Mike’s RX for Creating Jobs and Helping the Economy
In light of the latest national unemployment figures in which the government has reported a net monthly job change of zero (the first time since 1945), we have confirmation that this issue continues to be problematic for our President and political leaders. If you followed the President’s recent Midwest Bus Tour, you learned that the President believes he has been the victim of some bad luck. Apparently, every problem in this country can be blamed on something or somebody else.After careful consideration, I have the following suggestions. First, be nice to the President. He means well, but as I stated in numerous blogs back in 2009, he is clearly in over his head. Look, when columnists from the New York Times question the competence of a Democratic President, we are witnessing the personification of the Peter Principle.
Yesterday, the President announced that he will address the Nation and unveil his jobs plan on September 8. Why has the President taken over 2 1/2 years to come up with a plan? Let’s be honest and face facts; The President and his Administration are completely clueless about what it takes to create jobs in the private sector in the United States of America.
Prior to holding political office, he had never run a business or created a single job in the private sector. Additionally, his selected cabinet members have the least amount of experience in the private sector of any administration in our lifetime. It is estimated that only 8% of his appointments had any experience in the private sector.
So what will the President’s plan look like? The pundits are concerned that if his previous suggestions are any indication of what he will offer in this plan, we are in deep trouble. Extending unemployment benefits to 2 1/2 years, cutting the payroll tax by 2%, accelerating approval of patents, and pushing for a massive investment in an infrastructure bank isn’t going to solve the unemployment problem.
Having said this, a fervent supporter of the President’s policies gave me a challenge: Stop playing critic and offer constructive suggestions about what it will take to get America back to work.
So, I decided to take up his challenge and offer ‘Mike’s RX for the Economy’. These are simple, cost-effective ideas that will incentivize business owners to do what the President wants done - hire people! Effective immediately announce that:
There will be a moratorium on any new federal regulatory matters until unemployment drops below 7%. Tell the EPA and the NLRB that they can take extended vacations. There will be no new regulations further restricting carbon emissions, or “snap elections” or any other decisions from the NLRB which dis-incentivize business owners from hiring. With respect to the NLRB, it is imperative that the President and/or Congress put the brakes on their reign of terror. This week alone, the NLRB announced three new rules that may make the unions happy but will, according to the National Association of Manufacturers and the US Chamber of Commerce, be extremely detrimental in creating jobs. Additionally, the President and Congress can delay the implementation of Dodd-Frank, and the major provisions of Obamacare (due to kick-in 2013) until unemployment drops below 7%.
In order to minimize the risk associated with hiring new employees, the President needs to address two of the biggest concerns associated with hiring people: The risk that if employees are laid off, a company’s unemployment rate will go up as people file for unemployment benefits, and the cost of health insurance. This can be accomplished by establishing a “Putting America Back to Work Period” between October 1, 2011 and December 31, 2012. Instead of lowering the payroll tax, the following rules will apply:
Give employers a tax credit for the 2012 tax year for people hired during this period, provided new hires are still employed with the firm after 12 months. This will compensate employers for a portion of the cost of health care insurance and an overall benefit package. Additionally, if a company has to lay off an individual hired during this period, it would not count against their experience rating for unemployment tax purposes. The beauty of this idea is that it does two things. First, it encourages companies to go out and hire people. And second, the tax credit incentivizes employers to retain good employees.
If the President really wants to swing for the fences that he can offer to reduce the federal tax rate on earnings from subchapter S corporations if the companies increase their employee base by 10%. For example, if a company that has 100 employees adds 10 employees during the period October 1, 2011 to December 31, 2012, they would be eligible for a 4% reduction in their federal income tax rates on their subchapter S earnings.
With the President calling for higher marginal tax rates, he can issue a challenge to small business owners: “If you want to keep the Bush tax cuts - hire more people!” This win-win proposal will incentivize entrepreneurs to go out and build their businesses, hire more people, make more money, and not worry about having to pay higher tax rates.
The beauty of Mike’s RX for the Economy is that it does not rely upon payroll tax cuts or massive governmental expenditures to be effective. This will appeal to conservative and Tea Party members as well as liberal representatives like Maxine Waters. Supporting this plan will prove that they are serious about wanting to put people back to work.
If you want the job creators, people such as myself, to be more aggressive and take prudent risks, then call a truce in promoting anti-business, job killing initiatives. We’d much rather focus on building profitable businesses instead of having to worry about what the government is going to do to us in the future.