Monday, October 31, 2011

AP points out the obvious: GOP candidates ignorant on jobs situation

De-regulation, tax cuts for corporations, won't fix the economy or unemployment rate

The belief that cutting taxes for the rich and de-regulating businesses will help our economic outlook is in fact a fallacy. Regulations that make sense, protect the consumer, and still allow the business to function are well worth having, if they serve a purpose. Removing regulations for the sake of "job creation" makes about as much sense as taking your vitamins and expecting dramatic weight loss. In both cases, you're not going to see positive results by doing those actions alone.

A recent Associated Press article lays this out in greater detail. Acknowledging the proposals by Republican candidates for president, the AP pointed out that many of their statements simply don't hold any weight to them whatsoever:

Consider proposed cuts in taxes and regulation, which nearly every GOP candidate is pushing in the name of creating jobs. The initiatives seem to ignore surveys in which employers cite far bigger impediments to increased hiring, chiefly slack consumer demand.


As for the idea that cutting regulations will lead to significant job growth, [Republican economist Bruce] Bartlett said in an interview, "It's just nonsense. It's just made up."

Government and industry studies support his view.

The Bureau of Labor Statistics, which tracks companies' reasons for large layoffs, found that 1,119 layoffs were attributed to government regulations in the first half of this year, while 144,746 were attributed to poor "business demand."
So layoffs were 129 times more likely to be due to poor business demand rather than regulation. In fact, layoffs due to "excessive government regulation" account for only 0.2 percent of layoffs altogether.

But what about tax cuts? Don't they create conditions that make it easier for businesses to grow jobs? Surely we should do whatever we can to get more money into the hands of "job makers!"

It might help some -- if corporations weren't already swimming in money:
The Republican candidates...are calling for tax cuts that would primarily benefit high-income people, who are seen as the likeliest job creators.

"I don't care about that," Texas Gov. Rick Perry told The New York Times and CNBC, referring to tax breaks for the rich. "What I care about is them having the dollars to invest in their companies."

Many existing businesses, however, have plenty of unspent cash. The 500 companies that comprise the S&P index have about $800 billion in cash and cash equivalents, the most ever, according to the research firm Birinyi Associates.
Emphasis added.

Getting money in the hands of "job creators" is important under ordinary circumstances. A business can't hire an employee without cash to pay for their work. But if these companies, who have more cash on hand than ever before, still refuse to make any more hires under those conditions, the problem clearly isn't a lack in capital.

Not even small business owners are citing regulation or lack of capital as a problem:
Small businesses rate "poor sales" as their biggest problem, with government regulations ranking second, according to a survey by the National Federation of Independent Businesses. Of the small businesses saying this is not a good time to expand, half cited the poor economy as the chief reason. Thirteen percent named the "political climate."
Emphasis added.

We need a more proactive approach to fixing the jobs problem in our country. Tax cuts and de-regulation alone won't solve anything. Businesses have to WANT to hire people, have to have a NEED to do so. Getting more money to corporations for the same amount of productivity they have expended previously creates no incentive for hiring more people. Why make that investment if you're bound to make more money for the same amount of workers you already had?

Reject the Republican talking points. They're not accurate, and won't do a lick of good for job creation in this country.

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