Thursday, September 15, 2011
Random ruminations from your resident curmudgeon...
According to information that the Census Bureau released for 2010 on the 13th of September, things are getting worse in this country. Much worse. Here are the grim facts: poverty in the United States hit a 27 year high, with 46.2 million people reported at or below the poverty level. That is 1 in 6 Americans. The number of people without health insurance also reached a new high of 49.9 million people. Many of the people that fall into this category are those that have lost jobs during this recession. Also, the Census Bureau reported that median household income fell in 2010 to $48,445, a decline of 2.3%. This dreary picture points out the necessity for all of us to be honest- government efforts to "stimulate" the economy have not worked. There needs to be an honest discussion about how to create an environment where businesses are confident enough to hire new employees and put more people to work. The anti-business, more taxes, more government regulation rhetoric out of Washington has had the opposite effect. Government cannot create jobs, but it certainly can prevent jobs from being created. The numbers from the Census Bureau bear this out.
I'm using a new shampoo that promised me extra body. So far, I have gained 3 pounds.
As mentioned above, real wages fell significantly last year. Why is this problematic? The drop in real wages comes after three years of grueling layoffs and slowing of the economy, a perfect storm that has now caused many to deplete their savings and other cash resources. Couple this desperate economic scenario for many families with the fact that there are 6.86 million fewer jobs in the U.S. from their January 2008 peak, and more individuals are taking reduced wages just to have a job. Real wages are perhaps the best indicator of economic well being for the work force as well projected levels of consumer spending. The downward trend points to the fact that employers have the upper hand in setting wages and that economic growth in this country is going to remain anemic until that trend is reversed. Although another round of stimulus has been proposed by the White House, many economists do not believe that it will help in the long run since many businesses are loath to hire, knowing that the money will run out and that demand will not be there to support adding new personnel. Until the economy allows companies and individuals to feel confident about future prospects, no amount of stimulus is going to reverse this downward spiral.
I once had a job at an origami factory, but it folded.
President Obama has proposed a $447 billion dollar jobs bill to try to reverse the downward trends that we have been discussing. In presenting the bill, he has said that it is "fully paid for", which to any rational person should mean not that money is be reallocated from other areas of government but that instead your taxes are going up. The bulk of the revenue for this bill will come from taxes being raised on households that earn more than $250,000 or individuals that earn more than $200,000. Another portion would come from eliminating tax breaks for oil and gas companies for money they spend for exploration. Additionally, the bill proposes giving a $4,000 credit to companies that hire individuals that have been unemployed longer than six months. Here is the problem with this proposal: families that have earned income are seeing their taxes go up, which further curtails their spending, which in turn causes the economy to continue to languish. Outside of the federal government, one of the few sectors of the economy that has shown strong gains in jobs is the oil and gas industry. This bill removes their tax incentive to continue to explore and develop new energy sources and will slow their hiring in these areas. And that $4,000 tax credit for new hires? It is completely divorced from reality, as the cost of adding a new hire to a payroll right now is running approximately $15,000. Friends, if we are going to begin to reverse our economic situation, the first step will be to admit that the government is not the solution to our problems, but is responsible for many of them. Bills such as the one that has been proposed to "create jobs" serves as an impediment to real job creation.
I tried using invisible ink once, but drew a blank.
And that, my friends, is my view.