Over a year ago, panicked career politicians in Washington hysterically yelled that we had to pass a trillion dollar “stimulus” bill using money we didn’t have in order to keep the unemployment rate under 8 percent. Now, unemployment is stuck at about 10%, and these very same people are telling us that it will stay there for the foreseeable future.
Nothing illustrates better the point that government doesn’t create jobs.
The main reason that the government can’t create sustainable jobs is that, contrary to popular opinion, the government doesn’t have any money of it’s own. The only money it has is what it takes from you and me in the form of taxes. The government can also borrow money, but then that has to be paid back some day, again using our tax money. The government can also simply print more dollar bills, but this causes inflation, which is just another way for us all to pay more for everything. Every dollar the government puts into the economy in the form of spending, it must first take out of the economy in taxes or borrowing or inflation. It’ s a net zero operation.
Private industry creates jobs. Government’s role is to create an environment in which businesses of all sizes can prosper, grow, expand, and hire people. Every tax, every regulation, every piece of paperwork imposed by the government just makes it harder and more expensive for companies to hire people.
The recently passed government health care bill is just the latest example of how Washington increases the cost of hiring people, thereby keeping unemployment high. As a result of this law, employee health care costs are going to go up for all companies. Higher employee costs means fewer employees.
Another way some of Washington’s actions results in higher unemployment is the minimum wage. Every time this is increased, fewer low wage workers will be hired, because it costs more. Mostly, this affects college students and teen-agers, many of whom would be glad to work for less than the minimum wage if they could find such a job. These people are not depending on this low wage as a means of supporting themselves, they just want to earn some extra spending money, some money for college, or to supplement the family income. The teen unemployment rate is currently at an astounding 26.4 percent.
If Washington wants to encourage businesses large and small to hire more people, it should make it less expensive for companies to put someone on the payroll. One of the best ways of doing this would be to reduce the payroll tax, which is a tax on jobs. By lowering this tax, businesses could hire more people for the same total amount, and that would surely encourage then to do so.
President Obama recently decreed a moratorium on new off-shore drilling, at an estimated cost of 40,000 to 120,000 jobs.
The “jobs” bill passed earlier this month by Congress raises taxes by $80 billion on small employers and U.S. based corporations. On January 1, Congress is set to let taxes rise on capitol gains, dividends, and small businesses. All of these increased taxes are sure to stimulate the economy and incentivize hiring, right?
Here is some interesting good news on the jobs front. Chinese firms last year acquired or announced they were starting more than 50 U.S. companies. One, in Spatanburg, South Carolina, will make cylinders used to print labels like the ones around plastic soda bottles. Chinese companies have invested $280 million and created more than 1200 jobs in South Carolina alone.
Some 33 American states, ports, and cities have sent representatives to China to lure jobs to America. The attractions here in the U.S. are lower priced land, reliable and cheap power, and tax credits.
Wait! You mean tax credits, not higher taxes, encourage companies to expand here and hire Americans?
Virginia knows this. It was recently announced that Northrop Grumman, a company I used to work for, will be moving its headquarters from Los Angeles to Virginia, creating 300 new jobs for Virginians. The reason they moved is Virginia’s pro-business climate.
Meanwhile, Congress is gearing up to eliminate the cheap power incentive to foreign companies to come to America. Congress wants to pass “cap and tax”, a huge new energy tax that will dramatically push up the cost of all energy, especially electricity, thus killing thousands of jobs throughout America.