhetoric hasn’t changed much since 1982, but the accumulated evidence against this GOP dogma is overwhelming.

Gingrich was again at the forefront of the fight against taxes in 1993 when he warned that the Clinton budget plan “will in fact kill the current recovery and put us back in a recession.” Rep. Dick Armey, who would go on to be House majority leader and now is a Tea Party godfather, warned that “the impact on job creation is going to be devastating.” Texas GOP Sen. Phil Gramm warned that the budget deal was a “one-way ticket to a recession,” adding that Clinton’s would be one of the jobs killed by the bill. (Gramm would seek Clinton’s job, but couldn’t best Bob Dole; he was last seen being muzzled by John McCain’s presidential campaign in 2008 after calling the country a “nation of whiners.”) Laffer warned that “Clinton’s tax bill will do about as much damage to the U.S. economy as could be feasibly done in the current political environment.” Boehner himself dismissed the Clinton plan as “Christmas in August for liberal Democrats: more taxes, more spending, and bigger government.”

He got the Christmas part right. Unemployment, which had been 7.1 percent in January 1993, fell to 5.4 percent by the end of 1994. Real GDP grew from 2.9 percent in 1993 to 4.1 percent in 1994. The final tally of the Clinton years was 23 million new jobs and a budget surplus.

Clinton and his villainous tax hikes were followed by George W. Bush and his cure-all tax cuts. “Tax relief will create new jobs,” Bush argued in April 2001. “Tax relief will generate new wealth.” When the bill was enacted that June, GOP Rep. Mike Pence (now running for governor of Indiana) gushed that they would “stimulate our economy” and “put the ax to the root of the Internal Revenue Code as it wages war on the American dream.”

How’d that turn out? From 2001 to 2007, jobs grew at one fifth the pace of the 1990s, the slowest rate in the post-World War II era. GDP in those years grew at half the rate of the 1990s. Oh yeah, and the deficit exploded. Fully 10 years after the largest tax cuts in history, the economy had shed 1.1 million jobs. It seems Pence’s ax was put to the root of the American dream itself.

Given the historical and economic record, one has to ask: How can anyone take the GOP seriously, especially when they are playing fast and loose with economic disaster in service to a political philosophy that not even their main icon—Reagan—followed with such monomania?

Decrying the Clinton tax plan in 1993, Boehner recalled the quote: “Those who do not learn from history are doomed to repeat it.” He went on, “It very appropriately applies to Congress today.” That’s one piece of rhetoric Boehner really should recycle. And learn from.

By: Robert Schlesinger, U. S. News and World Report, July 13, 2011

July 14, 2011 Posted by | Businesses, Congress, Conservatives, Debt Ceiling, Deficits, Democracy, Economic Recovery, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Jobs, Politics, Republicans, Right Wing, Tax Increases, Tax Loopholes, Taxes, U.S. Chamber of Commerce, Unemployment, Voters, Wealthy | , , , , , , , , | Leave a comment

   

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