A spate of layoff and restructuring announcements has hit the airwaves recently, while hiring remains distinctly lackluster. Over three years into what the economists technically call a recovery, the employment market is listless and job seekers are frustrated. What’s going on?
Allison Linn of NBC News points to several themes that explain today’s job market and why companies are so reluctant to hire:
- They are uncertain
- They don’t have to
- Their business strategies have changed
- They are risk averse
The first two factors are related in large part to hopefully temporary phenomena – political wrangling and the weakness of the recovery. Ever since the passage of Obamacare and the resulting GOP takeover of the House of Representatives in 2010, the government has been in “kick-the-can-down-the-road” mode and has not faced up to hard decisions. Uncertainty about government spending and the tax code is bound to affect hiring, given the huge role government plays in business decisions. This in turn aggravates the weakness of the labor market, as companies try to get by without hiring. Productivity measures have ticked up sharply in recent years.
The last two are more structural and more ominous. We may have entered a new era of business decision-making where the consensus awards risk avoidance: better to have more certain returns on modest investments than blowout returns on a bigger gambles. If that’s the case, we could be facing anemic growth for a generation.
The House Republican leadership has offered a substantive counteroffer to President Obama’s frivolous fiscal cliff proposal of last week. At first blush, it appears little more than categorical, pre-emptive capitulation.
To be fair, the details of the Republican proposal are extraordinarily vague. Nor is much clarity or comfort gained from the three-page accompanying letter sent to the President and signed by Speaker John Boehner (R-OH), Majority Leader Eric Cantor (R-VA), House Budget Committee Chairman Paul Ryan (R-WI), and three other senior members of the House Republican leadership.
Much can and likely will come out in the days ahead clarifying what a few figures and labels on a single sheet of paper mean. One can only hope the additional clarity substantially improves the picture. However, it is very difficult to be hopeful.
The fiscal cliff contrived by President Obama and the Congress over the past two years creates a tremendous opportunity for Republicans and Democrats alike to come together on some simple yet profound, widely understood and commonsense reforms to the real drivers of the nation’s fiscal troubles—Social Security, Medicare, and Medicaid. Beyond disappointing, the House Republican counteroffer appears at best to suggest incremental tweaks to these programs. Without real entitlement reform—not just spending cuts—we will never fix the underlying problem.
Real, substantive reforms are badly needed, as the Boehner letter affirms in observing “these reforms are, in our view, absolutely essential to addressing the true drivers of our debt.” They then go on to observe, “we recognize it would be counterproductive to publicly or privately propose entitlement reforms that you and the leaders of your party appear unwilling to support” (emphasis added). Rarely in modern American politics have more counterproductive, more foolish words been set to paper.
In exchange for these incremental tweaks to spending, the Republican plan offers up what it calls “revenue through tax reform.” One hopes this means revenue arising from the additional economic growth that would pour forth from pro-growth tax reform. However, references to the Bowles plan suggest otherwise. They suggest instead revenues through tax deform, an anti-tax reform program of reductions in the availability of certain deductions and exemptions—without offsetting reductions in rates. While preferable in general to raising tax rates, this proposal largely dooms future efforts at tax reform based on the sound principle of broadening the tax base to lower the rates. Instead, this proposal would broaden the base, not to lower rates, but to raise revenues. So much for improved economic growth.
Despite these thoroughly discouraging aspects, the Republican letter includes two encouraging statements. The first is the reassurance that House leadership continues to support the elements of the House Budget Resolution passed last year by the House. The House Budget Resolution assumed a fundamental overhaul of the federal tax system and reforms to federal entitlement programs, “ensuring they are sustainable for the long-term rather than continuing to grow out of control.” This is encouraging because it suggests the House Republican leadership still grasps what real solutions look like. Unfortunately, the letter prefaced this reference by comparing it in its practicality to the frivolous Obama proposal of last week.
The second encouraging statement in the letter was in reference to higher income tax rates, “which we will continue to oppose and will not agree to in order to protect small businesses and our economy.”
Despite these encouraging notes, the Republican counteroffer, to the extent it can be interpreted from the hazy details now available, is a dud. It is utterly unacceptable. It is bad policy, bad economics, and, if we may say so, highly questionable as a negotiating tactic.
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Bill Whittle delivers a brilliant and powerful 15 minute speech that is sure to change the American political landscape. This one is a game changer.
Herman Cain would crush Sen. Saxby Chambliss in a Republican primary if the pizza mogul were to run in 2014, according to a poll released Tuesday.
Cain led Chambliss (R-Ga.) 50 percent to 36 percent in a survey from Public Policy Polling.
Of those surveyed, 45 percent approved of the job the incumbent is doing, while 36 percent disapproved. In contrast, 68 percent said they had a favorable opinion of Cain, the former presidential hopeful, and 20 percent had an unfavorable view.
The bulk of those questioned said they wanted a GOP Senate nominee to the right of Chambliss: 43 percent said they preferred someone more conservative than he is, while 38 percent said they wanted him to stay the nominee.
“I’m a problem-solver and a lot of people don’t want problem-solvers — they’d rather have the issue,” Chambliss told POLITICO earlier this week. “And I’m very open at home that I’m going to continue to work hard to solve problems because our country’s in trouble, and you can’t do it without Democrats and Republicans working together.”
PPP also offered match-ups with other possible primary challengers, including outgoing Rep. Allen West (R-Fla.) and RedState.com editor Erick Erickson, but Chambliss bested all except for Cain.
Cain has said he is not seeking the Senate seat.
When President Obama put forth his first offer on the fiscal cliff, House Speaker John Boehner (R-OH) said, “You can’t be serious.” We could say the same thing to the Speaker after his counteroffer yesterday.
In a letter signed by House Republican leadership, including Majority Leader Eric Cantor (R-VA) and Budget Committee Chairman Paul Ryan (R-WI), Boehner offered to raise taxes by $800 billion and cut spending by $1.4 trillion, with no substantive reforms to the entitlement programs that are driving U.S. spending and debt.
Heritage’s Alison Fraser, director of the Roe Institute for Economic Policy Studies, and J.D. Foster, the Norman B. Ture Senior Fellow in the Economics of Fiscal Policy, quickly responded that “the Republican counteroffer, to the extent it can be interpreted from the hazy details now available, is a dud. It is utterly unacceptable. It is bad policy, bad economics.”
Boehner’s letter to the President actually said that the Republicans were not going to make their more serious proposal, which has already passed the House.
If we were to take your Administration’s proposal at face value, then we would counter with the House-passed Budget Resolution. It assumes an overhaul of our tax code with revenue remaining at historically normal levels and proposes structural reforms to preserve and protect the Nation’s entitlement programs, ensuring they are sustainable for the long-term rather than continuing to grow out of control.
But, they said, “we recognize it would be counterproductive to publicly or privately propose entitlement reforms that you and the leaders of your party appear unwilling to support in the near-term.”
This is precisely the time for laying out bold reforms, showing the nation the principles, vision and policies conservatives share to dig out of this budget mess, today and for the long term. Instead, the leadership pointed to a plan they said was suggested by Erskine Bowles, the co-chair of President Obama’s debt commission and formerly Bill Clinton’s White House Chief of Staff. It raises taxes, but not by raising tax rates—instead, by lowering the amount or number of tax deductions or exemptions available.
This misses the point of the tax reform America really needs, said Fraser and Foster:
While preferable in general to raising tax rates, this proposal largely dooms future efforts at tax reform based on the sound principle of broadening the tax base to lower the rates. Instead, this proposal would broaden the base, not to lower rates, but to raise revenues. So much for improved economic growth.
Essentially, it appears the Republican leadership caved on raising taxes and first steps toward fundamental entitlement reforms that are desperately needed to keep Social Security, Medicare, and Medicaid going. To be sure, the Boehner letter is short on details. But, as Fraser and Foster put it, “Beyond disappointing, the House Republican counteroffer appears at best to suggest incremental tweaks to these programs. Without real entitlement reform—not just spending cuts—we will never fix the underlying problem.”
Not only would this be the right course to take, but Americans polled just after the election have these priorities more in order than the President and Congress.
Just a few days after the election, Gallup asked people to rank a list of 12 issues by importance for the President’s second term. Restoring “a strong economy and job market” was No. 1, with entitlement reform—“take major steps to ensure the long-term stability of Social Security and Medicare”—No. 2. “Make major cuts in federal spending” was No. 6 on the list, while raising taxes on people making more than $250,000 a year was way down the list at priority No. 10.
Now is the time for leaders to get serious. That means serious entitlement reforms that will deliver real savings and improve the programs. The President and House Republicans should both start over and work together toward solutions the nation truly needs.
ABC PLUNGES OFF CREDIBILITY CLIFF
TOUTS TAX HIKES OVER SPENDING CUTS BY ABSURD 17-1 MARGIN
ALEXANDRIA, VA – ABC World News with Diane Sawyer continues to tout the Obama Administration’s spin that tax hikes on the wealthy are the only solution to the looming “fiscal cliff” catastrophe. According to an analysis from the Media Research Center’s Business and Media Institute, in the three weeks following President Obama’s re-election, World News devoted more than 10 minutes 18 seconds to talk of tax hikes and just 35 seconds to spending cuts (a 17-1 margin).
NBC Nightly News discussed taxes more than twice as often as spending (4 minutes 23 seconds to 1 minute 47 seconds.), while CBS Evening News gave tax hikes only three more minutes of coverage (14 minutes 5 seconds to 10 minutes 12 seconds). However, more than a third of CBS’s spending cut coverage total comes from one story detailing the horrific downside of spending cuts.
But ABC was by far the worst offender, refusing to even entertain spending cuts as a viable solution to the Obama Administration’s crushing budget deficits.
Media Research Center President Brent Bozell reacts:
“The ‘fiscal cliff’ is looming, but ABC has already plunged off the credibility cliff. No serious news organization could possibly commit 17 times more coverage to touting tax hikes as the solution to this crisis than spending cuts. ABC News is nothing more than the press office of the Obama Administration. They’re an embarrassment to the profession.
“Instead of telling the American people the truth about the Obama Administration’s reckless spending binge, the tax-happy liberal media are toeing the party line: raise taxes on the ‘wealthy’ and the crisis will be averted. As guilty as NBC and CBS are on this issue, ABC is without a doubt the most corrupt.
“ABC News’ coverage of the fiscal cliff is an abomination, and they simply can’t be trusted.”
Spending Daily | December 4, 2012
Cliff Divers and Cliff Negotiators Battle It Out During Fiscal Debate
The Wall Street Journal reports, “That sputtering sound you hear in Washington is the sound of the deficit-reduction talks trying to get rolling again. That other noise? Oh, that’s the sound of a growing number of partisans on both sides strapping on parachutes, because they would be just as happy to go over the fiscal cliff that will be reached if those talks fail. The negotiating process had ground to a complete halt until House Speaker John Boehner made a move to revive it Monday. The Ohio Republican’s proposal—$800 billion of tax revenue without any increase in tax rates, and cuts in both Medicare and Social Security growth—will be as unacceptable to the Obama administration as the president’s offer last week—twice as much revenue, largely from a tax-rate increase, with smaller long-term cuts in Medicare—was unacceptable to the Republicans.” Many fear posturing on both sides makes strike a compromise impossible. “The longer it goes on, the more deeply entrenched become the partisans on both sides who would just as soon go off that fiscal cliff of economically perilous mandatory tax increases and spending cuts that will arrive at year’s end without a deal.”
“White Houses rejects GOP offer as ‘nothing new,’ unbalanced”
The Hill reports, “The White House on Monday blasted a counteroffer from House Republicans on debt talks as failing to ‘meet the test of balance.’ The White House said the $2.2 trillion offer of spending cuts, entitlement reforms and $800 billion in new tax revenue ‘includes nothing new’ and was not serious. It also faulted the proposal for lowering tax rates on the wealthy. … Republicans touted their proposal as a much more serious offer than the one President Obama floated last week. Obama’s proposal was based on his budget, and included $1.6 trillion in new tax revenues.”
Fiscal Cliff Negotiations Likely To Remain At A Stalemate
The Washington Post reports, “Sure, Republicans may have made a show of offering to include more revenues in the discussion.” But three things are in the way of a compromise. “One: Democrats may have had several key wins in the election, but the contest was still close enough not to give anyone an overwhelming mandate. Two: The already terrible hyper-partisanship is likely worse in the aftermath of the election, with one side licking its wounds, the other feeling overconfident and both sides with less to gain (at least in the short term) from appearing to give anything up. And three: The president learned a lot in the bruising battles over the budget and the debt ceiling during his first term, and is likely to be less willing to give ground early. Coming off the heels of the election, Obama has ‘emerged as a different kind of negotiator in the past week or two,’ the New York Times wrote Sunday. He appears far more disciplined and adamant than in earlier discussions. … Obama has made the first formal proposal one that does little to include compromises for Republicans, such as tax cuts. Instead, the plan Treasury Secretary Timothy Geithner delivered includes $1.6 trillion in taxes from the rich, short-term stimulus spending, $600 billion in cuts, and the ability for the president to raise the ceiling on federal borrowing without Congress’s approval. “
Poll: Americans Trust Used Car Salesmen More Than Congress
Politico reports, “Americans’ opinion of congressional honesty has improved over the past year, but lawmakers are still more distrusted than even used car salesmen, according to a poll released Monday. More than half of Americans — 54 percent — have a low or very low opinion of congressional honesty and ethics, Gallup found. That’s improved from 2011, when 64 percent had a low or very low opinion. Ten percent had a high or very high opinion of congressional trustworthiness, up from 7percent a year ago. The only similarly distrusted profession is used car salesmen: Only 8 percent trust them, and 49 percent do not. Americans are also more likely to trust governors and senators than they are to trustrank-and-file members of the House of Representatives. One-fifth of Americans have high or very high opinions of gubernatorial ethics, and 14 percent said the same of senators.”
“GOP ‘Fiscal Cliff’ Plan Echoes Failed Budget Talks”
The Associated Press reports, “Republicans are proposing a fiscal cliff’ plan that revives ideas from failed budget talks with President Barack Obama last year, calling for raising the eligibility age for Medicare, lowering cost-of-living hikes for Social Security benefits and bringing in $800 billion in higher tax revenue. The counter to a White House plan last week relies more on politically sensitive spending cuts and would raise half the $1.6 trillion in revenue proposed by Obama over the coming decade. The 10-year, $2.2 trillion proposal from House Speaker John Boehner, R-Ohio, resembles a framework similar to what Boehner supported last year, but Obama is pressing for additional tax increases and appears to be balking at spending cuts discussed in those talks and since.”
Cutting Medicare Hurts AARP’s Bottom Line
The Washington Post reports, As Washington debates whether to cut federal retirement programs as part of a deal to tackle the nation’s debt, one of the most powerful advocates for preserving them could have millions of dollars riding on the outcome. AARP, the highly influential lobby for older Americans, is fiercely opposing any Medicare or Social Security cuts and emphasizes that it is fighting for the good of its members. But the proposals for changing Medicare also could affect AARP’s bottom line. … It advocates for the interests of seniors, and it makes money allowing its name to be used in selling them private insurance, including coverage known as Medigap, which supplements government-provided Medicare. … But in last year’s negotiations over the federal debt ceiling, President Obama and top Republicans discussed proposals to change Medicare that could have reduced AARP’s revenue from Medigap. …Now, political observers predict that those measures will be back on the table in the coming weeks as Democrats and Republicans wrangle over a deal aimed at avoiding the ‘fiscal cliff…’”
GOP Fiscal Cliff Plan Freezes Federal Pay Through 2015
Joe Davidson writes in The Washington Post, “In a Monday letter outlining the plan to President Obama, House GOP leaders, led by Speaker John A. Boehner (Ohio), did not detail how their plan would affect the federal workforce, but they did say it would include ‘hundreds of billions in savings in other mandatory spending, including reforms to Federal employee compensation’ that are in the fiscal 2013 budget resolution approved by the House. … Federal employee leaders have denounced the GOP budget document, which ‘freezes federal pay through 2015,’ for a total of five years, and…calls for reducing the workforce by 10 percent through attrition by 2015. Although a current freeze on basic federal pay, which began in 2011, and other hits to their compensation are already costing federal workers $103 billion over 10 years, the Republican budget says they are ‘immune from the effects of the recession.’ Referring to within-grade ‘step’ increases, the GOP budget said, federal employees ‘have received regular salary bumps regardless of productivity or economic realities.’”
Bipartisan Delegation of Governors Talk Cliff With Obama, Boehner
Reuters reports, “With a few weeks remaining before the onset of ’fiscal cliff,’ a bipartisan delegation of governors is set to meet Tuesday with President Barack Obama and congressional leaders in search of some answers about the impact of deficit reduction measures on their state budgets, which rely heavily on federal aid. … Cutbacks in federal contracting due to the automatic budget cuts set for January 1 will also reduce employment levels regionally, with the heaviest impact expected in areas with large numbers of defense contractors
“House, White House aim for $32-$35 billion in farm bill cuts”
Reuters reports, “As time runs out to pass a new U.S. Farm Bill in 2012, the White House and Republicans in the House of Representatives hold surprisingly similar goals about how much to cut spending – roughly from $32 billion to $35 billion. But getting to a final agreement is proving difficult. Each side agrees to significant cuts to farm subsidies and soil conservation, but they have diametrically different views on food stamps, which the White House refuses to cut. A final figure for cuts may emerge as part of an agreement on government-wide retrenchment to rein in the federal deficit.”
Detroit’s Fiscal Clock is Counting Down
Reuters reports, “Detroit’s fiscal clock is ticking down again as the city faces running out of money by the end of the year unless a political squabble between the mayor and city council can be resolved. Without a resolution, the state of Michigan will not release cash to keep the city running. Mayor Dave Bing, who contends that bankruptcy or bond defaults are not on the horizon, is prepared to put city workers on unpaid leave to keep the struggling local government operating. Credit rating agencies are warning that political and legal obstacles could derail plans to get Detroit back on solid financial footing. Moody’s Investors Service last week pushed the city’s credit ratings deeper into the junk category and warned of a heightened risk of bankruptcy or default over the next year or two. The city of 700,000 has been hard hit by a steep population drop, years of severe budget deficits and escalating employee costs — factors that led state officials to begin an intervention process about a year ago.”
The Story of Business: The Opportunity to Compete
Arlington, Va. - Bankrupting America, a project of Public Notice, released its latest video in the “Story of Business” series looking at how burdensome government regulations impact real businesses struggling in today’s economy. The video profiles Jeff Lawrence, owner of Forefront Construction in Middletown, Penn., a commercial HVAC and plumbing company founded in April 2008, just prior to the financial collapse. Lawrence discusses how high taxes and government mandates are making it more difficult for his company to compete and thrive in today’s economy.
“We definitely have been able to stay afloat during this tough time, but there have been some obstacles put in front of us that have made the journey a little bit tougher,” said Lawrence. ”We’re a small business, and cash is king. Anything that could be done to lower taxes would be a help to our business. What the government could do to help get out of my way is to not mandate Project Labor Agreements, which don’t allow us to have a seat at the table because we’re not a union contractor.”
Forefront Construction’s story is one that resonates with small business owners across the country who are also facing higher taxes from Washington and endless bureaucratic red tape. After enduring four years of a struggling economy that hasn’t seemed to rebound, Jeff Lawrence believes many of the regulations and policies coming out of Washington are counterproductive. All he wants is an opportunity to compete.
“An even playing field is so important because it gives me the opportunity to compete. I’m not asking for anybody to give us any work; all I’m just asking for a seat at the table, to have the opportunity to bid the same jobs, to be able to bid the same work, and to be able to do the same work,” Lawrence continued.
Gretchen Hamel, executive director of Public Notice, issued the following statement on Forefront Construction’s Story of Business:
“Forefront Construction is an American story of what’s possible when entrepreneurs have the opportunity to compete and succeed. The problem in Washington is that too often misguided policies stand in the way. Instead of burdening small business owners with higher taxes and federal mandates, we should be helping businesses by making it easier to take risks and expand. With all the uncertainty surrounding the fiscal cliff, lawmakers should stop and ask themselves whether their policies are going to help or hurt job-creators like Jeff and businesses like Forefront Construction.”
Townhall.Com – Amid all the political and media hoopla about the “fiscal cliff” crisis, there are a few facts that are worth noting.
First of all, despite all the melodrama about raising taxes on “the rich,” even if that is done it will scarcely make a dent in the government’s financial problems. Raising the tax rates on everybody in the top two percent will not get enough additional tax revenue to run the government for ten days.
And what will the government do to pay for the other 355 days in the year?
All the political angst and moral melodrama about getting “the rich” to pay “their fair share” is part of a big charade. This is not about economics, it is about politics. Taxing “the rich” will produce a drop in the bucket when compared to the staggering and unprecedented deficits of the Obama administration.
No previous administration in the entire history of the nation ever finished the year with a trillion dollar deficit. The Obama administration has done so every single year. Yet political and media discussions of the financial crisis have been focused overwhelmingly on how to get more tax revenue to pay for past and future spending.
Business Insider – Obamacare supporters rejoiced in June when the Supreme Court ruledthe U.S. could use its taxing authority to mandate that most people buy health insurance.
But their celebrations may have been a bit premature.
The Affordable Care Act faces other legal hurdles—including a challenge that only could have been made after the Supreme Court’s ruling.