If those economists were thinking straight, they would find all sorts of ways to actually create jobs -- none of which involve more government spending. Lowering the capital gains rate on American corporations would create jobs. Making the Bush tax cuts permanent would create jobs. Eliminating some of the millions of pages of government regulation on businesses would create jobs, millions of them.
As reported in the Wall Street Journal on June 9, the Waxman-Markey climate change bill has cleared a key House of Representatives panel. According to the Congressional Budget Office, this legislation will cost the American people $846 billion dollars over a ten-year period from 2010 to 2019. Yet only $25 billion of this amount would be used for energy-related projects. An astounding $821 billion would go into programs such as welfare or job training.
Notice that the bill making its way through the House is not a "global warming" bill. It would be impossible to argue that the climate is currently "warming" because for the past decade the earth's climate has actually been cooling. So what was once a global warming bill is now a "climate change" bill. Presumably, this means that the efforts of Messrs. Waxman and Markey are intended to prevent the earth's climate from either warming or cooling, a remarkable feat that has never been accomplished during the 4.5 billion years of the earth's geologic history. I did not realize that the Democratic Congress of the United States possessed such alchemical powers.
But what if the House were to reject the Waxman-Markey bill? American corporations would be spared $846 billion in new taxes, and the American people would be spared paying for these taxes in the form of higher prices on energy and on everything manufactured, serviced, or transported. That $846 billion would then remain in the hands of the private economy where it could be used to create jobs.
How many jobs would $846 billion create? $846 billion over ten years is $84.6 billion per year. (I'm doing the hard math in case our Treasury Secretary, who had some difficulty figuring his taxes, has troubling following along.) $84.6 billion just happens to be $84,600 times one million, or $42,300 times two million. $42,300 is a figure that is remarkably close to the national wage plus benefit package (wages alone averaged $36,764 in 2002, according to the Bureau of Labor Statistics). So by simply not spending $846 billion on a climate change bill (a bill intended to either warm or cool the atmosphere -- Congress doesn't seem to know which), we might enable the free market to actually create two million jobs.
But what if the House were to reject the Waxman-Markey bill? American corporations would be spared $846 billion in new taxes, and the American people would be spared paying for these taxes in the form of higher prices on energy and on everything manufactured, serviced, or transported. That $846 billion would then remain in the hands of the private economy where it could be used to create jobs.
How many jobs would $846 billion create? $846 billion over ten years is $84.6 billion per year. (I'm doing the hard math in case our Treasury Secretary, who had some difficulty figuring his taxes, has troubling following along.) $84.6 billion just happens to be $84,600 times one million, or $42,300 times two million. $42,300 is a figure that is remarkably close to the national wage plus benefit package (wages alone averaged $36,764 in 2002, according to the Bureau of Labor Statistics). So by simply not spending $846 billion on a climate change bill (a bill intended to either warm or cool the atmosphere -- Congress doesn't seem to know which), we might enable the free market to actually create two million jobs.
In reality, this analysis understates the jobs potential of not spending $846 billion. Over the past 200 years corporate profits in America have averaged 8% above inflation (as measured by average inflation-adjusted stock market return over the same period). This return on investment within the private sector, if compounded over fifty years, yields $46.90 for every dollar invested. Over a 200 year period a single dollar invested at 8%, if untaxed and reinvested, earns $4.8 million. All of those reinvested dollars would be put to work in the economy, thus creating jobs.
By contrast, a dollar "invested" in government spending on welfare, wealth transfer, inefficient alternative energy schemes, and make-work programs soon disappears. It disappears because these programs disregard market efficiencies. The programs fund windmills in districts where the wind rarely blows and solar farms where the sun doesn't shine, simply because some congressional donor must be rewarded. They mandate larger ethanol subsidies because corn-growing states have votes in the House and Senate --despite the mounting scientific opinion that ethanol contributes to increased levels of CO2. In addition, every new government program carries with it the burden of bureaucratic and administrative costs, and sheer corruption. It costs the government 13 cents just to collect one dollar of taxes. It then may cost another 50 cents to administer an inefficient program that produces no tangible benefit and, indeed, that produces further government regulation, leading to additional costs in the private sector.
As if this were not enough, all new government spending is now financed through debt. That debt entails interest payments that continue indefinitely, and these interest payments remove more capital from the private sector, thus creating a vicious circle of lowered wealth creation.
Well said. Want to "stimulate the economy", and thus create jobs? Here's JG&AH's Economic Stimulus Plan. I'll put it up against Obama's Political Payoff (ie, his Stimulus Bill already signed into law) any day.
1. Abolish the Capital Gains Tax.
2. Make the Bush Tax Cuts Permanent, irrespective of income level.
3. Push through a comprehensive South American Free Trade Agreement.
4. Freeze entitlement spending increases to keep pace with inflation, for a short period of time (2-3 years?)
5. Commission a task force to explore the worked required to revamp the tax code to either a flat tax or a consumption tax. The gesture alone will create a positive response in the markets.
Don't hold your breath on any of it, obviously.
Well said. Want to "stimulate the economy", and thus create jobs? Here's JG&AH's Economic Stimulus Plan. I'll put it up against Obama's Political Payoff (ie, his Stimulus Bill already signed into law) any day.
1. Abolish the Capital Gains Tax.
2. Make the Bush Tax Cuts Permanent, irrespective of income level.
3. Push through a comprehensive South American Free Trade Agreement.
4. Freeze entitlement spending increases to keep pace with inflation, for a short period of time (2-3 years?)
5. Commission a task force to explore the worked required to revamp the tax code to either a flat tax or a consumption tax. The gesture alone will create a positive response in the markets.
Don't hold your breath on any of it, obviously.
