While President Obama is having his jobs summit today, National Review Online decided to have one of our own. We asked some of our experts: What’s a realistic policy that could actually create jobs? Who could take it up as a campaign?
Only supply-side economics and reductions in tax rates will stimulate permanent job creation. America’s corporate-income-tax rate is now virtually the highest in the industrialized world, as others across the planet have adopted the successful policies of Reaganomics. Cut the federal corporate-tax rate from 35 percent to 20 percent, if not lower. Allow immediate expensing for business equipment. Cut federal payroll taxes by 50 percent for two years, which would provide powerful, immediate relief to small businesses that create the most jobs. Follow this with a permanent personal-account option for that portion of payroll taxes for younger workers, with the personal accounts substituting for an equivalent portion of future retirement benefits. This would provide a continuing gusher of new savings for capital investment, resulting in more jobs and higher wages. To pay for this, abolish TARP and return the money, end all bailouts, and repeal still unspent “stimulus” funding. Newt Gingrich has a complete jobs program along these lines here.BURTON FOLSOM JR.
– Peter Ferrara is director of entitlement and budget policy for the Institute for Policy Innovation.
What does history tell us about how to create jobs? For three generations, Keynesian economists have argued that stimulating spending by the federal government is the most effective way to jump-start an ailing economy. That tactic, however, has no record of success. It always fails. The government aid becomes politicized and the higher taxes choke economic growth.What does work in creating jobs is tax-rate cuts. After World War I and World War II (under Presidents Coolidge and Truman) the U.S. reduced the size of government and also cut tax rates — and that encouraged business to expand. The result was the prosperity of the Roaring ’20s and the huge business growth of the late 1940s. For example, from 1921 to 1923, unemployment dropped from 12 to 2 percent. In a similar vein, unemployment in 1946 was sharply lower than it was during any year of the depressed 1930s.Who should support tax-rate cuts? In the last 50 years, a Democratic president (Kennedy) and a Republican president (Reagan) have promoted tax cuts in their administrations, and in both cases, U. S. economic growth soared. Those candidates attuned to history should advocate cuts on income, capital-gains, and estate taxes.– Burton Folsom Jr. is a professor of history at Hillsdale College in Michigan and author of New Deal or Raw Deal? He blogs at BurtFolsom.com.NICOLE GELINAS President Obama’s Thursday “jobs summit” will seem like an empty media event to many Americans, including many of the nearly 16 million jobless.How to create jobs? First, abolish the division between companies that fully face the consequences of their actions and companies that don’t. That is, end “too big to fail.” If Obama really needs to have a summit, he should hold one on how Washington can credibly end this policy, because the financial-regulatory “reform” bills won’t do the trick. Smaller businesses cannot create jobs until they can fairly compete for capital. They can’t fairly compete on the merits, though, when large financial companies are extensions of the government and must dole out some of their lending on political, rather than economic, considerations.Second, ask Congress to fix the stimulus law. Unspent stimulus money meant for states and cities should go only to state and cities that use the funds to credibly cut their long-term spending. It’s okay for municipalities to put some cash toward shoring up pension funds, for example, but only to ease the transition toward a revamp of public-employee pensions. The private sector can’t grow when employers are spending much of their time trying to figure out how to pay or flee ever-rising municipal taxes.Finally, spend more of the stimulus money on real infrastructure investments — even if it takes longer to plan good projects. The economy doesn’t need “shovel ready.” It needs to know that government has a long-term investment plan for the public assets that support private-sector growth.– Nicole Gelinas, contributing editor to the Manhattan Institute’s City Journal, is author of After the Fall: Saving Capitalism from Wall Street — and Washington.