Tax Cuts for Small Businesses and the Middle Class Will Spur Job Creation
Business leaders are asking for increased demand for their products and services. When asked -- by Obama -- CEOs explained, "that is why we hire!" We hire to build something someone ordered. We hire engineers for projects. We hire to fill customer needs.
CEOs also explained that there are millions of high tech manufacturing jobs, and jobs that require advanced training that they cannot fill. They cannot find people who are trained for those jobs.
This is occurring in the context where more than $2 trillion in cash sits on corporate balance sheets. The largest supply of cash in history.
If demand can be created that will release those trillions from the hands of business into the economy, then America will see explosive growth. Jobs, jobs, jobs.
This demand creates the hiring that we want, and is what the CEOs told Obama it would do so.
This chart illustrates the level of cash on the sidelines.
How do we get there?
1) Find every person who could create demand for products and services and give them a tax cut.
The American Jobs Act, Obama's legislation, gives tax cuts to everyone who is employed. If you have a job, you get to keep more money. The idea is to leave more money in the hands of those who have secure employment because that is who feels secure enough to spend the money.
Spending churns up demand in the economy. The economy is businesses and individuals spending. If you buy a hamburger you are churning the economy forward. You are the economy. Start spending and the economy grows. Here is the plan in the American Jobs Act to give you more tax money back. This is money in your wallet.
2) Give massive tax cuts to small businesses.
The American Jobs Act, Obama's legislation, gives big tax cuts to small businesses. Small businesses create 98% of new jobs. Most of them in the first few years of business. They don't appear overnight. My businesses did the hiring after about three years or more. Job creation is a building up process. Building business takes years, not seconds. View the entire plan in short form and full form here: Tax Cuts to Help America's Small Businesses Hire and Grow.
Couple that with a program called, "Start-up America," that examines every regulation and any element that could stop a small business from being successful and smooths the way. When launched it was explained here:
The goal is not that the government turns on the economy, hires a bunch of people, and then takes on massive debt. That is the lie that is being spread about this initiative. And yes, it is an outright lie. Over ten years the American Jobs Act is beyond deficit neutral. $9 billion are removed from the deficit because of the major cuts written in the law. The entire goal is to do whatever is possible to immediately stimulate demand, to trigger businesses to put those $3 trillion to work.
Why would it work right now?
1) New Jobs.
Despite what you hear about job numbers, things are really moving forward. Over the past 27 consecutive months we have added 4,500,000 jobs. Someone you know found a job. In March we were told we had a dismal jobs report. Only 120,000 jobs added. However, that was only one third of the story.
The march jobs report showed that 441,000 underemployed workers moved to full time jobs at their skill level (i.e., Starbucks Baristas with a masters in engineering, or part time workers wanting full time). This is the sixth largest drop in underemployment history in a month when the jobs report was "dismal."
3) Job Turnover.
In an economy of 300 million people there is a constant turnover of jobs. There is a healthy level of around 370,000 jobs per month. Anything below that level and that side of the jobs equation is healthy. This month we were around 350,000 in job turnover, nicely in the healthy zone.
Last Thursday, jobless claims were reported at the lowest level in four years. Bottom line: This is all about what is happening with slack in the jobs market. Unemployment has been coming down. Underemployment, which was the largest problem is falling in fits and starts, but rather rapidly. Job turnover is in the healthy zone.
Conclusion: Slack is coming out of the system steadily. Job growth is steady. The slightest ping in the economy that releases $3 trillion from business cash reserves into the economy will send us off to the races. The American Jobs Act goes directly for the jugular vein and creates the demand that CEOs are looking for.
Here is the full video of the American Jobs Act being proposed in Congress.
Republicans did not want explosive growth during an election year. They wanted Americans to continue suffering through the election until Republicans safely returned to power. There were decades when Republicans had no majority in Congress. They felt that if they blew things up and Obama was too successful they would be back out in the woods.
My previous writing fleshes out the details.
1) How did Republicans sabotage Job Creation?
View the process that Republicans used to sabotage jobs creation in my previous article. 17 jobs bills were blocked. Not the law. Republicans blocked debate so they wouldn't have to be on record stating why they were against small business and worker tax cuts that would impact 160 million Americans.
2) How did Obama's policies do an amazing job of breaking the free-fall and turning us around? (Despite being designed to fix a smaller scale problem)
View my previous analysis of the success of previous programs, which Republicans did not vote for, and understand how Republican obstruction is killing job creation and recovery.
3) How does the Affordable Care Act send money to America's job creators?
The Affordable Care Act is basically the largest set of tax credits in American history towards everyone who needs insurance and can't afford it. Instead of spending the money through the government they want to send the money back to you.
Beyond that, the ACA sends massive tax credits directly to the smallest businesses that are in the size zone where most of the hiring happens. All those details are described here.
4) How the Affordable Care Act will send money to you.
Don't believe me? Here is the subsidy calculator. You can see how much you would get back based on your income and who you cover.
Bottom Line: The CBO stated that over a decade the Affordable Care Act is better than deficit neutral. It reduces the deficit by $100 billion. Despite the lies about the CBO, saying it will now cost $1.57 trillion, they have actually stated that the Affordable Care Act will reduce the deficit by $50 billion more that measured before. It reduces the deficit by $150 billion.
5) Fact check the costs of the law.
View a politifact article on the lie that costs will double. Gross costs double, but costs only double if you ignore all revenues included in the law that pay for it.
View the congressional budget office revised estimate of costs which states that costs will be, "about $50 billion less than the agencies' March 2011 estimate for that ten year period" (2012-2021).
Due to revenues in the law and cuts of programs like Medicare Advantage (Obama's massive entitlement reform), the Affordable Care Act shrinks the deficit. We spend less money by having it than we would without. Repeal means greater deficits. View why in this video. If you don't believe the capacity of the opposition to lie, examine Mitt Romney. The core mission of Romney's entire campaign is to repeal "Obamacare."
6) Romney essentially wrote Obamacare and promoted it nationally.
View my article on how Romney passed all elements of the Affordable Care Act in his state as Romneycare, promoted the individual mandate nationally, and then Obama hired Romney's team to write the national law. Then Romney made a massive "Mitt Flop" and now attacks the very law he wrote and proposed go national. I show this all with video of Romney. He says that the individual mandate will lower costs for everyone.
Bottom Line: Republicans have it wrong on jobs. When Republicans lost power in 2008 we lost 831,000 jobs in December alone. Then they voted against all the legislation that would have turned America around. Then, they outright blocked the legislation to kick us into overdrive. Now they attack a health care law that stimulates even more demand by sending Americans tax credits.
Conclusion: To stimulate job growth simply get the Republicans out of the way. Today, they are complaining that Obama is not creating jobs fast enough.
The complaint essentially means, "Republicans blew up the house and burnt it to the ground. Democrats got power and turned it around. Republicans are now complaining because Democrats haven't fixed the mess created by 10 years of Republican policy. They make this complaint while blocking every piece of jobs legislation put forwards by Democrats." With the top political priority of denying President Obama another term. That means causing Americans to suffer for several more years so they are angry enough to get rid of Democrats.
Here is Mitch McConnel, the Senate Minority Leader and one of the most powerful Republicans in America, at a time when Obama was focused on legislation to generate jobs. Here is what McConnel had to say:
What do you believe will create explosive jobs growth?
I believe getting Republicans out of the way and sending them back to the forest, sending them away is the best way forwards. Get rid of all of them. Republican leaders' actions during the massive financial crisis have been the most unpatriotic possible. Beyond anything I would even possibly imagine.