Archive for Sunday, October 30, 2011

Studies challenge wisdom of GOP candidates’ plans

October 30, 2011

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WASHINGTON — Key proposals from the Republican presidential candidates might make for good campaign fodder. But independent analyses raise serious questions about those plans and their ability to cure the nation’s ills in two vital areas, the economy and housing.

Consider proposed cuts in taxes and regulation, which nearly every GOP candidate is pushing in the name of creating jobs. The initiatives seem to ignore surveys in which employers cite far bigger impediments to increased hiring, chiefly slack consumer demand.

“Republicans favor tax cuts for the wealthy and corporations, but these had no stimulative effect during the George W. Bush administration, and there is no reason to believe that more of them will have any today,” writes Bruce Bartlett. He’s an economist who worked for Republican congressmen and in the administrations of Presidents Ronald Reagan and George H.W. Bush.

As for the idea that cutting regulations will lead to significant job growth, Bartlett said in an interview, “It’s just nonsense. It’s just made up.”

Government and industry studies support his view.

The Bureau of Labor Statistics, which tracks companies’ reasons for large layoffs, found that 1,119 layoffs were attributed to government regulations in the first half of this year, while 144,746 were attributed to poor “business demand.”

Mainstream economic theory says governments can spur demand, at least somewhat, through stimulus spending. The Republican candidates, however, have labeled President Barack Obama’s 2009 stimulus efforts a failure. Instead, most are calling for tax cuts that would primarily benefit high-income people, who are seen as the likeliest job creators.

“I don’t care about that,” Texas Gov. Rick Perry told The New York Times and CNBC, referring to tax breaks for the rich. “What I care about is them having the dollars to invest in their companies.”

Many existing businesses, however, have plenty of unspent cash. The 500 companies that comprise the S&P index have about $800 billion in cash and cash equivalents, the most ever, according to the research firm Birinyi Associates.

The rating firm Moody’s says the roughly 1,600 companies it monitors had $1.2 trillion in cash at the end of 2010. That’s 11 percent more than a year earlier.

Small businesses rate “poor sales” as their biggest problem, with government regulations ranking second, according to a survey by the National Federation of Independent Businesses. Of the small businesses saying this is not a good time to expand, half cited the poor economy as the chief reason. Thirteen percent named the “political climate.”

More small businesses complained about regulation during the administrations of Bill Clinton and George H.W. Bush, according to an analysis of the federation’s data by the liberal Economic Policy Institute.

Such findings notwithstanding, further cuts in taxes and regulations remain popular with GOP voters. A recent Associated Press-GfK poll found that most Democrats and about half of independents think “reducing environmental and other regulations on business” would do little or nothing to create jobs. But only one-third of Republicans felt that way.

Comments

kansanjayhawk 3 years, 6 months ago

This reads like a liberal "hit-piece" journalism. No one is denying that low consumer demand is a problem but in a macro-economic sense too much unnecessary regulation and redtape does create a burden for our economy if one wants to see more hiring!

Orwell 3 years, 6 months ago

Save your breath. The plutocrats and the "useful idiots" they've already conned are unmoved by reality, particularly when the "big lie" is such an effective technique.

The only thing disturbing about this story is that it's the exception rather than the rule. These days it's more common to see economic reporting that gives equal weight to sheer propaganda about "job creators" and class warfare.

Carol Bowen 3 years, 6 months ago

The data is from the Bureau of Labor Statistics. Do any of the GOP candidates have another source of data?

mloburgio 3 years, 6 months ago

House GOP’s ‘Job Creating’ Spending Cuts Destroyed 370,000 Jobs According to the report, the $2.5 billion cut to local law enforcement funding could have prevented 36,000 police layoffs nationwide, and similar cuts made to grant programs could have prevented the loss of other state and local government jobs. Crunched by the recession and budget cuts, state and local governments shed more than 200,000 jobs in 2010 alone. Republicans not only cut such funding this spring but have now opposed the American Jobs Act — which included grants to state and local governments for the hiring of teachers, police officers, and firefighters. http://thinkprogress.org/economy/2011/10/27/355181/report-house-gops-budget-cuts-370k-jobs/

mloburgio 3 years, 6 months ago

Bush Had Generated More Regulations At This Point In His Presidency Than Obama We certainly don’t remember Republicans crying about the “excessive” Bush regulations.

More of Obama’s regulations may cost more than $100 million as compared to previous administrations. But many of them help prevent outcomes that would cost exponentially more. For instance, the Department of Interior’s new controls on deep-water oil drilling may cost the industry $180 million, but one oil spill like that caused by Deepwater Horizon could cost the industry $16.3 billion. Some of the administration’s rules, like those governing coal ash, will actually help create thousands of jobs.

The impact of these regulations on small businesses is incredibly minimal. In fact, of the 10,361 mass layoffs last year, only 61 were attributed to regulations. When McClatchy asked small business owners why they have been hesitant to hire, “none of the business owners complained about regulation in their particular industries, and most seemed to welcome it.” http://thinkprogress.org/economy/2011/10/26/353942/bush-more-regulations-than-obama/

esteshawk 3 years, 6 months ago

WHAT!? So you are saying that if everyone saved all their money and did not spend it, the economy would be humming along?

Jimo 3 years, 6 months ago

You have to understand that Lib knows nothing about economics and is prone to the most laughable statements on the subject. Clearly an autodidact. No university would have given him anything short of an F for such absurd statements.

"Spending and demand do not drive an economy." Yes, and the grass is blue and the sky is green. ROFL

Carol Bowen 3 years, 6 months ago

Do you have data to back up your statements? The article above has data.

rtwngr 3 years, 6 months ago

Yeah, and Chris (I got a thrill up my leg) Matthews is sooooooo objective. Talk about carrying water.

rtwngr 3 years, 6 months ago

“Republicans favor tax cuts for the wealthy and corporations, but these had no stimulative effect during the George W. Bush administration,.......Mainstream economic theory says governments can spur demand, at least somewhat, through stimulus spending."

This is a nice objective piece of journalism here. Nothing biased about it. Gee, it worked so well in Europe, borrowing and spending their way out of tough economic times. That's why Obama and "Mainstream Economists" were right all along about the stimulus here in the U.S.

Sorry, this piece of liberal dung stinks like a barnyard. The American people will not be fooled by this again for another 80 years.

Jimo 3 years, 6 months ago

"Gee, it worked so well in Europe, borrowing and spending their way out of tough economic times."

Gee, those countries that "borrowed and spent their way": Germany France Sweden The Netherlands

Those that adopted austerity: Greece Portugal Spain Ireland

Those that have growing economies: Germany France Sweden The Netherlands

Those that have shrinking economies: Greece Portugal Spain Ireland

Britain provides a perfect laboratory -- a country that employed stimulus at first, and then after an electoral change, employed austerity.

Results? At first the economy recovered well, and then it began contracting. (How silent are so many of my right wing friend who, 6 months ago, said "We'll just see how well Britain will be after 6 months of austerity. He who laughs last laughs best." Now Britain, and the other anti-stimulus nations are dragging down productive Europe.)

Britain's route is similar to the U.S. choices:

First we had 2 years of watered-down economic stimulus. And then the last year that stimulus dried up.

Result: a big change of fortune with the stimulus, with a negative 9% economic contraction (4th Q 2008) moving to a 4% expansion (4th Q 2009) ... a 13 point change!! Huge!

Then ...... the end of stimulus ... and with it an economy growing but only at a 2.5% rate - too slow to improve except over many years.

So, Dems got "their way" (a/k/a, normal economic action) and we saw a big improvement. Then the Repubs got "their way" (a/k/a, no more stimulus, extension of Bush's tax cuts) and we're seeing a undeniably weak economy.

Way forward? Dems say "go with the tried and true and finish the job" Repubs say "just because tax cuts for the wealthy have never worked before doesn't mean they won't work now." (And, "who, besides an economist, would say that reducing economic activity--spending cuts--reduces economic activity--are job killers?")

Flap Doodle 3 years, 6 months ago

File under: "a paid political announcement by the DNC".

beatrice 3 years, 6 months ago

Yes, because when an independent study goes against your ideology, it is important that we demonize the messenger as being partisan.

If the tax cuts created jobs, where where are they?

jayhawklawrence 3 years, 6 months ago

I would say the "political climate" is the number 1 impediment to the economy.

Polarization and political leaders who are not qualified to make decisions are ruining our country.

The Republican Party, instead of attracting truly qualified and talented business leadership, continues to promote rediculously unqualified candidates for office.

When a pompous fraid like Trump can promote himself as the sage of American business and a pizza salesman is wowing the country, we definitely have hit bottom.

beatrice 3 years, 6 months ago

If tax cuts created jobs and the Bush-era tax cuts are still in place, then where are the jobs? It is a simple question: where are the jobs supposedly created by the tax cuts?

weeslicket 3 years, 6 months ago

from the article: “Republicans favor tax cuts for the wealthy and corporations, but these had no stimulative effect during the George W. Bush administration, and there is no reason to believe that more of them will have any today,” writes Bruce Bartlett. He’s an economist who worked for Republican congressmen and in the administrations of Presidents Ronald Reagan and George H.W. Bush. As for the idea that cutting regulations will lead to significant job growth, Bartlett said in an interview, “It’s just nonsense. It’s just made up.”

just in case you missed it again: ... writes Bruce Bartlett ... an economist who worked for Republican congressmen and in the administrations of Presidents Ronald Reagan and George H.W. Bush.

so, i'm all confused about the whole liberal hit piece complaints. anyway, enjoy your sit in the pumpkin patch waiting for The Great Pumpkin to arrive.

just_another_bozo_on_this_bus 3 years, 6 months ago

Why do we need factories, machines, equipment, computers, office space, etc. to produce things that nobody can buy? After all, spending (and therefore buying) is bad for the economy, right?

Addled minds would like to know.

jafs 3 years, 6 months ago

:-)

This is so obvious it's quite remarkable that anybody would miss it.

What reasonable business would invest in an expansion of their business without customer demand?

That's a pretty quick way to put yourself out of business.

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