From The Marston Chronicles
We have all watched in disbelief as the Obama administration has thrown over a trillion dollars at stimulating the economy and stemming the continual loss of jobs. Never has so much been spent to accomplish so little except to line the pockets of the special interests. You would think that even the economic illiterates could figure out that in order to create jobs, you need to give businesses a reason to start hiring. Threatening them with new taxes by letting the Bush tax cuts expire, cap and trade, and further regulation will definitely not do that; in fact, it will only encourage them to lay off more people.
There is a very simple way to encourage businesses to start hiring people right away. It does not require a whole new bureaucracy to administer it or to send money to anyone. All it requires is to design a simple form that businesses can fill out with the name, address, social security numbers and wages of all new hires or rehires. What will encourage businesses to do that? It is because the federal government will subsidize a portion of the wages of these hires and not be sending the business a check either. Businesses know that the inefficient federal government will not get them a check in a timely fashion as the cash for clunkers program made very clear.
What kind of a subsidy would be required? The business agrees to keep the new hire employed for a full year and to replace any new hire that leaves for any reason for the balance of the one year contract. The government will agree to pay 100% of the gross wages of the new hire for the first month. The second month, it will pay 90% of the gross wages. Each month after that it will decrease the subsidy by 10% until the subsidy stops after the tenth month. Simple isn't it? This is not rocket science, people, it is just common sense which seems to be sorely lacking in government these days.
How does the business get paid the subsidy? It doesn't. It subtracts the amount of the subsidy from the payroll taxes the business deducts from all its employees' wages and sends in the reduced amount. The form is attached to the paperwork filed showing the payroll taxes that are being paid. The business gets to keep the the subsidy immediately by not sending in all of the payroll taxes like it is required to do. There is no muss, no fuss and minimal paperwork. Instead of having to cut a check for the subsidy with all of the effort and bureaucracy required, the government just collects less in taxes in the first place. Now would businesses go for this program? You had better believe they would.
You now are going to tell me that this is way too expensive. Like a trillion dollars wasted to no real effect was too expensive? Instead of another stimulus bill that will not work, how about this idea? You can just use the rest of the previous stimulus money to pay for this program since it will only be wasted on any other approach. How many jobs will be created the minute a bill enacting this program passes? As many as the government is willing to subsidize. Let's say that the average wage of a new hire will be $10 an hour. For an average work month of 176 hours, that is $1,760 the first month, $1,584 the second, etc. until it becomes $176 in the tenth month. This is a total subsidy of $9,680 per new hire (or rehire). Let's call it an even $10,000 to keep the math simple. You create 100 jobs for each million spent. That comes to 100,000 jobs for each billion spent. If this program had been in place in stead of the stimulus bill, we could have created 10,000,000 jobs at a cost of $100 billion.
Since we spent a trillion to no avail, we could have gotten by with a tenth of that and have a solid economy to boot. There would have been no need for bailouts that did nothing for working Americans. It would have saved a fortune in unemployment compensation and food stamps. Starting in the eleventh month, the government would start collecting payroll taxes on another 10 million employees and not be in the bind it is now. Best of all, these jobs would put us back at full employment in a very short time. The state and local governments would be collecting sales taxes on all the money being spent by another 10 million employed people and not be in the bind they are in now. This is not a welfare program, it is an investment in America's future. Why does the government have to do things the hard and ineffective way?
Does this simple idea ring a bell with you? Fine. Spread the word through the internet and flood the halls of Congress with demands that the government enact this program. This is not a Republican program or a Democrat program. This can be the American people's program. The sooner this is done, the sooner we will all be better off and so will our country.
A Proposal That Will Actually Create Jobs
The Stimulus Package: Fear Mongering and Crisis Propagation, the Liberal Way
Cross posted at Politics and Critical Thinking.
This attempt at breaking down the stimulus from the beginning to the end will not be an easy undertaking, since I am not economist. However, neither is President Obama, he is a lawyer. Nevertheless, there is ample information from sound sources to help the average tax payer understand exactly what the government is asking of them and the other possibilities for economic stimulus. This first addition is a challenge to the government's claim that we are in the worst economic downturn since the Great Depression. Also, this will show how they are propagating fear in order to push their agenda onto the American people.
As far as this blog is concerned, free markets and economics are inexorably connected to the liberty and prosperity of every individual American. This is not to say humankind is free due to capitalism, just that if used properly, it can be the engine of that freedom. Mankind is unarguably born with certain unalienable rights that are derived from Higher, not from monetary, fiscal, or economic policy.
However, despots, tyrants, dictators, and megalomaniacs have learned throughout the years that by manipulating these economic systems they can attain a greater accumulation of power over their citizenry. Infringing on, if not taking away these freedoms, all in the name of the State. Thereby, creating an atmosphere of dependency on the government for even the most basic daily needs.
Even as far back as October, then Senator Obama, was stirring fears that this was the greatest economic downfall since the Great Depression. Recently, even his toadies and acolytes have been echoing the same sentiments. All for the sake of spreading fear and generating hopes that they have the only answers to end this crisis.
Now, only a fool would say, with a straight face, we aren't in hard times and things aren't going to get harder. But the egregious claims and fear mongering of the Obama administration fall apart once you look at history.
According to the Bureau of Labor, from 1930-41 the unemployment rate never dropped below 8.9% and actually went as high as 24.9%. When the recession deepened in circa 1981-82, unemployment sat at well over 10%. We are presently at 7.4%, althoughthis number will undoubtedly get higher, it still remains to be seen whether it tops either of these benchmarks.
As far as GDP, from 1929-1933 there was a major constriction, to put it mildly. The GDP output of the United States in 1929 was $865.2 billion and in 1933 it sat at $635.3 billion, this represents a -29.3% decline in the gross domestic product of the US in a 4 year period. It was not until 1936 when the GDP reached $866.6 billion, did the economy finally overcome the 1929 tally. This represents real growth of only $1.4 billion over a 7 year period. Furthermore, this still does not address the rampant inflation or unemployment most Americans still faced.
In 1981 the GDP sat at $5,291.7 trillion, then in 1982 after a major contraction brought on by the recession it was lowered to $5,189.3 trillion, meaning a decline of -1.9%.
Looking at the breakdown of each quarter in FY 2008 you gain a comparison between them and the previous recessions. In FY 2008 we had 1st quarter growth of .9% (Final Report), 2nd quarter growth was 2.8% (Final Report), the 3rd quarter sat at -.03% (Preliminary Report), and finally 4th quarter results were a -3.8% loss (Advanced Report). Totaling up the BEA's quarterly reports for FY 2008 results in a net loss of -1.3%. The recession of 1981-82 still sets higher in losses by +.6% and there is no contest between the losses that were incurred during the Great Depression years which totaled -29.3%. The best year for declines in GDP, during this time, was actually 1933, when there was a loss, ironically, of -1.3%.
How interesting that once you crunch the numbers you see quite a different picture than what the administration is selling. Quite simply, they are misrepresenting the facts in order to perpetuate fear and panic to gain public support for their expensive and expansive government project. Again this is not to say things are not bad or they will not get worse, this is simply where we are at right now. We have one recession, 27 years ago which was actually worse, yet no one was running around talking about spending our way into oblivion. Quite to the contrary, then President Reagan used tax cuts to stimulate the economy. He brought about huge gains for the American people by creating 20 million new quality jobs under his administration, ushering an era of prosperity and hope that lasted for a little over 15 years.
Please note, the figures presented here are from the Bureau of Labor Statistics and the Bureau of Economic Analysis. Read them for yourself, don't take my word for it.
