Inspired by this thread: What ideas, consistent with their politics, do Republicans have to tackle America’s unemployment problem, in the short run?
The answer might be key to the GOP’s chances in the midterm elections.
Deregulation and cutting taxes. Same old song.
Deregulation and cutting taxes would, in the short run, provide jobs by allowing businesses to use tax money to hire people and allowing them to dispense with red tape. In the long run, this would screw us by putting government employees out of work and causing environmental and economic disasters.
In short, that’s a solution, true, but it’s worse than the problem
Going by the Republicans in congress; a raised middle finger.
The Republican answer would be that the best thing the government can do to reduce unemployment would be to get out of the way of the free market. Get rid of all social safety nets and the minimum wage, that way there will be no artificial price floors that cause the surplus labor THEN labor could reach its market clearing price.
Oh yeah and cut taxes for the rich, that is a critical part of getting to full employment.
Tax cuts on the wealthy, duh!
Quite frankly, that’s part of the point. If you think it’s critical that putting government employees out of work is a negative that should be avoided while angling for a healthy economy, then I don’t know what to say. Someone schooled in the basics of economics can articulate it better, I’m sure, but preserving government jobs does not translate to a robust economy.
Perhaps not, but neither is government some kind of parasitic organism on the private sector. The relationship is symbiotic.
And the unemployed are all unemployed equally, no matter what kinds of jobs they have lost. And the employed all provide economic stimulus and taxes, no matter whence comes their income.
Personally, I would advocate getting rid of the minimum wage, removing taxes on any salary below a level to achieve lifetime self-sufficiency, and making all health insurance separate from employer so as to make the barrier for small companies to employ someone very low, but that’s something permanent, not for solving the current situation. It could help, but more likely would just throw things into chaos for being such a sweeping change in a dark time and potentially just make things worse.
Really, the key is to get the public to have confidence in the strength of America and its future, so that they get back into the market. That’s mostly an issue of apparent strong leadership and a clear goal for our immediate future. If you pass a stimulus package, lower interest rates to zip, and set up public works projects through the nation to set the stage for the people to come back and none of that works, then essentially there’s not a lot to be done economically speaking. The government can do everything it wants to set the stage for an economic return, but ultimately they can’t make you take out your wallet and start spending money.
Personal choice: Announce that we’re going to start fighting China for economic dominance on the global marketplace, the steps American businesses should take towards that end, establishing closer ties with Europe – especially the nations with large English-speaking abilities like Sweden and Norway – relaxed immigration rules on importing skilled workers from abroad, etc. Get the “Go Team Go!” spirit fired up, essentially.
I fail to understand how throwing government workers on the unemployment line serves any real positive purpose, other than it makes the news and give a false sense of pride. It seems to me tackling the government programs they manage and reducing/eliminating those programs would have a more immediate impact. Of course, many (most?) of those government outlays actually go to private sector companies and private sector jobs.
Yes, I’m a federal employee and I hear this short-sighted crap all the time. Get rid of me and I join the dole queue, with practically no chance of ever contributing to private sector employment thanks to the inherent bias private employers have against “government workers.” (We endured outsourcing under Bush but kept 95 percent of our jobs because the studies all showed we do the work better/faster/cheaper than the private sector.) If my salary/benefits are such a burden to the taxpayer, why is it Congress has deemed locality pay in many parts of the country just so federal employees begin to approach some level of parity with their private sector counterparts. My locality pay is 20 percent above GS base pay, yet I’m still 30 percent below what the private sector pays in an equivalent job.
On the other hand, we manage lots of federal programs required by Congress that merely are make work programs and funding for the private sector. Identify those programs and eliminate those, unless they are your pet projects in your Congressional district you don’t want touched. I work with COs and CORs (contracting officers and contracting officer reps) all the time and we see lots of of tax dollars going to Congressional pet projects that serve no real benefit, other than to get Congressional critters re-elected. Congress loves to start programs, but all too often fails to provide continued funding. So after outlays for pet projects and getting them ingrained into the local economies, cutting such programs means layoffs of private sector contractors. Of course that can’t happen so people get up in arms to continue the corporate welfare funding to keep those private jobs paid by your tax dollars.
If you really want to cut government expenditures, go after the big ticket agencies. What areas of DOD, HSS, SSA, and DHS do you want cut? Until people get real with those specific agencies, nothing else will work.
Yeah, I agree. Allowing people to keep more of their money, and removing restrictions and distortions on the market for labor that prevent hiring is a waste of time. Those stupid free marketeers. Don’t they know anything?
Since we all agree such things are folly, why don’t we raise taxes instead? And increase the burden on employers?
After all, we’ve just convinced ourselves that doing the opposite is foolish and won’t accomplish anything. Why not go in the opposite direction, since it will (1) raise revenue for the government (2) provide more money to hire government employees, which is always a good idea and (3) not cause any harm?
Hell, why not just raise corporate taxes to 90% and confiscate all private property? That shouldn’t have any effect on employment, should it?
Yeah! Do the opposite of whoever! That’s the republican way!
Yeah, that’s exactly what I was implying with my post.
I was being serious with my first sentence and snarky with my second. We can rehash the minimum wage argument all over again if you want.
What about, “It’s not the government’s job to worry about the unemployment rate.”
Or is that the libertarian response?
Libertarian, Republican, at any rate it’s not a response that’s going to appeal to the voters of any party this year.
The number one job creation problem right now is market uncertainty. This uncertainty is driven by several things:
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An honest, realistic belief that the world is undergoing transitional changes that make it hard to predict where markets are going.
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High levels of public and private debt, which are causing financial instability and a decrease in aggregate demand
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Activist government proposing new policies almost daily, which makes it hard for businesspeople to plan for the future
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A worldwide demographic transition which will potentially disrupt markets substantially in the next 10-20 years.
It`s a little-known fact that more jobs were shed in the 2001 recession than were shed in the current recession. However, the unemployment rate didn’t spike because the private sector created far more jobs than it’s doing now, even during the recession. Over 8 million more jobs were created during and after the 2001 recession than have been created in this one.
Even more disturbingly, job creation by small business is way down, and the jobs that are being created are coming from a smaller group of large, government-connected businesses like GE. Small businesses are especially susceptible to fears of regulation, financial uncertainty, difficulties getting credit, and other such problems. But the economy will stagnate and calcify if job creation doesn’t move back into the small business/entrepreneurial sector.
So what can the government do to help this, bearing in mind that some of the problems are global and systemic? The main thing is to shift its focus from new regulations, new stimuluses, and other new programs to stabilization. Announce a regulatory moratorium. Create a sound deficit plan that is credible and enforceable and leads to reasonable deficit reduction over the medium and long term. Scrap big, scary programs like cap and trade, Obamacare, card check, etc. Announce that there will be no more bailouts, no more stimulus packages.
The government doesn’t have to cut taxes at this time, and would probably be foolish to do so, as anything that makes the deficit worse at this time will probably just add to uncertainty. It can probably get away with letting the Bush tax cuts expire, as these have already been discounted by the market. But it should announce a moratorium on new taxes other than those.
There’s very little room for tax cuts to stimulate the economy, and even less room for more spending. Obama’s request for a worldwide tax on banks has been shot down by the G20, as has his request that governments engage in more fiscal stimulus. The stimulus programs have widely been seen to be, if not an outright failure, certainly nowhere near as effective as promised, and governments around the world are running away from them. So on the fiscal side, not much more can be done.
There is one area that could offer some stimulus at no cost: Regulation. Not willy-nilly deregulation of everything (we don’t need to argue about food inspection), but there are certainly regulations on the books which have been shown to be much more expensive than the economic benefit they provide. These could be removed, or at least a regulatory holiday for some of them could be considered.
Obama needs to get his regulatory agencies under control. The EPA’s threat to make CO2 a pollutant is a perfect example of how misguided regulators are injecting uncertainty into a marketplace that’s already very volatile.
Regulations in America cost business several trillion dollars per year. Many of them return more in economic benefit and should remain. But there’s plenty of room in there for fat to be trimmed.
So… Modest regulatory easing, and credible plans for economic and regulatory stabilization. That’s what the government can, and should do. Forget ‘change’. Forget the radical re-inventing of America. If you want to do that, wait for good times when you have the money and political capital to do it, and when the markets have some resiliency left in them that can absorb the change.
Some of the biggest problems businesses have right now aren’t regulatory - they involve tax code complexity and an unnecessarily high corporate tax rate compared with the rest of the world. These have negative effects on employment in both the short and long term, and ought to be addressed.
Get rid of the corporate income tax and raise the private income tax.
http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm Our tax rates are at the lowest since 1950. Do you look about and see all the job creation it did and feel satisfied? Do you really believe they are too high? Amazing how a mantra can get traction, even after it is proved wrong over and over.
http://www.factcheck.org/askfactcheck/whats_the_percentage_breakdown_of_the_governments.html Corporate taxes account for 14 percent of the governments revenue. Not long ago it was 50 percent. Lowering them over and over has just created soooo many jobs.