One would not expect that President Obama’s stick-it-to-the-“rich” plan — I mean, his jobs plan — to get good reviews from those who lean conservative, such as the Tax Foundation, which doesn’t mean the Tax Foundation isn’t correct:
A review of the economic research suggests that “jobs” incentives tend to be ineffective in spurring new hiring, while the three most recent “demand-side” tax cut plans failed to induce new consumer spending. The business-expensing provision, while a good idea, will only have a modest impact on economic growth because of its temporary nature. …
While it is likely that the tax incentive portion of Pres. Obama’s plan would deliver few jobs and little economic growth, the permanent tax increases that “pay for” the tax cuts can do permanent harm to the economy. …
By and large, these measures are not motivated by sound tax policy, but rather as a means of punishing politically unpopular groups such as the “rich,” hedge fund managers, and oil companies.
While limiting tax deductions for high-income taxpayers is certainly less harmful economically than raising their marginal tax rates, the provision would still mean a substantial tax increase for America’s most successful private business owners. For example, more than 60 percent of taxpayers in the 33 percent tax bracket have business income while more than 82 percent of those in the top 35 percent bracket have business income. While they may be few in number, high-income taxpayers earn the vast majority of all private business income. It’s hard to imagine that these business owners would increase hiring in the short term in the face of a permanent tax hike.
But Obama’s jobs “plan” isn’t even getting good reviews from Democrats, reports the Chicago Tribune:
Elizabeth Warren is a staunch Democrat who recently left the Obama administration to run for the Senate in the unusually liberal state of Massachusetts. When asked if she would vote for the jobs plan proposed by her former boss, Warren didn’t hesitate. “I’m my own person, and I’ve been talking about my set of issues for a very long time.” Translated: Don’t try to hang that one on me.
The president wants to show the country he’s serious about boosting employment, which he proposes to do with a $447 billion package that bears an eerie resemblance to his 2009 stimulus effort. But the country isn’t buying. A recent Bloomberg poll found that 51 percent of Americans don’t think the jobs bill would have the desired effect.
They may never find out, since it faces strong opposition in Congress. Conservative Democrats say they have no interest in voting for Obama’s proposed new spending. Among liberals, there is some resistance to cutting employer payroll taxes. Republicans are, shall we say, even less receptive to Obama’s demands.
The skeptics are on solid ground. When he signed the original $787 billion stimulus measure, the president said it would create or save 3.5 million jobs. Instead, employment has dropped by 1.7 million. The administration is not wholly at fault: The economy was weaker then than anyone realized. But the spending measures simply didn’t have anything like the payoff that was promised. …
The folly here is trying to juice up the job market in the short run at the expense of what the economy needs in the long run. House Speaker John Boehner‘s Thursday speech to the Economic Club of Washington had a less jazzy but more realistic formula.
One big piece: “broad-based tax reform that will lower rates for individuals and corporations while closing deductions, credits and special carveouts.” Another is addressing the spending binge of the last few years, a job that, as Boehner acknowledges, will require curbs in entitlements like Social Security and Medicare. Curbing excessive regulation is also needed to reduce the uncertainty that hangs over business owners, discouraging them from hiring.
When the Tribune says “curbing excessive regulation,” perhaps its editorial writers have in mind these proposals from Future of Capitalism, which is in the process of rolling out 30 “Cost-Free Job-Creating Ideas”:
Cost-Free Job-Creating Idea No. 1: Repeal ObamaCare. …
Cost-Free Job-Creating Idea No. 5: Repeal the regulatory burdens of Sarbanes Oxley for all companies with less than $1 billion in sales, and index that number to inflation. …
Cost-Free Job-Creating Idea No. 7: Moratorium on significant new regulations until unemployment rate returns to pre-Obama level of 7.7 percent. …
The regulatory moratorium idea comes from U.S. Sen. Ron Johnson (R–Wisconsin):
It is the Regulation Moratorium and Job Preservation Act, which provides that no federal agency “may take any significant regulatory action until the unemployment rate is equal to or less than 7.7 percent.” “Regulatory Action” is defined in the bill to mean “any substantive action by an agency that promulgates or is expected to lead to the promulgation of a final regulation, including notices of inquiry, advanced notices of proposed rulemaking, and notices of proposed rulemaking.”
A press release from Senator Johnson explains: “During the Obama Administration, the unemployment rate has never been lower than it was the day the President was sworn in, when it was at 7.8%. Johnson’s legislation prohibits federal agencies from implementing any new significant regulatory actions until the nation’s unemployment rate falls to 7.7%. It allows the President to waive the rule for regulations dealing with national security, or national emergency.”
Those opposed to defanging the feds as Johnson proposes obsess over what they claim are the record profits of publicly traded corporations. Independent of the facts that no profit is bad profit and that business profits are always preferable to government tax revenues, the number of publicly traded U.S. corporations totals only 15,000 — one-third on stock exchanges, the rest over-the-counter — with another 7,000 grey-market firms, whose stock is available publicly but not sold on exchanges. The number of publicly traded companies on major stock exchanges is dropping, according to CFO.com, for reasons that include the impetus for aforementioned idea number 5.
The number of businesses with employees, according to the U.S. Census Bureau, totaled in 2007 6,049,655. The number of businesses without employees (in other words, sole proprietors) totaled in 2007 21,708,021. So when considering cuts in corporate taxes and regulations, opponents are interested only in the effects of corporate taxes and regulations on 0.1 percent of businesses, instead of the effects of corporate taxes and regulations on 99.9 percent of businesses.
One would think it makes more sense to base government policy on 99.9 percent of businesses than 0.1 percent of businesses. Or, if you wish, the 99.64 percent of non-publicly-traded businesses with employees than the 0.36 percent that are.