Jobs Bill Misses The Mark

Yesterday, the Senate was giddy about passing a "jobs creation bill." The media has been proclaiming how even Republicans are jumping on board with this bill. They are making a big deal out of Scott Brown, R-MA, voting yes since he just got to Congress. But, let's slow down. What is this bill about?

This bill is supposed to be a $15 Billion job creation package. First, let's remind our good friends in Washington that the only jobs Congress can create are Government jobs. Congress cannot create jobs in the private sector. Their policies can hinder or encourage job growth in the private sector, but they are not the ones responsible for any new jobs. Now, Congress wants the credit for jobs creation because then Obama can take credit for it as well.

One of the focal points of this bill is that it frees any company that hires the unemployed from paying their 6.2% social security tax for 2010. If the company retains the employee for at least a year, they get a $1,000 tax break.

So, with less money going into Social Security, Congress will have to go after it somewhere else. And, that somewhere else will be from those who are already employed. Secondly, a $1,000 tax break?! Is that per new hire? And, by the way, companies don't pay taxes anyway - we pay them through their prices they set for their goods and/or services. So, giving a company a "tax break" would actually be giving us a tax break. But, a $1,000 tax break isn't a tax break. That's like letting the couch cushions fund your kid's allowance. If you want to encourage more corporate participation in the hiring game, then do something big. How about eliminate a lot of the taxes and regulations that are imposed upon them and that stifle their ability to be able to afford to hire additional help. Why not suspend and even eliminate the federal income tax - give people more of their money to spend in the economy. This is the real issue, folks. Giving companies "tax breaks" is only a symptom of the problem.

Jobs are created based on two simple things: Supply and Demand. If demand is higher than supply, then companies need to hire more workers to get supply back even with demand. If we had more of our own money to spend, demand would start to increase, companies would begin to hire more to meet the demand with more supply and two things ultimately happen: the economy is back on its feet and unemployment falls. Companies do not just arbitrarily decrease their work force. This bill suggests they do by virtue of it focusing on the corporations and their hiring practices. Jobs exist for one reason - a company needs to make money and they need workers to make supply to meet demand. If the demand isn't there, then the need for employees decreases. Companies are not going to keep an employee on the books at 20k/year or 30k/year just to get a 1k tax break. That's like the common practice of hanging on to a mortgage because of the tax write off. So, you send 10k to the bank in interest so you don't have to send 3k to the IRS in taxes?! (By the way, if your CPA suggests that you do that, then fire their sorry carcass and get one that can actually do math.) Frankly, this bill is insulting to private business.

The Government that has given us this economy and this deficit are now the ones who are going to fix it?! The Government that hates the private sector now are seen as their savior? Don't fall for it - these people want one thing only and that is full government control over business industry - and you take that to the bank...well, don't take it to the bank because they will be taxed more for the TARP money they've already paid back.

Economic Stimulus Wrapped in Crime

http://www.cnn.com/2010/POLITICS/01/07/immigration.economy/index.html

According to CNN.com, a study finds that if we just legalize all illegal immigrants, it will boost the economy. Of course, if we let all of the criminals out of prison, that will help with our prison over-crowding issues too. However, the real problem is being avoided in favor of a very short-term political cure. This has its roots in the idea that there are too many illegals now to round up and ship back so we should just legalize them. Now, to put the pressure on, it is being suggested that by legalizing these sovereignty-ignoring folks we can have a positive impact on our economy. Notice cutting taxes doesn't even cross their minds. Let's examine the so-called results that this study is putting forth.

With the legalization of 11 million illegals, the study is suggesting that wages would increase. First of all, it is illegal for companies to higher illegals, so there shouldn't be any wage info to even make that claim from. Secondly, people will work for what it takes to take care of themselves and their families. Just making someone legal doesn't automatically increase their wage. Now, let's assume that all 11 million illegals are currently not working and that making them legal would put them into the job market. With the roaring Obama economy flailing about like a fish out of water, a sudden influx of 11 million (assuming these 11 million are all of age to work) would have what effect? Right now, the demand for jobs is high and the supply is low. So, a flood of 11 million would increase demand rapidly. What happens when demand outweighs supply? The price of the good, in this case the salary, goes up. So, this is the answer they are hoping for. But, here's the problem. Jobs and the ability to pay a salary depends on the company's needs and financial strength. If there is no money for new employees, it doesn't matter how much the demand increases, no one is getting a job! Secondly, there is an influx of teenagers each year into the work force – does that mean McDonald's is now hiring cashiers at $20/hour?! No. Again, it still rests in the hands of the companies.

The second proposition is that by legalizing these illegals it would cause an increase in consumption. I guess this is based on the first theory that there would be higher wages, therefore, more money circulating in the economy. The majority of the illegals that work in this country are working for a family...and that family is often quite large. Therefore, the consumption that is taking place is already relative to the amount of illegals in the country. Secondly, with many of them already enjoying Government handouts at our tax dollar's expense, what would be the incentive to move away from that? Heck, once they are legal, there is so much they could get from the Government. Therefore, the majority of any increase in consumption would be subsidized by our tax dollars.

The last idea they propagate is that this will create many new jobs and increase tax revenue. Now, before I'm accused of believing that illegals are only valuable for a certain line of work, forget it! I do not hold to that position. However, based on where you find them working, it is reasonable to assume that they will not fall into a taxable bracket anyway – so, no increased tax revenue. Secondly, job creation is again at the mercy of the company. Just because there are people available for work doesn't mean there are jobs available to put them in.

This whole idea, again, is not about boosting our economy. (Tax cuts and decreased corporate regulations would do that). This is about pardoning criminals on a grand scale – probably just to secure more votes. This also smacks the faces of all those who went through our citizenship process legally. There is only one thing to do with illegals – send them back and tell their Government that we will take action to defend our boarders and if you want your citizens to remain happy, then encourage them to come here the legal way. (Not hand out maps of secret routes across the boarder as President Fox did in Mexico). At any rate, expect Obama to jump all over this one.