During the seemingly endless runup to the compromise agreement on taxes that appears to be a done deal, the rhetoric from some corners sounded generally like this (emphasis mine):

“…the Democrats’ tax hike would force job creators to cut back or eliminate employee benefits, switch full-time jobs to part-time, and replace end of the year raises and bonuses with pay cuts, layoffs, or relocating to countries with lower tax and regulatory burdens.

“These are serious decisions that face our job creators as a direct result of the failure to prevent massive tax hikes.

“At a time when our economy is struggling to recover, why would we raise taxes on anyone who could create a job?  Why would we, even partially, want to impede our nation’s path to economic recovery?”

The refrain that “no one ever got a job from a poor person” has been an ever-present argument that tax cuts for the wealthy must be extended.

Now, the “wealthy,” the “job creators” – however one defines that term — got Bush tax cuts in 2001 and 2003 and subsequently produced what can only be described as tepid job growth.  In July 2003, private sector employment was 108.231 million, its trough under Bush.  53 months later — in December 2007 — it peaked at 115.574 million (~140k/month on average, barely sufficient to keep up with new entrants into the labor market).  That’s an average annual growth rate of 1.5%, compared to a rate over the past 72 years of 2.0% (and don’t even ask about the Clinton era).

So, for those who have trumpeted maintaining the status quo on taxes for higher-income “job creators,” I express my sincere hope that we start to see some 250k+ NFP prints, as the shoe is now on the other foot.

The ball is in your court — let’s get those “job creators” cranking . . .

Category: Employment, Politics, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

32 Responses to “So Now Job Creators Will Get In Gear?”

  1. You should instead expect any job created or uptick in economic activity attributed to the extension of the tax cuts–whether it’s warranted or not. Somehow corporations hiring more people will be due to it’s executive staff being taxed less on their bonuses. The reams of analysis already showed that the “job creators” of the middle and upper middle-class were smack dab in the sweet spot of the middle-class tax cut.

    You should also expect more of the same rational disconnect of cutting revenue sources while finding ways to save money. We have deficits past our eyeballs, and the way we solve it is to sell more Treasury notes, and eliminate services to the people who will most need these same services over the next 25 years.

    All because any kind of a tax or other shared sacrifice is “communist”. I didn’t know that the passage “Ive got mine, f*#k you if you don’t have yours” is in the Star Spangled Banner.

  2. mathman says:

    Whatever happened to the much hyped “green jobs” we heard so much about during the last presidential election cycle? Currently China and Germany are going “all in” on this, while we’re still in denial about climate change, educating our future citizens for mediocrity or less, and resisting change in our economic policies by printing fiat money 24/7.

    i guess it’s true that “you can’t fix stupid.”

  3. ByteMe says:

    The deal is only for two years, so the refrain will change back to “too much uncertainty”.

    Where’s a smart viable third party when you need them? Oh, yeah, begging for money like the two we got.

  4. Patrick Neid says:

    Obama, like Bush before him, is living in a post bubble environment. These environments are not amendable to policy fixes, raising taxes, lowering taxes, less/more government spending etc. Time and debt liquidation are the only curatives. Like FDR and Reagan before who ever is president when the tide turns and the stock plateau ends, will take credit for it much the same way a cock takes credit for the sunrise.

  5. Greg0658 says:

    I readed the post .. will catch the thread after .. “no one ever got a job from a poor person” .. ya but I’ll bet they got rich using that poor persons muscles, usually paid them, then that poor guy used those muscles to buy something like flowers for a girl who responded with some nookie which begot another consumer/laborer/soldier .. and it goes round’n’round …. I like that quote you’all pointed out by Henry Ford paraphrased “pay someone enough for him to buy our product”

    now on this tax cut for zillionaires .. and the Robinhood is Dead world we live in .. where do zillionaires get it ? .. seems to me paper-pushers are getting over on the real stuff makers .. and this situation goes round’n’round .. there has got to be a fight in the halls of CorpGE (unless backscratching across the floors is the moda) …

    now where will zillionaires spend their excess cash me wonders ? – humptydumpy America or the Isles of Paradise? … one thing I learned while hanging out in here @TBP = import & export is Very Important .. and trickles right into my #’d accounts … and so will it go round in Circles? and sorta hope close to home?

    Manfred Mann’s Earth Band – Marthas Madman (Live 1983)
    http://www.youtube.com/watch?v=Qq4Rg9nCb4I

  6. Ralph67 says:

    I doubt the number of jobs created by entrepreneurs is greatly affected by how heavily taxed they are. Suppose Bill Gates had been far more heavily taxed than he actually has been, and had made a mere $25bn instead of $50bn, would he have reacted by refusing to set up Microsoft? Or would he have got a job sweeping the streets? I doubt it. Is there anyone out there who’d prefer the lifetime savings of a street sweeper to $25bn?

    Assuming market forces work, then raising taxes on entrepreneurs results in a shortage of entrepreneurs, which in turn raises their pre-tax earnings. Net result: everyone is pretty well back where they started, except that government takes a bigger slice of GDP.

  7. ByteMe says:

    “Assuming market forces work…”

    Let us know when that happens.

  8. wally says:

    I believe the ‘job exporters’ is the correct term. China did not come to its current technology and manufacturing prowess on its own… US businesses sought it out and moved factories and technology there deliberately.
    The wealthiest people are definitely not job creators. Rather, they tend to stifle progress by trying to deliberately preserve the status quo. Look at Buffet or Gates: lots of money, but not enough to invest in high-speed rail or alternative fuel industries or rebuilding infrastructure… big things. So they sit on what they have and delude themselves that their charity work is a major force in the world.

  9. machinehead says:

    The trend toward ever weaker job growth in recoveries has been in place since the 1973-74 recession. This suggests that the issue is structural, going deeper than tax policy, and probably related to the steady erosion of manufacturing jobs during the last 40 years.

    Many of the seven million jobs created during 2003-2007 were in finance, including plenty of mortgage brokers doling out low-down payment, low-doc mortgages. Turns out finance jobs tend to evaporate overnight when a bubble pops.

    Yet the authorities’ only strategy is to keep Bubble III growing. More finance-related jobs may be created — gold dealers on every corner? — but we’ve seen this movie before. A economy run on a ‘sequential bubbles’ model, and stripped of its investment capital by grossly excessive war spending, is headed for the scrap heap.

  10. ““…the Democrats’ tax hike would force job creators to cut back or eliminate employee benefits, switch full-time jobs to part-time, and replace end of the year raises and bonuses with pay cuts, layoffs, or relocating to countries with lower tax and regulatory burdens.”

    Invicky,

    no doubt that, the above, is some politico-grade campaign rhetoric, though, it seems that you’re missing the “relocating to countries with lower… regulatory burdens.”-part of it..

    but, anyway, nice Agitprop you put forth– anything to maintain the froth, right?

  11. Unsympathetic says:

    Why do Democrats allow these nonsensical debate points to lay there unchallenged? Of course nobody’s going to be hired.. because actual, real-life hiring decisions are made on the margin, not on tax policies!

    Let’s see just how many jobs are created over the next year. The Republicans got what they claim will do the trick.. want to bet that they won’t do what they claimed?

    If they couldn’t create jobs over the last decade, why on earth would ANYONE trust them to be able to create jobs in the next one?

  12. BuffaloBill says:

    I won’t begrudge Bill Gates or Warren Buffet a continuation of their current tax rates. If both feel they don’t pay enough in taxes and neither has viable private sector investment alternatives available, they are both welcome to open their checkbooks on April 15 and write large checks to the U.S. Treasury. I only wish that, in agreement, Obama had taken this opportunity to demand a complete and comprehensive overhaul of our income tax system – a system which has been bastardized by lawmakers and is laden with loopholes and far too many tips-of-the-hat to far too many special interests. This constantly undulating government game board works to our collective disadvantage. Has anybody noticed that in the past two weeks, we’ve managed to kick both the “revenue” and “spending” cans down the road?

  13. Joe S. Pack says:

    It’s become way too easy for the Banksters to make money without real risk. Why would they change now?

  14. beaufou says:

    The housing market is still awful so job creators in construction will have a hard time hiring anyone, unless some major project involving construction is planned by the government; city of the future with new energies? that would actually be an opportunity to retrain the auto-industry folks who also are going nowhere.
    We have 8 million jobs to create, this isn’t a financial/liquidity issue.
    If we are to have government spending, let’s do something on the ground level with actual wealth being created.

  15. curbyourrisk says:

    If you allowed companies to build things here…that is stop all the environmental crap….OR FORCE OTHER COUNTIRES TO LIVE UP TO THE SAME STANDARDS THAT WE LIVE UP TO HERE…. You would instatnly level the playing field, once again making America a competitive manufactring place. I say institute tarriffs on producing nations who allow the manufacturing companies to pollute the very land they build their factories on. Force them to pay up for stealing our jobs.

    There is a Mindite Oil song that speaks of this. The River Runs Red… Great tune…an even better message. (Barry, I even think you would like the tune … it’s on my i-pod and hear it just about everyday while riding the LIRR. Midnite Oil is one of those bands who’s songs have a deeper meaning right now. King of the Mountain, Forgotten Years, so many songs…all with great meanings)

  16. Init4good says:

    Hofner @ 8:50 – “Agitprop”….great word for it…

  17. Invictus says:

    @Mark Hoffer

    The quote to which you point is not mine. FYI.

    As to the agitprop: Essentially all we have heard about this “jobless recovery” (which is slow, to be sure, but not jobless) is that it is “uncertainty” on the part of “job creators” that is holding the recovery back. Though there may be some truth to that, I have pointed out more than once that the NFIB’s members have long been citing “Poor Sales” as their number one problem, and by a long shot at that. When the rhetoric and the data contradict each other, I’ll take the data every time.

  18. Petey Wheatstraw says:

    This puts it in perspective:

    “Breaking news: Obama, GOP agree on 2-year tax cut for Jayson Werth”

    http://www.philly.com/philly/blogs/attytood/Breaking_news_Obama_GOP_agree_on_2-year_rax_cut_for_Jayson_Werth.html

  19. wally says:

    “Though there may be some truth to that, I have pointed out more than once that the NFIB’s members have long been citing “Poor Sales” as their number one problem, and by a long shot at that. ”

    Of course. A consumer economy – and EVERY developed country is a consumer economy – runs on demand. It is demand that creates sales and jobs and incomes. Currently, demand in the US is weak – for very obvious reasons – so the economy is weak.

  20. beaufou says:

    Curb,
    no more world reserve currency, just use an index on production/consuming punishing local currencies, you produce too much, your currency goes up and vice versa.
    That would even flatten totalitarian regimes, no more blaming the neighbor or evil empires and also contain commodity prices.

  21. bernandoo says:

    Or you could pull an Obama administration and argue that without the tax cuts the employment situation would have been much worse off from 2003-2007 than without them. That’s the same argument made by Obama when the stimulus failed to keep unemployment below 8%.

  22. Our Increasingly Dangerous Asymmetric Economy

    So why hasn’t the well-oxygenated “wealth effect” translated into a stronger virtuous economic cycle?

    As I look at the data, there appear to be several reasons.

    At the consumer level, the wealthy seem to be using the benefits of lower mortgage rates to accelerate both revolving and non-revolving debt repayment. Thirty-year mortgages, for example, are being converted to 15 years while keeping monthly debt service flat and mortgage lenders are seeing “cash in” not “cash out” refis. And for savers (arguably the group perceived to be the most resilient going into the crisis), they have found themselves having to restructure their daily lives to reflect the impact of quantitative easing on their monthly incomes. As they will attest, living off of 1% interest is considerably more difficult than living off of 5%.

    At a corporate level, the benefits of lower US interest rates appear to have been transformed into a multinational carry trade, where cheap dollars have been translated into capital expenditures and jobs in higher-growth countries abroad. And as we saw last week, what little job growth we’ve seen stateside has been restricted largely to temporary/part-time positions as any number of uncertainties linger. Finally, given the experience of 2008, where both the bank and money markets froze up, corporations are today taking a much more conservative approach to cash management, choosing to bring on board their previously off-balance/contingent liquidity.

    And then there are the small community and regional banks, whose small business customers continue to struggle while their deposit costs continue to widen versus the Treasury curve. For them, QE2 is not an oxygen mask, but rather a pillow being placed over their mouths.

    The net result of it all is that, despite the abundant oxygen, the masks aren’t getting to where they were supposed to. And to these eyes, rather than creating a virtuous economic cycle, I am increasingly afraid that all the Federal Reserve and other global policymakers have accomplished is to create a potentially dangerous asymmetric recovery, in which “the haves” now have even much more and the “have nots” are slowly suffocating to death.

  23. Invictus,

    obv., it, the Quote, isn’t yours(from you), you, just, chose to use it (in the creation of your ‘argument’)..

    though, then, you trot out “…I have pointed out more than once that the NFIB’s members have long been citing “Poor Sales” as their number one problem, and by a long shot at that. When the rhetoric and the data contradict each other, I’ll take the data every time…”

    as if the NFIB is representative of all Businesses..are you trying to be serious?

    “The National Federation of Independent Business is the leading small business association representing small and independent businesses….”
    http://www.nfib.com/about-nfib

    you like the FedRes, listen to one of their own:
    “Random Refereeing: How Uncertainty Hinders Economic Growth (With Reference to Lucky Puppies, Pepper…and Salt, Lawrence Summers and Thomas Jefferson)
    Remarks before the Greater San Antonio Chamber of Commerce
    San Antonio, Texas
    July 29, 2010…”
    http://www.dallasfed.org/news/speeches/fisher/2010/fs100729.cfm
    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Regulatory+uncertainty+hindering+job-roll+growth

    ‘Regulatory Uncertainty’, a nice way of saying ‘Political Risk’, is, Stateside, in a continuing ‘Bull’ Market..
    ~~

    QOTD:
    “The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” —John Maynard Keynes

  24. Invictus says:

    Atwater article is spot-on.

  25. rip says:

    @Invictus: Fascinating that everyone seems dialed into the truth, and yet our gov keeps poking us in the ass.

    The last days of Rome?

  26. DeDude says:

    The funny thing is that you will get that job growth and the GOP idiots will declare that it happened because they saved the rich from increased taxes. Ironically it is the other piece of the package that puts more money in the hands of the consumer class that will create those jobs. Businesses are pretty much all saying that the one thing they need before they can hire more people is more costumers (and that is what more money to the consumer class will create). These things are pretty simple, unless you decide to misinterpret reality such that the final conclusion is that more money to your rich friends is good for everybody. Remember how we repeated trickle down even after it had been such a spectacular failure in the 80′ies.

  27. daf48 says:

    The world cannot sustain the Global economy. It’s time to start thinking how we can lower our standard of living most effectively. Unlimited growth is cancer’s mantra.

  28. Lukey says:

    Well I suppose the advocates of tax cuts over stimulus can always fall back on “it would have been worse” without the extension.

  29. Peter Pan says:

    The “job creators” never got out of gear.

    The new found extra investable capital from the tax cuts took flight out of the USA and was invested to create jobs outside of the USA. Those newly created non-USA jobs succesfully competed against USA jobs. The effect of what has been ocurring has been masked by a huge credit/asset bubble.

    The idea that tax cuts for the wealthy for investment in the USA to create jobs within the USA is totally limpdick in it’s effect. It’s just more bullshit sales-pitch-hyperbole from Republicants.

  30. Invictus,

    in the first few minutes, here

    http://www.youtube.com/watch?v=DRut_LTJpwI

    Richard Epstein speaks to some(many) of the Problems of “Regulatory Uncertainty”/”Wanton Fiat creation”…

    on Reason.tv …

  31. theorajones says:

    “no one ever got a job from a poor person” Really? What about Sam Walton?

    There is something so weird in our discussions of jobs. Fundamentally, CUSTOMERS create jobs. Some customers are wealthy, some are middle class, some are poor, some are profitable businesses, some are money losing start-ups, some are once-great businesses in decline, some are governments, some are not-for-profit ventures. At the end of the day, it’s demand for your product that leads you to hire people to fulfill that demand (or manage your growth in order to fulfill that demand, or generate more demand for your product, etc.). And that demand comes from your customers.

    People don’t get hired because a wealthy company owner says “my goodness, look at this big pile of profits! Whatever will I do with it? I know, I’ll go hire some people.” People get hired because they are necessary. What makes them necessary is demand for whatever it is the company is selling. If a company owner believes there will be no growth in demand for his product, a responsible company owner will quite sensibly sit on that pile of money until it makes sense to hire people to DO stuff. You don’t hire people because you have money, you hire them because you need them to DO something, and if you don’t believe demand is coming, you’re not going to hire anybody no matter how much you have in profits. It would just be stupid.

    At the end of the day, CUSTOMERS are job creators. This isn’t freaking rocket science.

    I’ve got to think that it’s not coincidence this political talking point became very popular around the time that customer service went down the drain in so many places, and the notion of fiduciary duty basically evaporated on Wall Street. More and more, it’s mainstream business management to fail to value your customers, just value their money. This is a problem.

  32. willid3 says:

    not sure why any body would really expect continuing the tax cuts will help any at all. they didn’t help when they first were done. we had the weakest job growth since records have been kept. and that makes a lot sense. its like giving some one a raise for doing nothing. why should they work harder? they get more for doing nothing. and most of those getting the ‘raise’ don’t do much in the way of buying any thing. they save it or buy stocks (maybe. maybe not) or they buy commodities (oil??????). but doing any thing that adds jobs? nope. not a chance of that