President Obama calls them “the rich” and Representative Bohner calls them “job creators.” So who’s rhetoric is right? Or could it be that job creators and the rich are one and the same?
The rich, says Obama, make $250,000 or more per year. They pay social security tax on only $106,000 of those $250,000 but get full benefits. They own 76% of all assets held by individuals and when they sell them, they pay capital gains taxes, which are lower than salary income. They also get to deduct $500,000 per couple from the sale of their private residence and 75% of their gains from the sale of stocks, bonds, gold and other assets. They have big IRAs and 401k plans where none of the capital gains are taxed until retirement. The money in these plans came over a decade in which their wealth grew by 29% while for those below them it remained level or declined. Obama says, they deserve to be part of the solution to our economic problems, so fork-over an equal share, you guys.
“These are not rich people” resonates Bohner, “these are job creators. What, do we want them to stop creating jobs?” Make matters worse. If they do not have enough money to invest, they will invest nothing, confused by all this talk of taking some of their perks away.
Jobs are created by corporations (foreign and domestic), governments (Federal, State and local), and non-profits. Jobs are also created by small firms which, in order to avoid double taxation, are often owned by individuals. Immigrants are 3 times more likely to own one of those than U.S. born people. Some estimates say that they have nearly two trillion dollars in cash or cash equivalents and a similar amount is held by the corporations.
If we were to take some of what the stimulus package we gave them in 2009 and maybe some of what Bush gave them in 2006, Bohner says, they’ll panic and create fewer jobs. Well, how many jobs have they created since 2006 when we gave them the breaks. That number is 0. As a matter of fact small businesses have shed 1.7 million jobs since 1968. But Bohner says we should give them more breaks.
So why haven’t the job creators created jobs? They say they can’t create jobs until the economy improves, that is until demand is restored. “Give me more sales and I’ll hire more people”, they say.
If we were to take them at their word, the only way for them to work their job-creating magic, is to give those folks who are at the lower half of the economy table and now earn less than $29,000 for a family of four, some money so they can buy more things. Doesn’t that make sense to you? So then, the job creators say, it is the consumer who takes the first step in producing new jobs. So, the consumers are the job creators, no?
I’ve just spent three days in Silicon Valley and talked to three entrepreneurs in the high tech world who have jobs open in their companies and can’t find the right people. One is looking for wi-fi engineers and six other kinds of engineers, another is looking for programmers and trainers, the third is looking for management of production, sales, public relations. If you think they are not representative of what is going on in this industry, just check the employment rate for these categories of jobs in Santa Clara County. It’s 2.9% The interesting thing is that if you could find these qualified people and hire them, each of these people would generate an average of 3 more jobs in the same company. So then, THESE are the job creators, no?
So if people buying more things and people with the right credentials graduating schools, wouldn;t policymakers say something like..Quick, let’s put our money there!
Some of these jobs creators are graduates of UC Berkeley and I was also up there attending a meeting of the University of California System Regents. They are facing a $650 million cut in their annual budget. Bottom line is that, in addition of raising tuition up to 16% per year over the next 5 years (that’s 80% uncompounded) they will only be able to take in 1,100 engineering students (a cut of 30%) in a market that already has 3,500 “job creators” fewer than there are jobs in the nearby industries. Doesn’t it seems to you that we are killing the goose that lays the golden eggs?
What about those pesky regulations that Obama has instituted and that prevents Bohner’s mythical job creators from creating jobs? Sacrebleu!
There’s no more regulated industry than oil production. Oil companies spend billions lobbying against them, but in fact state and local have joined Federal regulators trying to keep disaster from happening in their backyard and it does cost more to dig for oil under these increased regulations. One would expect companies like Exxon-Mobil have all but stopped looking for oil. But the opposite is true, at no time in their history have they put so much money in a hole the ground. Why? Oil prices. Keep the oil prices high enough and even the troublesome regulations can be overcome. Exxon Mobil is responsible for a great deal of Perry’s Texas Miracle (the part that didn’t come from Federal stimulus dollars).
Let’s summarize. Who are the job creators.? A) People who have fewer things than they want and need and get money (from whatever source) to buy them, b) engineers who are being sought after and as soon as they are hired need to hire other people to help them do their jobs, and c) organization who deal in commodities, technology and some manufacturing companies that are getting a great price for their products. Given a reasonable immigration policy they’ll be able to do more here. And who are those guys Bohner is looking to hand some of our tax money? They are simple spectators and fat political contributors to the economic drama known as, “Getting Re-elected in 2012.”
The rhetorical winner is definitely Bohner.