Does GOP Really Want To Increase Taxes On The Middle Class?
As the Senate considers an extension of the payroll tax holiday, the big question is: why in the world would Republicans in Congress consider raising middle class taxes by $1,000 to $1,500 per household in the midst of an economic downturn and an election year?
This is a particularly vexing question when you recall the ardor with which the GOP has campaigned against raising the taxes paid by millionaires and billionaires by even one dime.
At the beginning of the week it appeared that virtually every Republican in the Senate was prepared to vote no on a Democratic proposal to extend and broaden the current payroll tax holiday.
Now some are beginning to get cold feet. Senate Republican Leader Mitch McConnell has now reportedly “opened the door” to considering the possibility of a payroll tax cut extension.
But the real question is why Republicans would contemplate voting against extension of the payroll tax holiday in the first place?
Voting no would be like leaping off a political cliff — taking an iconic vote that would no doubt become emblematic of the fact that they are willing to sacrifice the interests of the 99% to protect the fortunes of the wealthiest people in America. John Paulsen — the Wall Street hedge fund manager who made $5 billion last year (that’s $2,400,000 per hour!) — might consider this a courageous stand. But the everyday worker — who will take 48 years to make as much as Paulsen makes in one hour — might not be so charitable.
Perhaps, you might say, it’s because Republicans are taking a strong principled stand against raising the deficit. But that would not be the case, since the Democratic proposal is entirely paid for by a small increase in the taxes of millionaires.
What on earth could drive Senate Republicans to consider taking such a stupid vote? Four possibilities jump to mind.
1). Possible Reason Number 1: They claim the extension of the payroll tax holiday will undermine Social Security and Medicare.
Republican Senator Jon Kyl made this argument on the weekend talk shows. We can dismiss this talk as a complete smoke screen.
First, Senator Kyl and the Republicans have never given a rat’s rear about Social Security and Medicare in the first place.
Second, the payroll tax holiday that was passed last year does not remove one dime from the Social Security or Medicare trust funds. In fact, the lost payroll tax is replaced dollar for dollar from the Federal general revenue fund.
The payroll tax holiday itself is simply a means of putting money directly into the pockets of working people that is then replaced with money from the much more progressive overall Federal tax structure.
2). Possible Reason Number 2: Some Republicans really don’t believe that taking $1,500 out of the paychecks of everyday consumers will hurt the economy.
There are apparently some Republican lawmakers who have drunk the “Keynesian Economics Doesn’t Work” Kool-Aide. They actually believe that the only way to stimulate economic growth is to shovel more and more income into the hands of the top 1% — the “job creators” — and watch that money “trickle down” on the rest of us.
The problem is that there is absolutely no evidence that “trickle down” economics works — or ever worked.
We had an actual experiment with “trickle down” economics during the Bush Administration. The Republicans cut tax rates for the wealthy. The rich got a lot richer, and the median income of everyday families actually dropped. In fact it was the first decade in modern history that the economy did not create one net private sector job.
But — the Republicans say — two and a half years ago Congress passed a huge stimulus bill, and we still don’t have enough jobs.
Of course, they forget to mention that at the time, the economy was shedding hundreds of thousands of jobs because the financial system had collapsed as a result of the very same policies they are now advocating once again. And there is the inconvenient fact that since the stimulus worked its way through the economy, we have had 20 straight months of private sector job growth — whereas during the last twelve months of the Bush Administration we lost massive numbers of private sector jobs.
Of course a good deal of that private sector growth has been offset by the Republican refusal to continue the stimulus bill’s aid to state and local governments. That resulted in layoffs of teachers, firefighters, police officers — and other public service workers who they must presume do not hold “real jobs.”
The problem with the stimulus bill was not that it didn’t work. The problem was that it wasn’t big enough. Republicans remind you of a guy who uses a hose to put out half of a house fire, turns off the water and then contends that water doesn’t put out fires because the entire fire hasn’t been extinguished. The obvious answer is to get more water. Not only do the Republicans want to stop pouring on the water of stimulus — they want to pour on the gasoline of austerity — just the opposite of what is needed to put out the bad economic flames.
When an economy is in recession the problem — by definition — is too little demand to absorb the goods and services that the economy can produce. The way to solve the problem is to generate more demand to jump-start the economy. This is not just a matter of opinion — it’s a matter of mathematics.
Republicans who run around claiming that economic stimulus — money in consumer pockets — isn’t what’s needed to stimulate economic growth are like people in the middle ages who refused to believe that the earth circles the sun. If the evidence doesn’t support their ideological frame, they throw out the evidence — not the ideological frame. They ignore the facts. It makes no more sense for them to vilify “Keynesians” than it did for an earlier generation to vilify “Copernicans.”
There is complete economic consensus that eliminating the payroll tax holiday today will be a disaster for the economy. In fact, economists like Mark Zandi — who advised John McCain’s campaign — argue that if the payroll tax holiday is not extended, it will shave 1.7% off the gross domestic product and throw the economy into a double dip recession.
3). Possible Reason Number 3: The Republicans oppose extending the payroll tax holiday, because President Obama is for it.
That’s certainly their knee-jerk response. They believe that anything that makes Obama look effective hurts Republican chances in 2012.
But they have some big problems here. First, many Republicans supported a payroll tax holiday in the past — and many voted for the original holiday last year. If they form a solid wall of opposition, they will look like hypocrites who changed their position simply to hurt their political opponents.
And, second, the entire issue puts them in political box canyon — with no escape. If they oppose extension they look like they are obstructing something that is good for the economy — and very palpable to everyday voters. If they support an extension, they give the President a victory.
4). Possible Reason Number 4: Republicans actually understand that ending the payroll tax holiday will hurt the economy — and that’s exactly what they want to do.
There are clearly some Republicans in Congress who actually believe that ending the payroll tax holiday won’t hurt the economy. But there are a lot of Republicans who know exactly what will happen and would be perfectly happy to hurt the economy.
In fact, the Republican leadership has laid a bet that if the economy continues to stagnate they are that much more likely to defeat Democrats next fall. They know that no President in a hundred years has been re-elected when the economy was not materially improving. And they are certainly right that a major issue in next year’s election will be who is responsible for the lousy economy.
Their problem is that by supporting an increase in the payroll tax that takes $1,500 out of the pockets of every middle class family, they create an iconic example of why the real problem is the “do-nothing Republican Congress.”
Sixty-seven percent of Americans believe that Congress is completely controlled by Republicans. And even though the Senate leadership is Democratic, the Republican willingness to stop action using the filibuster means that they are, in fact, entirely responsible for preventing action to create jobs.
That’s good news for Democrats, since in some polls only 9% of Americans have a positive view of Congress and overwhelming numbers believe the country is on the wrong track.
That means that Democrats in Congress can run as outsiders who want to break the log jam in Congress and take action on jobs — take action to defend the middle class. It means that the President can lay the blame for the lousy economy directly at the doorstep of the Republican Party – and its nominee.
The battle over the extension of the payroll tax holiday plays right into that narrative. It is a huge problem for the Republicans in Congress. Bad enough that the “do-nothing Republican Congress” is doing everything it can to oppose President Obama’s agenda to create jobs. Taking $1,500 out of the pockets of everyday Americans gets downright personal.
That’s why, when the chips are down, the odds are good that the Republican leadership will fold its hand and support extension of the payroll tax holiday.
By: Robert Creamer, The Huffington Post, November 30, 2011
State Loan Program That Rick Perry Touted Had To Be Bailed Out
Gov. Rick Perry has anchored his presidential campaign to his claims of creating jobs.
With no business record of his own, Perry must contrast his ability to create jobs with public money against the records of two front-runners, Mitt Romney and Herman Cain, who tout credentials as private employers.
His GOP opponents already have sniped at his gubernatorial record, saying Perry inflates his job-creation numbers and takes credit for a business climate he inherited. Perry’s efforts to create jobs and spur agribusinesses as the state’s agriculture commissioner during the 1990s might provide even more fodder for the opposition.
Over his eight years as Texas’ farmer-in-chief, Perry oversaw a loan guarantee program with so many defaults that the state had to stop guaranteeing bank loans to startups in agribusiness and eventually bailed out the program with taxpayer money.
The state auditor panned Perry’s claims of creating jobs and criticized Perry and his fellow board members at the Texas Agricultural Finance Authority for not following their own lending guidelines.
In some instances, the auditor said, Perry and the authority guaranteed loans to applicants with a negative net worth or too much debt. Citing growing debts, the auditor finally suggested that state officials consider dismantling the program.
Even as the first alarms were sounded, Perry defended the program, saying no taxpayer money was at risk, blaming others and claiming he had fixed it.
It only got worse.
By 2002, Perry’s successor, Agriculture Commissioner Susan Combs, a Republican, stopped making loans as the percentage of bad loans neared 30 percent.
By 2009, her successor, Agriculture Commissioner Todd Staples, also a Republican, asked the Legislature to pay off the loan guarantees with a $14.7 million appropriation. The finance authority could no longer afford the $541,000 to cover the annual interest on the bad debts, almost all of which dated back to Perry’s tenure.
“It’s bad,” Staples told the American-Statesman at the time. “Unfortunately, taxpayers are on the hook for something that happened as long ago as 1987.”
In effect, Perry, as governor, signed his own government bailout when he approved the 2009 appropriations bill.
The Perry campaign did not respond to questions about whether Perry, as president, would use public money in economic development programs and what lessons he learned from his experience guaranteeing risky business loans with public money.
Mired in partisan politics
When the Legislature created the Texas Agricultural Finance Authority in 1987, the intent was to boost the state’s agricultural economy by selling state-backed bonds to guarantee bank loans to entrepreneurs who could not get commercial loans. The goal was to create small businesses and jobs by processing — rather than simply growing — Texas agricultural products.
The program immediately got mired in partisan politics, with Agriculture Commissioner Jim Hightower, a Democrat, on one side, and the Republican members of the finance authority appointed by Gov. Bill Clements on the other.
The impasse ensured that no loans were made during Hightower’s term.
In 1990, Perry campaigned on a promise to create jobs and expand the rural economy by making loans to agribusiness startups that would process the state’s agricultural products.
Clements’ appointees to the finance authority board gave Perry, a board member, sole authority to guarantee loans before newly elected Gov. Ann Richards, a Democrat, could replace them.
Under the program, the state would guarantee 90 percent of a lender’s loan — up to a maximum of $5 million — to an applicant.
Entrepreneurs lined up for money to spin cotton into yarn, process meats, develop cotton insulation, market canna bulbs to wholesale nurseries and sell pinto beans as a ready-to-eat frozen meal, to name a few.
‘This has not cost Texans money’
Perry had made four loan guarantees for $5.8 million by the time the attorney general ruled that he had to share that authority with his fellow board members. Even then, Perry and his staff drove the decisions.
Mary Webb, a Richards appointee who joined the finance authority as chairwoman in 1992, said the part-time board members had to rely on Perry’s staff at the agriculture department when screening loan applications.
“They did the legwork,” she said. “We looked at the deals to see if they fit with the legislation: Would they create jobs and help the agriculture community?”
By the time Webb left the board in 1995, she said she knew a couple of loans were in trouble. She said she learned only later the scope of the problems with other loans.
The first loan guarantees were financed by selling $25 million in bonds.
Twice, in 1993 and 1995, Perry campaigned for voters to approve more bonding authority.
Perry claimed the first two years of the program had created 4,100 jobs and pumped $390 million into the economy by guaranteeing loans to 47 companies. He predicted more than 40,000 jobs could be created with the additional bonding authority.
He didn’t mention troubled loans as he touted the program’s virtues at a 1993 Capitol press conference: “We think that this Texas Ag Finance Authority is, without a doubt, one of the finest programs that the Texas Legislature, that the citizens of Texas have ever gone forward with.”
At another stop, Perry said, “We can truly say it has not cost the taxpayers of Texas any money.”
Voters turned him down in 1993, but Perry finally won an extra $200 million in bonding authority two years later.
“This is one of the few government programs that truly has worked,” Perry said. “This has not cost Texans money.”
In January 1997, State Auditor Lawrence Alwin first alerted state officials, saying Perry and the board had violated their own lending guidelines.
He said 10 of the 48 companies had defaulted, and six more were in trouble. The first bad loans were written off as uncollectible in 1995, according to records.
Alwin also debunked a $40,000 report by a state-paid consultant claiming the program had created or retained more than 5,000 jobs at a cost of $412 per job as well as contributing $600 million to the economy.
The consultant’s data, which Perry submitted to the Legislature, were “unverifiable, incomplete, untimely, and inconsistent” and based on unrealistic assumptions about job creation, Alwin concluded.
A year later, Alwin warned that the situation had gotten worse. The program was $5.7 million in the red because of bad loans.
The issue hit the newspapers.
Perry and his lieutenants defended the program.
Deputy Agriculture Commissioner Larry Soward told The Dallas Morning News that the audit reflected a number of bad loans made early in the program to farmers and ranchers trying their first business ventures.
“The business acumen of the people behind them might not have been as strong as possible,” Soward said.
But he insisted the program would rebound: “The fact that there is a negative balance does not mean the program is in trouble.”
Perry echoed a similar refrain in a guest column in the Amarillo Daily News.
“By their very nature, TAFA loans are considered higher risk. Because of this, some defaults were inevitable and a negative balance was expected in the early years of the program,” he wrote.
He blamed the problems on “some unfortunate decisions made by the previous TAFA board early in the program.”
Perry promised the problem was fixed. “Today, TAFA is on solid footing with a positive balance projected by 2010,” he wrote.
He reminded readers that the loans were funded by debt — commercial paper: “No taxpayer money has ever been used to make TAFA loans.”
In 1998, Perry was elected lieutenant governor, and Combs succeeded him as agriculture commissioner.
She talked of expanding the loan guarantee program to other borrowers beyond food and fiber processors. But she asked Alwin to do a follow-up audit.
His warning was prescient. He said a program that guaranteed loans to people who typically couldn’t qualify for commercial loans would have a hard time finding enough good loans to generate the income to offset the losses from the bad ones.
In 2002, Combs and the agricultural finance authority bowed to that reality, suspending any new loans.
Twenty-nine of 102 guaranteed loans defaulted, almost all of them during Perry’s tenure, according to the records provided this month by the agriculture department.
While the majority of the loans were in good standing, the majority of the original $25 million — $14.7 million — was bad debt. Just as the auditor warned, the income from the good loans could not generate enough cash to make the program self-sustaining.
“We hit a brick wall,” Staples said in 2009.
By: Laylan Copelin, American-Statesman Staff, Statesman.com, October 22, 2011
Job Creation: Small Isn’t Always Beautiful
I challenge you to find a stump speech by a politician running for any office from dog catcher to president that doesn’t invoke the importance of small businesses.
That’s not necessarily a bad thing. It’s a hat tip to American entrepreneurialism, evoking images like that of Steve Jobs planting a seed in his garage that grew into an amazing Apple orchard. Besides, don’t most people work for small businesses, and aren’t such businesses the engine of job growth?
Actually, no. In what may be the most misunderstood fact about the job market, although most companies are small — according to 2008 census data, 61 percent are small businesses with fewer than four workers — more than two-thirds of the American work force is employed by companies with more than 100 workers. You can tweak the definitions, but even if you define “small” as fewer than 500 people (as the federal government does, basically), you still find that half the work force is employed by large businesses.
It’s even more stunning when it comes to payrolls: 57 percent of total compensation is paid out by companies of 500 or more employees, with most of that coming from the largest, those with at least 10,000 employees. And new research by the Treasury Department finds that small businesses — defined as those with income between $10,000 and $10 million, or about 99 percent of all businesses — account for just 17 percent of business income, and only 23 percent of them pay any wages at all.
But don’t small businesses at least fuel job growth? Sort of. It’s not small businesses that matter, but new businesses, which by definition create new jobs. Real job creation, though, doesn’t kick in until those small businesses survive and grow into larger operations. In fact, according to path-breaking work by the economist John C. Haltiwanger and his colleagues, once they accounted for the outsize contributions by new and young companies, they found “no systematic relationship” between net job growth and company size.
It’s unlikely such findings will change politicians’ speeches trumpeting small businesses. But if we want to get our job market back on track, they should inform our policy thinking. For example, it’s not only the case that start-ups are of particular importance to robust job growth. They’ve been creating fewer jobs over the last decade. Employment at start-ups fell by almost half, and those losses predated the “Great Recession” — probably one reason job growth was so lackluster over the last decade’s expansion.
Economists do not yet have a good answer as to why start-ups and surviving young companies are creating fewer jobs, but it may have something to do with “allocative inefficiency.” Too many resources flowed to financial engineering in the last decade, and too few went to R & D and innovation outside of the financial sector. The decline of American manufacturing plays a role here as well, as the sector has historically accounted for 70 percent of job-creating private-sector R & D, often in partnership with start-ups and small suppliers.
This isn’t to say that public policy should abandon small businesses. Many face distinctive hurdles compared with large businesses: they have tighter profit margins and thus less room for mistakes, they have diminished access to credit markets and, even with creditworthy borrowing records, many say they’re not getting the loans they need. Small manufacturers often have less access to export markets, and, with emerging economies growing a lot faster than advanced economies, that’s a big disadvantage.
Yet the sector’s primary lobbying group — the National Federation of Independent Business — tends to fight less for these pragmatic policies and more for the standard conservative agenda of lower taxes and deregulation. Indeed, the group has become a purely partisan operation, fighting more for Republican electoral victory than small-business growth. For example, it opposed the president’s jobs bill, even though independent analysts estimated it would significantly increase economic demand, and the federation’s own survey shows that “poor sales” — a k a weak demand — is a much bigger problem for its members than taxes or regulations.
The next time a politician tells you how he or she is for small business (which will likely be the next time you hear a politician say anything), be mindful that to the extent that size matters at all for job growth, it’s really about new companies that will start small and, if they survive, perhaps grow large. Everything else is largely noise — and too often, noise that has little to do with what this economy really needs.
By: Jared Bernstein, Op-Ed Contributor, The New York Times, October 23, 2011
Obama Isn’t Trying To Start ‘Class Warfare’ — He Wants To End The Republican War On The Middle Class
History will record that on September 19, 2011, the Republicans made a huge political miscalculation — a miscalculation that could potentially doom their chances for victory next year.
If I were a Republican, the last thing I’d want to talk about is “class warfare.”
For 30 years — whenever they have been in power — Republicans and their Wall Street/CEO allies have conducted a sustained, effective war on the American middle class.
Much of the success of their war has resulted from their insistence that it didn’t exist. They have talked instead about how the economy needs to reward all those “job creators” whose beneficence will rain down economic prosperity on the rest of us.
They fund right-wing organizations that divert our attention by whipping up worry that gay marriage will somehow undermine heterosexual relationships. They start wars that help pad the bottom lines of defense contractors but do nothing to make us safer.
And all the while they quietly rig the economic game so that all of the growth in the Gross Domestic Product goes into the hands of the top two percent of the population — while they cut our pay, destroy our unions and do their level best to cut our Social Security and Medicare.
There has been a “class war” all right — a war on the middle class. And the middle class has been on the losing end.
Today the truly rich control a higher percent of our wealth and income than at any other time in generations. Income inequality is higher than at any time since 1928 — right before the Great Depression.
According to the Economic Policy Institute, “the richest five percent of households obtained roughly 82 percent of all the nation’s gains in wealth between 1983 and 2009. The bottom 60 percent of households actually had less wealth in 2009 than in 1983… ”
Today, 400 families control more wealth than 150 million Americans — almost half of our population.
American workers have become more and more productive — but they haven’t shared in the income generated by that increased productivity, so now they can’t afford to buy the products and services they produce.
The success of the Wall Street/CEO/Republican war on the middle class rests, in part, in the old frog in boiling water story. If you put a frog in a pot of boiling water, they say, the frog will jump right out. But if you put a frog in a pot and gradually turn up the heat until it boils you end up with a cooked frog.
Republican policies have gradually shifted wealth, income and power from the middle class — and those who aspire to be middle class — into their own hands and for obvious reasons they haven’t wanted to focus too much attention on “class warfare.”
So now if the Republicans want to talk about “class warfare” — in the words of George Bush — “bring ’em on.”
In fact, President Obama isn’t proposing to start a “class war” — he wants to end the war on the middle class.
Among other things, he has proposed that America live by the “Buffett Rule” — by Warren Buffett’s suggestion that he and his fellow billionaires should have to pay effective tax rates at least as high as their own secretary’s.
Obama pointed out yesterday that requiring hedge fund managers to pay effective tax rates as high as plumbers and teachers was not “class warfare.” The choice is clear: either you increase taxes on the wealthy — or dramatically cut Medicare, Medicaid and Social Security benefits. It is, as the President said, “simple math.”
Whereas Republican proposals to rein in the deficit by cutting Social Security, Medicare and Medicaid benefits are intended to continue this war on the middle class, the President’s plan — in stark contrast — addresses the three factors that actually caused the deficit in the first place.
From 1993 until 2000, Bill Clinton had successfully pushed back much of the Republican anti-middle class agenda. When he left office, America had a prosperous, growing economy, increasing middle class incomes, and budget surpluses as far as the eye could see.
Bush changed all that. The anti-middle class warriors were back in power, and they took the offensive. They passed massive new tax breaks for the rich, and set out to break unions.
Three Bush/Republican policies led directly to today’s deficit:
• Giant tax cuts for the wealthy;
• Two unpaid-for wars that will ultimately cost trillions;
• Trickle-down economic policies that did not create one net private sector job and ultimately caused the financial collapse that led to the Great Recession.
The Obama deficit proposal reduces the deficit by directly addressing these three factors — that actually caused the deficit — rather than demanding that the budget be balanced by taking even more out of the pockets of ordinary Americans.
A trillion dollars — 1.2 trillion with interest — is cut by ending the Wars in Iraq and Afghanistan. Those who argue that you shouldn’t count these reductions toward deficit reduction, because Obama already planned to end these wars, are ignoring the fact that they were a big reason why we have a deficit in the first place.
Second, Obama’s proposal eliminates the Bush tax cuts for the rich — and demands that millionaires, billionaires, oil companies, and CEO’s who fly around in corporate jets, pay their fair share.
Finally, the Obama plan includes a robust jobs package to jumpstart the economy and put America back to work. The Republicans have no jobs plan at all — none whatsoever. In fact, their plan is to simply let the Wall Street bankers and CEO’s continue to siphon as much as possible from the pockets of ordinary Americans.
The combination of Obama’s jobs and budget plans have set the stage for a clear, sharp battle for the soul of America. They have posed a stark contrast that is not framed as a battle over conflicting policies and programs — but as a struggle between right and wrong.
That battle will continue throughout this fall — and into next year’s elections.
These proposals, coupled with the President’s urgent, passionate advocacy, have transformed the political landscape.
The major iconic fights that will dominate American politics over the next 14 months will be the President’s jobs proposal, his call on millionaires and billionaires to pay their fair share, and the Democratic defense of Social Security, Medicare and Medicaid.
Democrats and Progressives have the high political ground on every one of these defining issues — and I don’t just mean slightly higher political ground — I mean political ground like Mount Everest.
By huge margins, Americans prefer to raise taxes on millionaires and billionaires rather than cut Social Security and Medicare. The choice is not even close — in most polls something like 8 to 1.
And who can possibly question that the number one priority of voters everywhere in America is jobs?
The Republican policies that led to the Great Recession did more damage than anyone knew. Many Republicans actually thought they would benefit politically by the long, slow economic slog that ensued in its aftermath. After all, no sitting President had won re-election in a century when the economy was not good or materially improving — except one.
Harry Truman won re-election in the midst of a bad economy in 1948 by running against the “Do-nothing Republican Congress.”
President Obama’s jobs and budget proposals have set the stage for just that kind of battle.
His proposals have simultaneously energized the progressive base and appealed to middle class swing voters — especially seniors — who agree entirely that the government should keep its hands off the Social Security and Medicare benefits they have earned, and turn instead to taxes on millionaires and billionaires to close the budget deficit that the Republican “class warfare” policies have created.
And it won’t hurt that these proposals have prompted the Republicans to turn the spotlight on the subject of “class warfare” itself. They should be careful what they wish for.
By: Robert Creamer, Strategist and Author, Published in HuffPost, September 20, 2011
Rick Perry And The Texas Non-Miracle
About all those new jobs created under Gov. Rick Perry…
The Center for Immigration Studies reports some facts that should sprinkle a little cold water on over-heated claims for the low-wage/high-immigration Texas economic model.
Of jobs created in Texas since 2007, 81 percent were taken by newly arrived immigrant workers (legal and illegal).
Absorb that for a minute.
Native-born Texans have experienced a jobs catastrophe very similar to that of Americans everywhere else in the United States, reports CIS:
The share of working-age natives holding a job in Texas declined significantly, from 71 percent in 2007 to 67 percent in 2011. This decline is very similar to the decline for natives in the United States as a whole and is an indication that the situation for native-born workers in Texas is very similar to the overall situation in the country despite the state’s job growth.
What we are seeing here is not a pattern of job creation. It is a pattern of job displacement.
The large share of job growth that went to immigrants is surprising because the native-born accounted for 69 percent of the growth in Texas’ working-age population (16 to 65). Thus, even though natives made up most of the growth in potential workers, most of the job growth went to immigrants.
And by the way – it’s not just a matter of jobs “Americans won’t do.” As the decline in native-born employment shows, these are jobs natives used to do as recently as 2007. And the displacement is occurring higher and higher up the pay scale.
Immigrants took jobs across the educational distribution. More than one out three (97,000) of newly arrived immigrants who took a job had at least some college.
In all this, illegal immigration remains a huge factor, despite the often-heard claim that illegal immigration has slowed since the end of the housing bubble.
Of newly arrived immigrants who took jobs in Texas since 2007, we estimate that 50 percent (113,000) were illegal immigrants. Thus, about 40 percent of all the job growth in Texas since 2007 went to newly arrived illegal immigrants and 40 percent went to newly arrived legal immigrants.
A couple of conclusions follow:
1) There was no Texas miracle, from the point of view of the people who constituted the population of Texas back in 2007.
2) Rick Perry’s permissive view of immigration is not (as I’ve pointed out before) some compassionate-conservative exception to his no-soup-for-you economic policy. A permissive immigration is the indispensable prerequisite to the no-soup-for-you economy over which Perry presided.
3) Immigration is not an issue separate from the debate over employment and growth. It’s integral. You could plausibly argue in the 2000s that immigration was ancillary to job growth for Americans – or even that it somehow spurred job growth for Americans. In today’s context however, immigration is increasingly a substitute for job growth for Americans.
4) Mitt Romney finally has his answer the next time Rick Perry attacks him for Massachusetts poor jobs ranking in the early part of the 2000s.
“The numbers show, Governor, that your economic policy was great at creating jobs – for Mexico.”
By: David Frum, The Frum Forum, September 22, 2011
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