Friday, March 12, 2010

Jobs, Jobs, Jobs

      When Bill Clinton was running for the presidency against George H. W. Bush, the catch phrase for his campaign was “It’s the economy, stupid.” Just as James Carville hung a sign containing that slogan in Clinton’s campaign headquarters, so should Barack Obama have the same reminder on banners all over the White House.
      Obama’s campaign promised change and hope, but change has gotten out of control, and hope seems to be retreating into the hills. Every poll indicates that healthcare is way down on the list of voters’ concerns. Now the primary focus is on jobs, jobs, jobs.
      Presently there is a bill in the Senate which would grant an exemption to an employer for each new hire during 2010. In addition, if the employee stays on the job for 52 weeks, the employer will get a $1,000 business tax credit in 2011.
      I have a bit of trouble understanding how this will do much toward solving the job problem. Suppose you have a business which employees 20 workers in normal times. A recession comes along, and sales drop off to the extent that you have to lay off five employees. Assuming sales stay depressed, would you hire a new employee for, say, $25,000 just because you don’t have to pay his payroll taxes and you get a tax credit? Assuming the payroll taxes run around $1,600, you will be out of pocket over $22,000, not to mention training, sick pay, insurance, etc., and your additional inventory will still be lying in your warehouse.
      I hate to tell you this, but when the current stimulus money runs out, it is going to take another large infusion of cash to avoid another job slide.
      I know, I know, how can we afford this? The right says that the government can pay for this spending in only three ways: borrowing, raising taxes and printing money.
      But there is a fourth way: prosperity. In fact, it’s the only reasonable and logical way. No jobs no pay, no pay no buying, no buying no jobs. Whether we like it or not, breaking the cycle requires drastic action in the form of cash.
      During WWII the government spent way more than it took in on items that had no earthly value after the war ended. And when the end came, all that money came flowing back. It is doubtful if the Great Depression would ever have ended had it not been for the war.
      I am not sure we have the nerve to do what we have to do. What the world needs is an alien attack - either that, or we need to grit our teeth, gird our loins (I got that from the Bible, and I am not sure what it means), and make the moves.
      Can we afford to do what is necessary? The more important question is: Can we afford not to?

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