Nearly nine months after Republicans taking control of the House of Representatives, Leader Eric Cantor (RTP-VA) released details of their first jobs plan. Upon initial review, it should do a lot to increase corporate profits, but it doesn’t do much for creating jobs. It is a plan of tax cuts and deregulation based on trickle down theory of economics.
The Republican Study Group led by Rep Jordan (RTP-OH) announced that his group of conservative House Republicans may introduce its own jobs plan tied to Cut, Cap, and Balance. It is not clear if the Cantor announcement will trump the Jordan announcement.
Plan gives businesses new tax breaks
The first plank of the plan is, as expected, more tax cuts. This plan would allow small businesses to deduct 20% of their income from their income taxes. While proposing a break for businesses, Cantor and his fellow Republicans are opposed to extending the payroll tax holiday for individual taxpayers.
This could create a loophole wide enough to sail an aircraft carrier through. Under current law, many huge corporations are considered small businesses because they file taxes as S corporations. So just as with other recent GOP tax cut proposals, 80% of the benefits will likely flow to the top 2% of taxpayers.
It is not likely that this tax cut will lead to new jobs. If small businesses were making money now, they would hire. If they are not making money, a deduction of 20% of their income is not likely to help. Businesses need customers for their products, not deductions.
The notion that tax cuts create jobs has been debunked and discredited by statistics. It is Republican talking point myth. If tax cuts created jobs, the Bush tax cuts (still in effect) would have us at full employment not 9.1% unemployment.
GOP plan also eliminates clean air and water regulations
Another feature the “jobs” plan is a roll back of clean air and water regulations as well as rules governing union elections. Cantor said the GOP wants to target 10 regulations promulgated by the EPA and under the clear air and water acts.
He said Republicans are also proposing a bill that would prohibit the executive branch from carrying out its duties under the constitution. It would require Congressional approval on rules put forth by the executive branch. So much for separation of powers. Perhaps they need to read the constitution again when they return from vacation.
The connection between allowing pollution and creating jobs is a leap
The difficulty with this plan is making the case that allowing companies to pollute will lead to job creation. It is certain that regulatory rollbacks will increase corporate profits. However, in this recession, corporations are not short of cash or profits. They are sitting on record cash assets and are unwilling to invest it in new employment.
Businesses are not hiring because of a lack of demand, and uncertainty about the economy. Allowing cement manufacturers to pollute, for example, will have no affect on the demand for cement. Sales are down because the construction industry is in the tank. Eliminating air quality controls will neither help nor hurt demand for cement.
Allowing oil companies to pollute the air will not create jobs either. It will only increase their already obscene profits. Under Obama domestic oil production is up. More oil has been produced in the U.S. this year than any similar period under Bush. Oil companies spend millions on TV ads bragging about how they have created 250,000 new jobs in the last two years—under current regulations So much for the argument that regulation kills jobs.
Eliminating regulations alone will not result in one additional job. In fact, it would result in lay offs of those who work in regulatory compliance. But, it certainly will add millions to corporate profits and executive bonuses. Companies will make things if someone wants to buy. They’ll hire the workers they need to make or distribute those products, and as always, they will pass the costs on to the buyer—including costs of regulation. A jobs bill needs to focus on increasing demand, not profits.
So, the new Republican job plan appears to be nothing more than a corporate welfare plan wearing a jobs bill costume. It probably has little chance of becoming law.
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