American Elephants


There is Nothing New in the Obama Administration, Just More of the Same Old Tired Ideas. by The Elephant's Child

President Obama seems to have much the same view of money as some of his most ardent supporters.  The government has money, and he gets to spend it, with the help of Congress.  And where does the government get the money?  The government takes the money from undeserving rich people, and it needs to be spread around to people who need it more.

The White House is finally beginning to realize that in spite of their well-intentioned Stimulus Plan, somehow it isn’t working.  The jobless rate keeps going up.  Teenage unemployment is over 50% (we told you that would happen if you insisted on raising the minimum wage).  California’s great Central Valley has unemployment rates reaching 40% in some areas.  Michigan has double-digit rates of joblessness. Christina Romer and Jared Bernstein, White House Economists, estimated that the spending of the Stimulus plan would keep the jobless rate below 8%, but that was then and this is now.

Alarmed by the rising rates, Democrats are rushing to “do something;” after all, there are elections next year.  The White House solution seems to be to bribe employers to hire new workers — only for a couple of years.  The current rate is 9.8% and may well continue to rise or at least stay high well into the election campaign of 2010.

Few things so concentrate the minds of politicians as the threat of very angry voters.  The Wall Street Journal reports:

The tax credit would also inevitably go to some employers already planning to hire, or reward companies that lay off some workers only to hire others to take advantage of the tax credit. And it would reward parts of the country that are growing, such as Texas, at the expense of those that aren’t, such as Michigan. In other words, it is a very inefficient business subsidy.

We know all this because a new jobs tax credit has already been tried—in the Carter Administration. In 1977 as he entered the White House, Jimmy Carter proposed a jobs credit and a Democratic Congress passed it. Its unfortunate history was recounted in 1980 by then-Treasury official Emil Sunley in a chapter of “The Economics of Taxation,” a book edited by Henry Aaron and Michael Boskin for the Brookings Institution.

The lack of job creation is a huge problem.  The misconceptions of the White House about America’s small business job-engine are really quite astounding.  When you keep imposing financial burdens on hiring, you are not going to get very much of it.  When government is imposing new taxes, raising health care costs, raising energy costs and at the same time demonstrating government’s interest in controlling business, taking over companies, imposing new mandates and regulations that limit what a businessman may do; any desire to expand, hire, take new risks is dampened down by cold hard fear.

A small temporary bribe is really not going to help.  Don’t Democrats ever learn from history?


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