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Dismal Jobs Report Sends a Clear Message

Less spending, less regulation on businesses are needed to bring unemployment numbers down.

On Friday, the Department of Labor issued the latest jobs report, and the news was not good. The economy added only 54,000 jobs in May. It is clear that the president’s economic policies are not working.

The Bureau of Labor Statistics reports that the average unemployed American has been looking for a job for 38 weeks, the longest average time in history. Consider what these abstract statistics mean in real life. For many of us, summer is time for baseball. If someone started looking for a job before opening day, they would still be job searching two months after the final game of the World Series.

I believe combating unemployment is one of the most important issues facing Congress. But more spending, regulation, and taxes are not the right prescription for our ailing economy. Instead, Washington can help repair our economy with policies that will help spur job creation from the private sector.

First, we must get our fiscal situation in order. The president’s “stimulus” spending spree has only served to spend money we don’t have and pass the burden on to the next generation. How we address government spending and debt today will impact the nation’s economic growth in the future. 

To emphasize this point, more than 150 of our nation’s economists publicly declared that an unconditional debt limit increase — without significant spending cuts and budget reforms — will harm private sector job growth. The House last week voted overwhelmingly to reject an increase to the debt limit, demonstrating that we cannot and will not continue to spend without any meaningful limits in place.

Second, Washington can help create an environment that encourages job creators to hire, not burden them with the threat of additional taxes and regulations.

Unfortunately, this administration has created an environment of economic uncertainty that is keeping our job creators on the sidelines. During each year of his presidency, President Obama has proposed tax increases which, if enacted, would have been the largest in history. This tax increase would cripple many small businesses — the engine of job creation, creating nearly two-thirds of the new jobs in this country.

Our economy needs tax relief — not a tax increase. The best way to help companies, investors and entrepreneurs to create good, private-sector jobs is to reduce taxes across the board.

Government regulations can also be a serious impediment for economic progress. But currently, unaccountable bureaucrats can impose these burdensome regulations. I support legislation in Congress that would require congressional approval of administrative rules with an annual effect on the economy of $100 million or more. 

The May jobs report should be a wakeup call to President Obama that we cannot spend, borrow and tax our way to economic recovery. By sidelining the job creator with higher taxes, we will just punish those searching for employment.

The prescription for reviving our economy is straightforward:  stop spending money we don’t have and allow the private sector to create jobs.

Dave June 6, 2011 at 03:05 pm
The solution is to impose a tax on the conversion of dollars into yuan, either for the purpose of importing Chinese goods or investing in China, equal to China's currency market intervention divided by its exports--35 percent. The EU could do the same, if it likes, on euro-yuan conversions.
Dave June 6, 2011 at 03:05 pm
When Beijing stops intervening, the tax stops. In the meantime, prices that drive investment and jobs creation would be more closely aligned with those that would prevail absent Chinese currency market manipulation and protectionism. Those would be free trade prices.
That tax bothers everyone but look outside. America is collapsing. China's currency market intervention is destroying the U.S. industrial base, thrusting millions into unemployment, driving up global energy consumption and pollution, and undermining the free trade system that took half a century to build. Free trade is great stuff and Americans should want to compete with Chinese workers on that basis--both countries would grow. But with China's currency manipulation unanswered, it's like wrestling bare handed with an opponent holding an axe. China continues to grow and will soon overtake the United States. Yet, U.S. politicians and pundits argue about spending cuts and tax increases, when neither will help us avoid the immediate threat of a double dip recession or ultimately the decline of America. Then whose example will the struggling nations of Asia and Africa aspire? America's democracy or China's autocracy?
Bob McBride June 6, 2011 at 03:07 pm
Michael,
In a nutshell I guess what I'm saying is whether or not one approves of more or less social programs doesn't matter when it comes to attempting to finance them by regulating and taxing corporations. Today's mobility allows them to avoid both. I know for a fact that there are entire industries for whom it just barely makes sense to keep facilities in this country as it is. Trust me, none of them want to move and when they have an opportunity to bring jobs back they do. On the operational level, they understand how it works. It's their jobs on the line, too. But they are subject to a marketplace, both consumer and industrial, that seeks by its nature lower costs. When it means the difference between being able to sell your product or service or not, most of these companies have no choice in the matter. Again, we're no longer the single power-player in this. We need to figure out where and who we're going to be 5, 10 years down the line. The old way of doing things is no longer valid.
Terry June 6, 2011 at 03:30 pm
Hey Sensennbrenner --- like we 've said before --talk to the President and his minions --not us. Get some nuts and back Ryan and do it daily and don't stop. Or,, a lot of us will not put you back in office.
You have seen that this administration has continually and purposely created this quagmire that we are living in -it is hurting all of us. Talk tio the jerk --now and every day and tell him with press present what a disaster he is. DO IT NOW. AND OFTEN. Stop writing this filch to taxpayers . WE KNOW what the damn problems are and who did it. TALK TO THEM and get some nuts.
Michael Schwister June 6, 2011 at 03:46 pm
Bob, How well is going for us leaving the middle class bear the entire weight of government. Lets talk about business. I rarely find what I am looking for at retail outlets. How much effort is business investing so we can clean up our act environmentally. Why do we cover our roofs with asphalt instead of solar panels? If you want to compete with someone lets compete on sustainable practices. How much useless plastic junk can we bury in landfills. Where is the investment to use alternate fuels for transportation to relieve the pressure on oil. The problem with our business practice is that we stifle innovation by supporting the largest most profitable business's in America with tax money. There is no incentive for them invest because these"job creators" are on welfare. Really Bob. I want my tax break too.
N. Peske June 6, 2011 at 04:22 pm
Rep. Sensennbrenner, if you really want to create jobs, do something about your party's ridiculous fight against affordable healthcare for the self-employed. There are so many people who want to start businesses but can't because they'll lock themselves out of healthcare. Those of us who already self-employed are crossing our fingers that the new bill will hold costs down but with your side aggressively fighting against us, we're starting to lose hope. You've been musing about how the administrative costs of our for-profit system are a problem since I moved to Wisconsin. At what point do you bother to DO SOMETHING and stop fighting those who are? Lead, follow, or get out of our way so we can operate our businesses!
Bob McBride June 6, 2011 at 04:40 pm
Michael,
Businesses adapt practices when there is a cost savings (or penalty) associated with them. They don't operate for someone's definition of the "greater good". For instance, last place I worked had an impeccable safety record in the industry. Not out of the goodness of their hearts. Not because of OSHA. Not because of the union that our production employees belonged to. They did because they were offered a discount on their insurance premiums if they could demonstrate that they had instituted "best practices" (I hate that term, but that's what they called it) in terms of safety precautions and they had a record of accident free quarters. Do you know why the insurance company offered them that discount? Not because they "care" about employee safety. But because the less accidents, the less they have to pay out. Similarly, just before I left the company, they signed an agreement to install high efficiency lighting throughout a portion of the plant. Not because they give a rip about environmental issues. But because they could get it done virtually free via government rebates AND it saves them money over the long term. Do you see where I'm going here? Corporations serve different masters than those who think the environment and other social issues are paramount. If you want corporations to do your bidding, you make it profitable for them. They have no social conscience. Again - good, bad, doesn't matter. It is what it is.
Keith Schmitz June 6, 2011 at 05:11 pm
Congressman, your prescription to the jobs situation is pretty much what we did and what you backed when Bush was loosing a hell of a lot more than 54,000 jobs. We are supposed to listen to this guy?
Keith Schmitz June 6, 2011 at 05:13 pm
All well and good, but Sensenbrenner and the job have no plan. It's quite simple. Figure out who the large donors are and that's who the GOP will benefit. Any one else is just dreaming.
Michael Schwister June 6, 2011 at 05:28 pm
Bob I do understand where you are coming from. I don't believe business is entitled to have their way with the planet. Knowing they have no social conscience should be enough to convince anyone they need to be guided with responsible social engineering. Our previous generations of job creators thrived because they had a product to sell. We have nothing to offer not only our current generation of young folks but future generations as well. I would like to see some support for companies with an eye on solving real problems. Probably more than one or two such companies tied up in the patent office. Business is cocky now and I can here the whining already. Not enough experienced help, or they want too much money. Kind of liked it back in the day, after the John Birch Society and before the Koch funded Government when a guy could have 5 jobs in the same week if he wanted too. A Business Professor for the UW system had her students read the famous repair bill and using the knowledge they had learned in class, come to a conclusion about whether this bill increased or decreased their chances for employment. Overwhelming results were this bill was a detriment to job growth.
Bob McBride June 6, 2011 at 05:39 pm
Michael,
Given that it's relatively easy for companies to move production off-shore, out of state, wherever to avoid punitive regulations and taxes, how do you propose to change them? Not theory, not whether they should be changed or not. How do you expect to make anything you want stick in the business environment we have now (off shore production and distribution facilities that rival or best ours, and technology that allows one to manage such facilities from virtually anywhere)? It's not the same playing field it was 15, 10 or even 5 years ago. You're ascribing human attributes, emotions, value judgements and drives to an entity that operates under one principal and one principal only - profit. You can't contain that entity within the borders of this nation, and unless you figure out how to make it stay here, you lose jobs. Have at it. What's your plan?
Randy1949 June 6, 2011 at 05:47 pm
@Bob McBride -- As you say, businesses are amoral entities. Amoral entities must be controlled by law or your carrot and stick approach. You can't keep businesses here in the US, but you can institute tax policies that reward US production and discourage off-shoring. Make it worth their while to stay and pay their workers enough to actually buy what they make.
Randy1949 June 6, 2011 at 05:53 pm
How about affordable health insurance for everyone? Think about the savings to business if the employer was no longer responsible for the employee's health coverage? (Of course many no longer feel that responsibility as it is.)
Keith Schmitz June 6, 2011 at 05:59 pm
I believe Obama's couple years scooping ice cream at Baskin Robbins in Honolulu while in high school gives him more private sector experience than Sensenbrenner.
Keith Schmitz June 6, 2011 at 06:14 pm
Yeah, those record profits really suck and show what a bad job Obama is doing.
Michael Schwister June 6, 2011 at 07:25 pm
Bob, If we work together we can produce product here that is effective and useful. If mattel wants to offshore barby dolls, go for it. I don't see other countries giving corporations a tax free status. Do you think for one moment they would risk moving overseas where corporate CEOs make about 5% of what US counterparts make? Letting the few hoard the nations wealth is contrary to my sense of equity. The plan? Sponsor innovation, assist small business instead of large corporate privately held entities that are in no need of our help.Get the patent office in order. Single payer health care would hold down costs for both business and labor. Stop the practice of tax free corporate profits. By the way, I have never heard from anyone how much more it would cost to save social security. If we kick the can down the road which generation is left to deal with the unfunded elderly health care and pension issues no longer available. Lets pay as we go now. All of us.
Bob McBride June 6, 2011 at 07:28 pm
Randy,
If it costs me $12.00 to make something here versus $5.00 to make and ship from China (these are not unrealistic figures, btw), how much of a tax burden do you think you can put on businesses that won't result in consumers not being able to afford to buy the product produced here OR overseas? How much are you willing to reduce the purchasing power of the average consumer by?
Bob McBride June 6, 2011 at 07:45 pm
Michael
Unless you do something to prevent companies from moving production to the cheapest possible venue (all other things being equal - ie, quality), it doesn't matter how much you "encourage" innovation. Maybe you don't remember, but that's what the tech boom of the 90s was all about. That's when production slipped out of our hands here and the common wisdom at the time was that it was a good thing. Manual factory labor was beneath us and something suitable for emerging nations. How'd that work out for us? The same thing is going to happen again with new technologies and, in fact, already has. Not long ago I read about a solar panel upstart that has had to move production to China in order to compete. This was not a major corporation, this was a small business. I had a client in the late 90s who started as very small business of the type you mention. At his largest he was 400 employees across several divisions. Still considered a small business. He, as well, was forced to start sourcing out of China because it was just impossible to compete. His products were unique, but not unique enough that the consumer was willing to pay 2-3 times what similar items produced elsewhere cost. So it was either close down shop and put everyone out of work, or save those he could be sourcing overseas. It's not just corporations anymore. It's small businesses as well. Money from innovation comes from production, not the innovation itself.
Randy1949 June 6, 2011 at 07:55 pm
@Bob McBride . . . if US consumers have only low wage jobs or no jobs at all because they've all gone overseas, the purchasing power of the average consumer is reduced considerably, no matter where it's made.
I'm saying, give a tax break to US manufactured goods. Do not give a tax break to US companies that do their production overseas, because that is not creating US jobs. This seems fairly simple to me. We should have either the jobs or the tax revenue on the profits made from outsourcing.
Bob McBride June 6, 2011 at 08:13 pm
Randy,
How much do you want that punitive tax to be? In order for it to be effective it has to be high enough to dissuade manufacturers from producing elsewhere. If it isn't and it's still more cost effective to produce overseas while taking the tax hit, that's what they'll do. Again we're talking about 3-4 fold increase in production costs and sale price for goods here. What you're really talking about are tariffs on foreign made goods, regardless of what you call it. Our days as the king of consumers is short lived as well. By driving the cost of living up over here, you effectively take us out of the competition on the world market as well, where the real growth is going forward. Of course, if our corporations want to set up shop over there (already done) and sell there (already doing that), they might just say it's not worth the extra expense of trying to compete here anymore. Anyway you want to play it, that's what you're talking about here. A self contained economy that ignores the world market and subsists solely on domestically made products. How long do you think that would last in a world economy?
kbb June 6, 2011 at 08:41 pm
Congressman,
Are we fighting a recession or trying to balance the budget? When you're defending the Bush tax cuts, which flipped the pre-Bush budget surpluses (remember, the CBO projected in Jan 2001 that the debt would be erased by 2008 under then-current law), you are crying about how raising taxes will hurt the economy. When you go in to attack mode, and try to blame the job creation under Obama on higher spending, you bemoan the growing deficit. Let's get the story straight. Lower taxes and higher spending BOTH stimulate the economy. (In fact, the majority of Obama's stimulus "spending" took the form of tax cuts). Raising taxes and cutting spending both have the effect of depressing the economy. If you cut billions in spending, tens of thousands of people will be laid off. Companies that would otherwise win contracts to build roads or bridges will lose business. I don't care what you think of that spending, when you cut it you will hurt the economy. So, if you're worried about jobs, now is NOT the time to cut spending. If we hadn't done the stimulus, the Bush legacy of 750,000 jobs lost per month would have continued, and we wouldn't be arguing about whether only gaining 54,000 in a month is "adequate". Get serious, or get out.
kbb June 6, 2011 at 08:47 pm
BTW, you voted for the Ryan budget, which would also require the debt limit to be raised. Even the most aggressive deficit reducing budget proposal in Congress (the <a href="http://cpc.grijalva.house.gov/index.cfm?sectionid=70">People's Budget</a>) would require the debt limit temporarily raised. If you really want to hold the line on the debt limit, then please tell us what else, besides ending Medicare and raising health care costs for the elderly, would you cut to keep from busting the budget? There's a lot of bluster on your side, but even the draconian Medicare cuts in the Ryan plan won't reign in the debt. End the hypocrisy.
Randy1949 June 6, 2011 at 10:09 pm
How long do you think we're going to last now, Bob? Before we become another third world nation, that is? Because you seem to think it's an awful imposition to expect a millionaire to pay a 35% marginal tax rate, or corporations to pay taxes on the excess profits they make by having their goods made overseas at a quarter of the cost. But it's incredible greed for a US production worker to expect more than ten dollars an hour, never mind health benefits.
What you're asking is for the average American worker to try to live on Chinese or Mexican wages when our cost of living is four times as high.
Randy1949 June 6, 2011 at 10:22 pm
Since Medicare is a funded program it really shouldn't be considered part of the deficit unless the FICA is considered part of revenues. Any Medicare fix should be done separately from other government spending. But if Medicare does need extra funding, I can't think of a better use for general revenues than to keep older people out of total poverty. It's better than waging war or subsidizing corn.
Bob McBride June 6, 2011 at 11:46 pm
I give it about 10 years, 5 if your kind of thinking takes hold and drives us down faster than that.
The average American worker is currently making nowhere near what the Chinese or Mexican worker is, yet is purchasing stuff they wouldn't be able to afford if there was parity. However if you want simulate that kind of parity, the quickest way to do it in the most extreme hurtful way to the American worker is to insist that companies sell only products produced in the US, or priced as if they were via tariffs. In 10 years, there's a possibility that the disparity between wages will be much less than it will be 5 years down the line, but if you truly want to expedite that, figure out a way for those in countries like China and India and other countries in that region to get paid more. I've half jokingly suggested that if those in the union movement spent less time doing stuff like mounting recalls and marching around banging drums and more time attempting to infiltrate those economies, they'd be doing our workers a much greater service. The alternatives you're presenting will effectively keep us out of those growing markets and will significantly reduce the purchasing power of those you're trying to "protect", to the point where you've not only not gained ground, you've lost it.
Nate June 6, 2011 at 11:59 pm
Hell in a hand basket gentlemen, and our country furthers its tarnishing.
Randy1949 June 7, 2011 at 12:30 am
I've watched your kind of thinking take this country down the toilet for the past thirty years, and now Mr. Sensenbrenner doesn't even want to tax the ones that are getting rich off it. And you blame the unions.
Bob McBride June 7, 2011 at 12:58 am
Randy, I blame the unions for wasting taxpayer time on the nonsense in Madison and the recalls and recounts. I'd be perfectly happy with the unions if they'd actually do this country a service and do what I suggest above.
And as I said before, I don't have a gigantic problem with increasing taxes on those pulling in super-incomes as CEOs and the like. Hitting those with incomes just above $250K is counterproductive. But if we do it, do it on a federal level, not on a state level. As for corporations, I don't believe in taxing them because, despite what Keith says, those taxes will be passed on to consumers, either in the form of price increases or in the form of cuts either in employees or wages for the same. Or, by simply moving those corporations offshore. Most of them have subsidiaries offshore already. If it's cheaper to operate elsewhere, they'll do it. Randy, it really just sounds to me like you want someone to be mad at. I understand that but, frankly, it's a waste of time and it keeps you from seeing the forest for the trees.
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