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Can Washington Find the Jobs?
Looking forward.


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True, President Clinton hiked income-tax rates in 1993, but (largely thanks to the Republican Congress) Clinton also signed serious welfare reform into law, which drastically shrunk federal welfare payments, and cut the capital-gains tax. Those limits on government under Clinton seem to have offset the damage created by his income-tax hike.

The Keynesian, massive-government-spending approach is the Obama solution, and under that strategy the U.S. has lost more than 2 million jobs in the last three years. And we are stuck at 9 percent unemployment. In the 1930s, under Hoover and especially FDR, we also tried massive federal spending and we had double-digit unemployment the whole decade. As Henry Morgenthau, FDR’s secretary of treasury, sadly said, “We have tried spending, and it does not work.”

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The evidence of the last hundred years suggests that cutting tax rates and limiting government is the surest way to spark economic development and job creation. Where are the jobs today? Waiting to be liberated from stimulus packages and other stifling government intervention.

— Burton Folsom blogs at BurtFolsom.com and is a professor of history at Hillsdale College. His latest book is New Deal or Raw Deal?


John C. Goodman
Uncertainty is the biggest reason employers are holding back on hiring more workers in the current economy. What’s causing all this uncertainty is that nobody knows what is going to happen in Washington, D.C. An employer who hires workers today has no idea what the company’s future costs will be for labor, building and facilities, capital, or taxes.

Hiring new workers and committing to new production has become extremely risky. Many employers are unwilling to make the kind of long-term investment needed to keep new workers through the learning curve until they make the initial training period worth the investment.

The cost of labor is difficult to estimate under Obamacare. Employers must provide full-time employees with comprehensive health insurance in less than three years. Cost estimates are that for an employee with a family, the required insurance will cost $12,250 a year or more — the equivalent of $6 an hour.

The National Labor Relations Board is considering rule changes that would make it much easier to unionize workers, creating another great uncertainty for employers. Under the Obama presidency, the NLRB has become refocused not on labor, but making labor more costly.

As for capital investments such as new buildings and new equipment, here again there is considerable regulatory uncertainty. And, as for the cost of financial capital, what is going to happen is anybody’s guess. When the Bush tax cuts finally expire, the tax on capital gains will increase by a third, and the tax on dividends will more than double. The administration has made no secret that it would like to accelerate these tax increases and make them even higher.

So, despite claims to the contrary, the Obama administration is profoundly anti-labor. It doesn’t understand that when you make hiring more costly, there will be less hiring.

What about the Republicans in Washington? Ironically, their presence in some ways adds to the uncertainty. While the two parties are battling, no one knows what the outcome will be.

So the best strategy from a business perspective is to sit on cash, delay the employment of labor and capital, and wait to see what happens next.

— John C. Goodman is president of the National Center for Policy Analysis.



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