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Another Jobs Summit Fantasy
Another wasted day and another dollar down the drain. As unemployment increases the only response that Obama has is another “Jobs Summit.” [You may remember this past June’s Senate Democratic” Green Job Summit.”] It would have been interesting if some of the participants had actually ever created any. This group was woefully lacking of people that know how to create jobs and the organizations that make a living by figuring these things out like the US Chamber of Commerce, National Federation of Business and National Association of Manufacturers weren’t even invited. Early reports indicate that not much happened short of more policy wonk talk and pontification. Here you have an Administration that has made 92% of their appointments from those that never worked in the “private sector” organizing a meeting to discuss how to create jobs. All this from a crowd that never had to “make a payroll?” This is a world class irony.
I did notice that Sen. Kristen Gillibrand (D-NY) was proposing a “jobs tax credit” and I am sure that the Administration would try and take credit as a “tax cutter” if they ever implement one but they shouldn’t (implement one), let me explain.
First this particular iteration of the “jobs tax credit” was designed by the Economic Policy Institute which has a Board largely formed by Union Leaders, College Professors and a retread executive of the failed Lehman Brothers, in short a rich mixture of Democratic partisans who themselves never had to make a payroll. In their collective wisdom they were recommending a “jobs tax credit” of 15% in 2010, 10% in 2011 and falling to 0% in 2012 and beyond. In short if you hired someone presumably in 2010 you could take a tax credit of $7500 for a $50,000 job in 2010, $5000 in 2011 and of course nothing in 2012. This means it actually costs you 85% in 2010, 90% in 2011 and 100% in 2012 and beyond along with all related “overhead” cost of employment such as insurance, retirement and whatever. They “project” that this will create between 2 and 5 million jobs. This is fatutously amusing.
I have been in the position over my career of having to “make” payrolls, hire people, prepare tax returns for those taking the tax credit and yes even taking said credit myself. (thank you Uncle Sam) I can honestly say that not on a single occasion did I or anyone I worked with even consider the “jobs tax credit” in making the “hiring” decision (maybe in the budgetary process). This is not an anomaly, it is the bottom line. I am certain that these “jobs tax credits” are not on their own responsible for a SINGLE reasoned job hire.
When you read statistics each month and you read something like “employment shrank by (lets say) 495,000 jobs.” This actually means that more people were “let go” than “hired.” In every economic environment (good or bad) SOME people are hired and SOME are let go. In good times the numbers favor the hiring and in bad times the numbers favor the firing. The employers of those that are hired will take the jobs tax credit for sure and the government will take the credit for creating (as opposed to saving) jobs. The result, however, is no impact on job creation but a huge cost to the Treasury to reward companies for hiring people that they would have been hired anyway. NOBODY will hire somebody and pay 85%, 90% then 100% of salary plus “overhead” based on that nominal savings. They must FIRST have confidence that they will need them in the long run, which is discouraged with every breath out of the administrations mouth continually promising tax raises for those making over some “arbitrary” limit ($250K i.e. small business), regulations and daily increasing the burden of government mandates. If employers are convinced they will need new employees in the long run they will hire them regardless but they will pick up the boot along anyway. Anyone that hires someone based on a jobs tax credit should be summarily fired, and somebody that doesn’t recognize this is fool.
This is not some esoteric business theory but Basic Business 101. The only problem is that nobody in the Obama administration has taken that course in academia or more importantly real life. I am shocked that it isn’t intuitive to them anyway. Senator Gillibrand has now also made it abundantly clear that she is a lightweight and I will impart to her along with others the title “fool.” They are just trying to look like they care and are doing something until something else just happens. This is sort of like re-arranging the furniture on the Titanic.
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SWEET HOLIDAYS my friend!..hugssss!
another demonstration of lack of experience of new administration… i am not surprised