The Republican Job Creation Plan

I realize the title of this article is an oxymoron since the Republicans really don’t have a genuine plan to create jobs and yet this is one of the things they promised they would promote with great earnest during the 2010 elections.  Here’s the Republican/Tea Party plan for creating jobs in a nut shell – Let the free markets be free markets.  If that sounds something similar to the mantra of “Let Reagan be Reagan” by the former president’s supporters it is because such quirky bumper sticker slogans that mean very little to the general public is the best that Republicans can offer when challenged with serious issues.

Reagan was blindly worshipped by most conservatives of his day so the expression to let Reagan be Reagan simply meant that anything he wanted to do was okay.  The mere mention of his name by many today brings up visions of a saint who had no faults, though a close look at the record will show that Reagan was a far cry from the second coming that his supporters credit him with.   Blind loyalist only see what they want to however and those who put the concept of “unregulated free markets” out there as the infallible answer to all of our economic woes fail to see the short comings of such a position in today’s global economy.

Perhaps when Adam Smith wrote his tome, The Wealth of Nations nearly 250 years ago, there existed an environment where unregulated free markets were perhaps able to meet the basic needs of most people and then some, especially the millions that were gradually freeing themselves from the chains of monarchies and serfstatus in Europe.  Businesses were for the most part relatively small and local in nature.  Entrepreneurs and their customers either knew each other personally or were in close proximity of one another to have a face to face meeting if they so chose.

We are way beyond this today as anyone who owns a credit card can tell you.  It is likely some young individual barely out of high school or college with no real human interaction skills is handling your questions or concerns over the phone and who is most likely not to live in your community but may be a foreign national on the other side of the world.  This was part of the job-killing action here in America where many businesses outsourced such jobs that Americans were proficient in but where foreign labor markets were cheaper than what your neighbor or an American was getting paid and who also understood the culture.

This isn’t a culturally racist statement.  It’s reality merely points out that our economic world has changed since Adam Smith first introduced us to the concept of free markets.  Markets are global now. Most products are handled by very large corporations that often have production facilities around the world and administrative headquarters in Geneva, Tokyo, London or Brisbane.  The simple process of making a product that meets the demand of consumers involves great complexities and special “deals” today that sometimes overlook the safety of its workers and the quality control necessary to make sure consumers are not being sold something less than the claims manufacturers make about their product.  How much do you trust the foreign food exports from Indochina without an FDA in place to make sure it is safe for consumption?

Regulations insure that the free markets do what they claim and have the consumer’s well-being in mind more than their profits.  If all men were honest there would be no need for regulations – nor for churches, mosques and synagogues and the religions they arise from to point out our human weaknesses, amongst which greed is probably at the top of every one’s list.

Free markets are humanly created systems.  And because they have the imperfections that we as human beings bring to them, you would like a series of checks and balances [that are also imperfect]. It is precisely why you need to regulate behavior.”  – Rebecca Blank, Robert S. Kerr Senior Fellow at the Brookings Institution

So what does all of this have to do with the Republican plan for job creation?  Well according to Eric Cantor, Republican House Majority leader from Virginia, the GOP/Tea Party wants “to create jobs by killing regulations on companies and passing tax breaks for small business and government contractors”.  According to a recent Newsmax report,“The initiative aims to reduce the stubbornly high 9.1 percent unemployment rate — the top concern of voters ahead of next year’s congressional and presidential elections.”

Newsmax, a conservative publication, conveyed a part of this GOP job initiative that belies a conflict with the GOP/Tea Party’s recent fight to reduce the deficit.   “One of the Republican tax proposals would give small businesses a deduction equal to 20 percent of their incomes. Cantor said this would free up funds for those businesses to hire new workers and to invest in their firms.  Cantor did not provide details on lost revenues if his proposal, which was unveiled about a year ago, became law.”.

Remember Cantor was the one that didn’t want to spend federal funds on emergency relief  in the aftermath of the tornado that wiped out about 400 businesses and killed around 140 people by the massive F5 tornado that swept through Joplin, Mo. last May, unless spending cuts from other sectors of the federal budget could be found.  Now he wants to reduce revenue even further needed to pay down the deficit by further tax breaks to small  businesses.  Would he be willing to eliminate huge tax breaks from the large corporations to help their smaller brethren create jobs?   They don’t seem to useful in creating jobs for them.  Lord knows they have the money since profits for most of the largest companies in America have seen their highest levels in quite some time.

I really don’t have a problem with this notion to help small businesses with a job-stimulating tax break, but Cantor presumes that giving such businesses a tax break like this will ensure job growth.  It won’t.  In fact, the best he can offer on this is that it will “empower them to hire more workers”.    Would a small business that’s been struggling for the last couple of years use this added income to hire new people as opposed to clearing some credit debt or tucking it away as profit?

Rather than cut that much more from the federal treasury to pay for the workings of government that we all benefit from, this tax credit should be granted ONLY if those who are eligible for it do in fact hire new people, or at least rehire those that they had to lay off when the economy went south three years ago.  If we are going to be asked to grant such actions that will have a negative impact on the deficit, we should at least be assured that there will be a quid pro quo in the form of actually hiring people.

Job creation can positively impact the deficit by bringing more wage earners into the fold who will pay taxes.  I’m not sure that if a company of 100 employees hires only one person that we will get our money’s worth (the federal government views businesses with less than 500 employees as a small business).  Thus, this tax credit the GOP is recommending should be scrutinized to make sure that enough people will be hired vis-a-vis the tax credit to balance out the lost revenue it creates with its implementation.

This would be the smart thing to do but as we have seen over the last few years, Republicans and their Tea Party cohorts are more concerned about ideology than they are about smart legislation.  

The belief that only spending cuts with no tax increases will erode the budget deficit is a notion that most economist scoff at and yet Cantor and his feckless leader, John Boehner continue to bow to this nonsense that conservative think tanks like the Cato Institute, the Heritage Foundation and the American Enterprise Institute promote and that are funded by anti-regulation billionaires like the Koch brothers and Richard Melon Scaife.

Don’t be fooled by this head nod of Cantor’s regarding job creation.  Unrestrained free markets may or may not create jobs but they can also create unemployment through mismanagement and monopolies.  The very reason federal and state regulations exist to begin with ought to be as obvious as the nose on your face.  The markets are not always free as long as there are those who would manipulate them for their own personal gain.


Three Good Reasons to Let the High-End Bush Tax Cuts Disappear This Year 

Rich People’s Taxes Have Little to Do with Job Creation 

GOP and JOBS – Stiff Arming the American Worker(


8 responses to “The Republican Job Creation Plan

  1. The cowards come back to Washington (notice I did not say back to ‘work’) and there should be a jobs plan unveiled by the Repubs and no doubt it will be mostly tax cuts….a proven non-starter.

  2. I am with you on your suggestion – give small businesses a tax break but contingent on their re-hiring or hiring workers. That’s it. None of this nonsense about expecting them to do what’s good for their communities. I’m cynical and pessimistic that giving tax breaks to businesses is going to motivate them to hire. Very cynical. I don’t think it’s much to ask of “patriots” that they play a part in bringing back the U.S. economy. Good post, lb.

    • Thanks SD.

      ” I don’t think it’s much to ask of “patriots” that they play a part in bringing back the U.S. economy. “

      Especially since so many have been giving tax breaks over the years that have amounted to those huge profits.

  3. I agree with you from the very first line of this post. I haven’t heard from Eric Cantor about not providing hurricane relief once Virginia got slammed. Suddenly, he is quiet. Why? because if his constituents realize that he wants to withhold help, he would most likely be out of a job. I don’t know the economic answers but I do think it is common sense to know that cutting taxes to the wealthy and large corporations will not improve employment. Revenue produces employment so we need to help our businesses make money. There should be some help for small businesses though. They were destroyed in this recession as the big guys continued to make money. Some respite should be given to them. We need Main Street and they are fading away fast.

    • You’re right Donna. And it’s interesting that Virginia was the epicenter of the recent earth quake on the east coast and I’m sure their coastline suffered some dame from Irene. Will Canter refuse to provide FEMA funds for his own state under such conditions if they are requested? We’ll see and if he does, that makes him something of a hypocrite.

  4. I loved this post. Regulation is important because of that greed factor. Had there been regulation during the days when my dog could get a mortgage, we wouldn’t be living this nightmare now.

    If we are going to be asked to grant such actions that will have a negative impact on the deficit, we should at least be assured that there will be a quid pro quo in the form of actually hiring people.

    YES! It is not too much to ask. Actually, it should be expected.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s