2012 US Job’s Reports – July sluggish – again “unexpectedly” – Historical data suggests continued loss under Administration. - Economics Simplified

President Obama with Jeffery Immelt, CEO of GE, a company that did not pay Federal Taxes and Shipped whole companies overseas - image buzzbox.com

A Primer on simple economics

Reuters: U.S.Non-Farm payrolls (i.e. private sector jobs) showed a gain of 100,000 in July, 20,000 more than in June – and this was “again unexpected”. One has to break this down in very simple terms - One: the government does not create jobs, the private sector creates jobs. Therefore if the private sector (those horrible rich people and corporations) are not hiring due to costly regulations, or uncertainty, specifically on tax issues, those lost jobs, are actually lost revenue for the government. Understanding that the government can only bring in income from those who pay taxes working for the private sector, is the key to understanding how the nation works – literally. Yes, the nation needs those who work to keep our government running, from clerical positions to law enforcement on the federal level, to the teachers, and municipal workers at the state and town level – but the distinction between a public employee and an employee at a private firm is this: those jobs created at the public level, do pay taxes, but their salaries are generated by the taxpayers – taxpayers who have private sector jobs. It is a fallacy to propagate the myth that by creating jobs in the public sector the economy would come roaring back – it would have been fair to say that if one had allowed the private sector a “tax holiday” or a corporate tax decrease, that money would have brought about hiring – those jobs, then created and filled would not only pay the government but supply the salaries of those teachers who rely on the government for their paycheck.

So much for the anti-trickle down argument – to recap: when corporations are taxed less, that money goes to hiring and research, those hired, pay taxes, which keeps the government running – the more small businesses are allowed to thrive in a lower tax environment – specifically the entrepreneurs – even more jobs are created, giving the government more money to hire more teachers, and SEIU members. (Who rail against the corporate machine as if it weren’t the real source of their income?)
The idea of giving tax cuts to those making under $250,000 maybe a great campaign speech, but, when one look at the fact that most individuals earning in the 30 to 40K range pay zero taxes (estimteed at half of the tax payers – half of the eligible tax payers – pay no taxes at all) – that leaves those making $250,000 or more left holding the bag for the “rest of the nation” and those are the “job creators”. Corporate tax rates are also more inviting in other nations, which leads large American Concerns to flee overseas and well, build and hire there – consider General Electric Corporation, whose CEO is an associate of the current administration. They have built factories in other nations due to our tax climate, and actually making billions in revenue paid no taxes to the U.S.

If one considers the brouhaha over Mitt Romney’s taxes – consider the following hypothesis while considering someone making 40,000 a year pays not one dime in taxes and may be eligible for further refunds under the current tax structure. If Mitt Romney paid 14% (the figure thrown about in the press) on $20,000,000 – that would be revenue to the government - in the amount to a payment to the Federal Government of 2.8 Million dollars. This would be enough to keep several SEIU executives on the payroll or a year! When viewing Romney on the wealth scale (for purposes other than divisive politics (see Obama Campaign class warfare). Forbes recent article on the “Richest Americans: (400 profiled) at here at “Forbes.com-400) includes the top earners in the nation - those with the most capital at hand, the last is one Dan Snyder, who earns 1.5 billion - (to those partisan’s -Romney is not on this list having that measly 20 million taxable dollars). It is not clear who pays taxes on the list - Warren Buffet does not - but one might hope that the other 399 might pay the same rate as say, Mitt Romney.


What Happens when the top earners pay the Romney Tax Rate?

Which would mean that 400 plus individuals are supporting the government and those people who are supported by the government, either in entitlements or through payroll (including teachers, and clerical workers) – without those individuals, giving millions in taxes each year (compared to those who pay no taxes), these billionaires and millionaires should be touted as government hero’s!

The false logic that the government creates any jobs is just that false. The government creates debt – and that is all it can create – as it has no source of income of its own. Period.

The only way that a government can create jobs, is through incentives to businesses that will hire massive amount of employees in a relatively short period of time. In order for business to do so, they must feel conformable in the environment and know that there is going to be set of regulations and tax codes in place, that are not subject to ridiculous changes and additions as well as increases.

It is that simple. It is contrary to everything that the President believes. It is also contrary to everything that past President Jimmy Carter believed – both men are “progressives”. (A share the wealth attitude – unless one’s friends are wealthy). The historical fact beginning with the administration of John F. Kennedy and then followed by the Reagan Administration is that tax cuts to corporations produce the following: jobs and revenue for the government. The two Presidents were from two different political parties, and yet understood that “trickle down” is not a fallacious argument that Mitt Romney is making – it has sound historical economic footing. The Brookings Institute the Obama campaign is quoting may have missed the fact that what Romney is suggesting, although modified a bit, is a way to boost the economy, and – get this –create jobs. Romney’s plan is similar in structure to two past-Presidents who had great success with the process. While the current administration is parroting a progressive ideology that when put into practice has disastrous results – also backed by historical data.

There will always be ups and downs in an economy – weaknesses come from so many sources, there may, for example be a drought, there may be a spike in oil prices, there may be other natural disasters or terrorist attacks that costs the nation billions of dollars. These situation are beyond the control of the man in office, and do nothing to help the economy - but... with a pro-business , which is pro-labor policy in place – jobs, private firm, whether small or large, will be created, and the monies needed by the government to run, will be increased.

Additionally, one must consider management – if one is an experienced manager, and has been successful in that position, then one understand the moves necessary to keep a nation running, hiring the right advisers, for one, individuals whose areas of expertise actually fit the job description – they should be niether friends, nor political appointees – rather experts with a track record. (With the glaring exception of the V.P. choice, who may or may be a strategic political appointee, but in the case of Mitt Romney, one can bet the house there will be some sort of business background in his choice of V.P. Candidate).

Jobs numbers, again, reflect the fact that the private sector is concerned about increased taxes and burdensome regulations, so much so that any job growth is not likely as projected by numerous economists through 2014 – which begs the question: If the administration is bent on maintaining the “war on people who can create jobs”, then there is only one hope for the economy.