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<DIV><FONT size=2 face=Arial><FONT size=3 face="Times New Roman">Others proposed
no income taxes whatsoever for earners of $200,000 income a year. Grovel for
those campaign contributions, fellas. These same candidates, after proposing
cutting hundreds of billions a year in tax cuts for the rich and corporations,
will turn around and cry about the budget deficits and demand equivalent cuts in
social security, medicare and Medicaid to make up for their ever-generous
handouts to the wealthy.</FONT>
<DIV class=MsoNormal> <?XML:NAMESPACE PREFIX = O /><O:P></O:P></DIV>
<DIV class=MsoNormal>But this kind of mercenary, Robin-hood in reverse, policy
of ‘No taxes whatsoever’ for the rich and their corporations is expected from
the radical right. Yet it seems Obama is being drawn into their tax cut for the
rich frenzy with his proposal last night for yet another $270 billion in cuts.
He just agreed, less than nine months ago, to give them $270 billion by
extending the Bush tax cuts last December. Now hundreds of billions of dollars
more. This past year witnessed the President’s adopting their central agenda
demand to cut deficits.<SPAN style="mso-spacerun: yes"> </SPAN>Could he
now be tailing the Teapublicans once again down the ‘Cut more taxes for
Corporate America’ road as well? </DIV>
<DIV class=MsoNormal> </DIV>
<DIV class=MsoNormal> </DIV></FONT></DIV>
<DIV style="FONT: 10pt arial">----- Original Message -----
<DIV style="BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A
title=lduncan@igc.org href="mailto:lduncan@igc.org">Larry Duncan</A> </DIV>
<DIV><B>To:</B> <A title=lduncan@igc.org href="mailto:lduncan@igc.org">Larry
Duncan</A> </DIV>
<DIV><B>Sent:</B> Friday, September 09, 2011 7:36 AM</DIV>
<DIV><B>Subject:</B> Obama’s ‘Jobs Act’ Proposal: Why Less is More of the
Same</DIV></DIV>
<DIV><BR></DIV><!--StartFragment-->
<P style="TEXT-ALIGN: center" class=MsoNormal align=center><SPAN
style="FONT-SIZE: 18pt"><B>Obama’s ‘Jobs Act’
Proposal:<O:P></O:P></B></SPAN></P>
<H1>Why Less is More of the Same</H1>
<P style="TEXT-ALIGN: center" class=MsoNormal align=center>By <SPAN
style="FONT-SIZE: 27px; FONT-WEIGHT: bold" class=Apple-style-span>Jack
Rasmus</SPAN></P>
<P style="TEXT-ALIGN: center" class=MsoNormal align=center>September 9,
2011 </P>
<P style="TEXT-ALIGN: center" class=MsoNormal align=center><O:P></O:P></P>
<DIV class=MsoNormal>Last night President Obama proposed a $474 billion ‘Jobs
Act’. What we got from Obama was a 2009 ‘Stimulus Light’ proposal, with all the
problems of the prior 2009 stimulus package in the form of inadequate magnitude
of spending, wrong composition and targets, and bad timing.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>First, on the matter of the magnitude of spending in the
proposal. Some think it was bold. But put it in context.<SPAN
style="mso-spacerun: yes"> </SPAN>$447 billion just won’t achieve the job
creation it claims. It’s once again too little for an economy the size of the
US, for an economy in as deep an economic hole as it is, and in an economy
facing growing downward momentum at home in the context of a global economy also
rapidly slipping.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>In February 2009 President Obama proposed $787 billion in
economic stimulus. Unemployment was about 25 million. More than two years later,
after the $787 billion has been spent,<SPAN style="mso-spacerun: yes">
</SPAN>unemployment (measured by the Labor Department’s U-6 rate) is still
around 25 million. Why therefore should Obama’s latest proposals to create jobs,
consisting about half the size of the 2009 stimulus, expect to create jobs when
the larger stimulus did not?</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Even more important than Obama’s jobs act’s insufficient
magnitude, the composition is also seriously deficient—just as was the 2009
stimulus. Like the stimulus in 2009, it is once again overloaded in tax cuts. In
fact, a greater percentage (60%) of the total Jobs Act is composed of tax cuts
than was the 2009 stimulus (38%). Then, and now, tax cuts simply cannot and will
not create jobs, given the kind of ‘epic’ recession in which the US economy now
finds itself entrapped.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>The 38% tax cut mix in 2009 amounted to about $300 billion
in total tax reduction. That $300 billion followed a $90 billion tax cut less
than mine months before in spring 2008. Another $50 billion in tax cuts was
further added later in 2009-10 in various bills and administrative actions.
That’s a total of $440 billion in tax cuts. There’s more. Add to that $440
billion another $270 billion in Bush tax cut extensions in late 2010 for 2011,
plus another $100 billion in this year’s payroll tax cut. Now add the ‘Job Act’s
tax-heavy $270 additional billion. Now we’re well over a $1 trillion in tax cuts
in just the past two years. And what’s been the result in jobs? Still 25 million
unemployed today as in June 2009. </DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>If someone needs still further evidence that tax cuts don’t
create jobs in today’s environment, just step back a decade. In 2001-04 George
W. Bush passed another $3 trillion in tax cuts, overwhelmingly biased again
toward the rich and their corporations in the form of capital gains, dividends,
inheritance, business depreciation, and other corporate largesse. Over 80% of
the $3 trillion went to the wealthiest 20% households and most of that to the
wealthiest 5% and 1%. And what kind of job creation resulted? We had the longest
jobless recession in US history up to that point. It took 46 months just to
recover to the level of jobs we had before the first Bush recession in
2001.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Furthermore, most of the jobs that were created under Bush
were in the Finance and Housing sectors of the economy at the time, which were
both undergoing a boom due to speculative excesses before an eventual bust. The
jobs mostly created in Finance and Housing had little to do with Bush’s tax cuts
of 2001-04, however. Instead, millions of jobs were being lost in manufacturing
while the tax cuts were taking effect last decade. </DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>In 2004 Bush also pushed through a bill to allow
multinational corporations to repatriate their then $700 billion hoard of cash
they were keeping offshore in their subsidiaries in order to avoid paying the US
35% corporate tax rate. The multinationals blackmailed Congress to let them pay
only 5.25% instead of 35%. In exchange, they said they’d bring back the money
(saving 29.75% for themselves) and use it to create jobs. Did they? No. The
money brought back was used to buy back their stock, payout more dividends, and
to use for mergers and acquisitions that in fact resulted in fewer jobs. Now the
same ‘game’ is being proposed in Congress, except this time their offshore cash
hoard is $1.2 trillion.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>The historical record of the past decade is clear: tax cuts
simply don’t create jobs, especially tax cuts for the rich and corporations. So
why has Obama given them $1 trillion in tax cuts the past two years and is now
proposing more?</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Neither Bush nor Obama policies of tax cuts have created
jobs. Big corporations today are sitting on a cash hoard of $2 trillion—a result
in large part of the nearly $1 trillion in tax cuts of the past two years—and
they aren’t using it to create jobs. How much more will Corporate America have
to be given in tax cuts to finally create jobs? Will another $1 trillion do it?
$500 billion? Will the roughly additional $270 billion proposed by Obama
yesterday suffice? What’s the magic number in more tax cuts that will finally
result in job creation? </DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>But the tax-heavy proposal once again by Obama is not the
only problem with his ‘Jobs Act’. The Jobs Act shares another similar deficiency
with the President’s prior 2009 stimulus. It’s too heavily weighted as well in
favor of subsidies to the states. The 2009 stimulus provided $264 billion in
subsidies to the states. It was supposed to create jobs. It didn’t. Local
government laid off hundreds of thousands of workers since June 2009 despite the
$263 billion. What guarantees are there that won’t be repeated this when they’re
given the added subsidies? Will they get the subsidy only if they first prove
they’ve added the jobs? Don’t count on it.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Another problem with the ‘composition’ of yesterday’s Jobs
Act announcement by the President is it once again repeats the promise of the
2009 stimulus that infrastructure spending will quickly create jobs. In 2009
about $100 billion was allocated to infrastructure related spending that was
supposed to create 4 million jobs. That didn’t happen. There were 6.4 million
construction workers employed in June 2009. There are 5.5 million today. Nearly
a million fewer construction jobs was the result. There just weren’t as many
‘shovel-ready’ jobs as was claimed. Construction and infrastructure jobs are
long term. What is needed today is immediate job creation. Infrastructure
programs just won’t cut it. Especially when of the minimal magnitude in Obama’s
recent proposal.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Obama yesterday promised his proposals would focus on small
business by subsidizing their hiring of workers for each job they create. But
for small business to create jobs it needs more than a partial hiring subsidy.
It needs funds in addition to cover all the other costs of production. For that
small business needs bank loans. And for two years now they just can’t get the
loans from the big banks. Bank lending to small business declined for 15
consecutive months after June 2009 and it’s not much better today. Obama and the
Federal Reserve bailed out the big banks to the tune of $9 trillion in recent
years, in the expectation they would start lending. They didn’t. They still
aren’t. Like the big corporations hoarding their $2 trillion and not creating
jobs, the big banks are hoarding their cash reserves as well and lending to
small business that might create jobs if they could get the loans. Obama would
have done better to propose the Federal government bypass the banks and directly
loan to small business at 0.25%. After all, that’s the interest rate at which
the Fed today ‘loans’ to the big banks? No, I take that back. Actually it’s only
0.1%, and then the Fed pays the banks 3% to temporarily park the free money with
the Fed in the interim. What a deal: the Fed pays the big banks to take its free
money.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>In summary, what we got from Obama’s ‘Jobs Act’ last night
was more of the same in terms of poor composition (i.e. excessively tax cut
heavy), poor timing (long term infrastructure projects), and too little
magnitude spending in any event. </DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>There’s no reason to believe that the Obama jobs package
that repeats the problems of poor composition and bad timing of the 2009
stimulus—which didn’t create jobs—is going to do any better when it’s also half
the size of the stimulus.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Of course, the proposed Jobs Act won’t pass anyway because
the Teapublicans will oppose it. At best, they might try to cherry-pick out the
business tax cuts proposed by Obama, and then add even more tax cuts to the
‘Jobs Act’—a proposal which anyway should be appropriate renamed ‘The Business
Tax Expansion Act of 2011’. </DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Just a day before the president’s address, the Teapublican
candidates gathered to hold<SPAN style="mso-spacerun: yes"> </SPAN>their
latest debate. They stumbled all over each other to see who could promise
Corporate America even greater tax cuts. Rick Perry even promised to end all
corporate taxes. Rick Santorum promised to lower capital gains and dividends
taxes to zero. Others proposed no income taxes whatsoever for earners of
$200,000 income a year. Grovel for those campaign contributions, fellas. These
same candidates, after proposing cutting hundreds of billions a year in tax cuts
for the rich and corporations, will turn around and cry about the budget
deficits and demand equivalent cuts in social security, medicare and Medicaid to
make up for their ever-generous handouts to the wealthy.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>But this kind of mercenary, Robin-hood in reverse, policy
of ‘No taxes whatsoever’ for the rich and their corporations is expected from
the radical right. Yet it seems Obama is being drawn into their tax cut for the
rich frenzy with his proposal last night for yet another $270 billion in cuts.
He just agreed, less than nine months ago, to give them $270 billion by
extending the Bush tax cuts last December. Now hundreds of billions of dollars
more. This past year witnessed the President’s adopting their central agenda
demand to cut deficits.<SPAN style="mso-spacerun: yes"> </SPAN>Could he
now be tailing the Teapublicans once again down the ‘Cut more taxes for
Corporate America’ road as well?</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>A real job program today would be proposals and programs to
re-create, in 21<SUP>st</SUP> century form, of a Works Progress
Administration—paid for not by giving the rich and their corporations still more
tax cuts but by taxing their $2 trillion cash hoard, their $1 trillion in excess
free Fed money bank reserves, their $1.2 trillion held in offshore subsidiaries,
and by taxing the more than $6 trillion they’ve all stashed away in their tax
havens around the globe from the Cayman islands to the Seychelles to Vanuatu
and, of course, Switzerland. </DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Politics in America today sadly is not about what will
ensure true economic recovery and give the 25 million Americans a job. It’s
about how to extend tax cuts for Corporate America and its shareholder
beneficiaries; it’s about how to ensure the Great American Tax Shift of recent
decades is never rescinded and instead further extended; and it’s about how to
make everyone else in American pay for their bailouts so that the corporations
and wealthiest themselves do not have to.</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Jack Rasmus, September 9, 2011</DIV>
<DIV class=MsoNormal><O:P></O:P></DIV>
<DIV class=MsoNormal>Jack is the author of Epic Recession: Prelude to Global
Depression, Pluto Press and Palgrave-Macmillan, 2010; and the forthcoming
Obama’s Economy: Recovery for the Few, 2011, same publishers. His blog is
jackrasmus.com and website: <A
href="http://www.kyklosproductions.com">www.kyklosproductions.com</A></DIV><!--EndFragment--></BODY></HTML>