The “new normal”: national unemployment at 9.8%
By JR Hoeft | Friday, December 3rd, 2010 | PolicyPresident Barack Obama in his interview with “60 Minutes” said that he hoped the unemployment rate being high wasn’t part of a “new normal”. Unfortunately for his administration, he has now presided over the 19th straight month of the statistic (aka, people’s lives) being over 9%.
Swiftly responding to the news were Virginia Republicans and soon-to-be Majority Leader Eric Cantor and incoming Congressman Robert Hurt.
Both claimed that stopping the uncertainty surrounding the extension of the 2001 and 2003 tax cuts would go a long way to getting businesses back on track in creating jobs.
“As today’s number proves, it is critical that the message coming out of Washington is one that fosters and promotes an environment of economic certainty that will allow small businesses, our true job creators, to regain the confidence necessary to start hiring and expanding,” said Hurt. “The last thing we need in these challenging economic times is a tax hike of any kind on families and small businesses.”
Hurt went on to say that as part of the incoming freshman class, he will follow through on his campaign promise to keep taxes low, reduce unnecessary government regulations, and rein in spending.
Cantor, though, went a step further.
Cantor, who was first elected to Congress in 2000, has seen the GOP not only in the minority, as it is now, but also when it was in the majority and had the opportunity once before to act on principle, as it soon will be.
“Political gimmicks — like yesterday’s vote in the lame-duck House – are emblematic of a dysfunctional Washington and a sad example of what millions of Americans profoundly rejected on election day. People want and deserve results, and Republicans will ensure – one way or the other – that no American has their taxes raised in this economic environment.
“The new Republican majority will be committed to changing the culture in Washington by cutting spending and stopping government overreach so our businesses can do what they do best – innovate, compete, and lead. We have been given a golden opportunity and we’re ready to start delivering results. We must return this country to the land of responsibility, opportunity and success.”
If rhetoric is any indicator of future action, things look promising in the House of Represntatives.
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Conservative to the core; liberal with his opinion! J.R. has been involved in politics for over a decade and has worked on several campaigns in Hampton Roads. He has served on the Executive Committee of the Republican Party of Chesapeake and the Central Committee of the Republican Party of Virginia. He is also the director of “Blogs United” in Virginia. E-mail J.R.. Follow J.R. on Twitter.
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24 Responses to "The “new normal”: national unemployment at 9.8%"
When has rhetoric EVER been an indicator of future action?
Hey, I’m no worse than an Obama supporter in 2008. I’m hoping for change too.
I’d disagree that decoupling the tax cuts for the middle class from those for the wealthy is a “gimmick.’ It’s possible to make the philosophical case that one group deserves and needs the tax cut and the other doesn’t. One could argue that keeping them linked is a gimmick to avoid voting for either on their own merits.
Steve…this is personal. My brother is a small business owner – and he is most certainly not wealthy. His family would be rocked if these takes on those that earn $250k go up. Is it his fault that his business has to buy a lot of inventory and pay a lot in leasing for his facility? Most of his earnings go to overhead – not personal gain. But that overhead is vital to his business. If he didn’t have it, he’d have no business. So, yeah…in my view, it was a “gimmick” yesterday.
I notice that the people advocating higher taxes never express a thought about economic growth or even the relative efficacy of the government in spending money. This makes me believe that the whole debate on the left is motivated by schadenfreude and hatred rather than anything positive. Let me ask the questions: What country has ever thrived on class warfare? What country taxes business at a higher rate than the US? Why do leftists hate small business?
As for the particulars here, are leftists so gullible to think that rich people can’t game any system they devise? Just take a look at John Kerry, Franklin Raines and yes Barack Obama. You say what about Barack Obama? Didn’t he sign a lucrative book deal a few days in advance of the election so he wouldn’t be bound by ethic regulations? Not that Dems pay any particular attention to their own ethics or tax rules. Look at Obama’s Treasury Secretary. Are leftists so ignorant to believe that rich people can’t buy loopholes and move money around to escape whatever infantile penalties you lay on them?
The answer to the question “why do leftists hate small business” is simple. It’s hard for them to call them up and demand money. They are too scattered and have too little spare money. Leftists love big big business. Look at Obama and the bailouts.
“Rocked”? Really? If he’s paying for leasing, that reduces his income. If he’s paying overhead, that reduces income, too.
The tax isn’t on the gross income, Jim, it’s on the net. And I think you know that.
If your brother’s personal share of the profits of his business are over $250K, that’s totally different from the argument you are making.
Thanks Vivian, that was my understanding too, but I’m not a tax accountant.
@JR,
I trust you realize that you are never going to get people on the left to respond to the overall logic of a position. To reference an earlier post I made – Leftists make a career out of seizing on a particular sentence in a whole page or article and either twisting it or decontextualizing it. They also make statements usually 180 degrees from the truth. The idea that that it is the Republicans who are holding anything hostage requires amnesia. The Dems controlled Congress and had a filibuster proof majority for 8 months. They could have dealt with the tax rates anyway they wanted to. It was the Democrats who could not get agreement amongst themselves. It is Nancy Pelosi blocking any up or down vote on the Republican proposal for fear it would pass. The Republicans won the midterm elections so why should they let Dems rush through every stupid idea they didn’t want the electorate to know about before the election? Why haven’t they even passed a budget?
I asked five straightforward questions in my post and your post raised issues related to spending, small business hiring and competitiveness. You will never see a response to anything that punctures leftist ideology.
Thank goodness Obama gave us the Summer of Recovery.
Imagine how much worse it could have been.
I was listening to NPR (I know I know) and started to feel bad for folks losing their unemployment benefits just before Christmas until I heard that they were getting them for 99 weeks!!! Then I was pissed.
Vivian beat me to it.
@J.R.
I am a small business man myself, I pay taxes only on my net, not my gross. Well, there is an exception to that, I pay business taxes to Virginia Beach based on my gross receipts, not my net profits.
It amazes me how many small business owners fail to grasp this. Like when I discussed with fellow business owners why I failed to get a cell phone until about 18 months ago because I considered it an unnecessary business expense (I finally was forced to get one because my customers expected me to have it and payphones are disappearing). These guys would explain I could take the expense off my taxes. I’d thump my forehead with the palm of my hand and explain that my top marginal tax bracket was 15% (I’ve got a great tax accountant) and I considered it silly to spend a dollar to save 15 cents on taxes; I’d rather keep the 85 cents in my pocket.
@valentinus
I am a small business man and I will tell you that if you really want to help the small business man go talk to Mayor Sessoms of Virginia Beach. I have to pay business taxes on my gross receipts instead of my net. I might pay as much as $70,000 a year for diesel fuel and not only do I have to pay state and federal fuel taxes on these purchases, I have to pay Virginia Beach on them because these purchases come out of my gross. I’d have to pay Virginia Beach even if I was losing money every year.
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I’m not here to debate my brother’s business with you guys; not only do I not know the financial details, but it’s not my business. However, he has told me time and again that taxes are too high, so I can only assume an increase in taxes on him are going to hurt him more.
I also know he employees people…so what do you think is going to be the first expense he’s going to cut?
He’s not the only small business owner who will have to make that decision either.
All across the country, when the tax on small business goes up, people are going to be let go.
And, yes, valentius, I expected those on the left to focus on items irrelevant to the discussion. Dodge and redirect.
Boy, the lengths the lefties will go to rationalize raising taxes. That’s really the “new normal” – the propensity of Democrats to get more money for government.
As far as taxing “the rich” – Where do you think investment capital comes from? Where do you think venture capital comes from? Do we want money hidden in shelters that shield them from taxation so people like Vivian can still have artful careers?
Or do we want it freed up to get this economic engine moving?
The left doesn’t care if people are unemployed, except to make sure they can keep getting unemployment checks from government, food stamps from government, health care from government, and to pay for it, they need more taxes from the only people left with any money – the rich!
Our way creates jobs and makes people independent and self-sufficient, and that’s hell for power-seeking Democrats.
Want to end the economic downfall? Cut taxes for the wealthiest Americans who invest in American companies that employ Americans.. novel huh.. And at the same time offer a prebate for the poorest who contribute next to nothing anyway.
J.R.,
Look, if a business has an employee on the payroll that is not adding to the profits on the bottom line they are plum stupid. If they are going to lay off such a profit generating employee because some increased percentage of these profits are going to be taxed then they are not going to last very long in business anyway so they do not need to worry about how high the taxes are.
See why I included my example of how some business people do not seem to understand the basic principles of business? Now, knowing how intelligent you are, and figuring that your brother has some of the same genes you have, I do not figure he misunderstands. He knows, but he is willing to misrepresent the tax burden on business to the uninformed. If your brother tells you he is going to have to lay off employees because of increased taxes on his profits he is lying to you, I am confident that those employees would have already been in the unemployment line if they weren’t helping him generate profits. He might be truthful in showing you examples of taxes, fees, etc that make it more difficult for him to generate a profit.
Two more years, two more years
“Overall, the data strongly support our long-held view that the unemployment rate will remain at 9.5pc or above for at least the next two years and that GDP will not grow by much more than 2pc. That’s consistent with the Fed keeping monetary policy extremely loose.”
Paul Dales, US economist, Capital Economics
Paul Dales is a British economist and Capital Economics is a British company that provides economic news for 6,000 pounds a year.
The whole argument that small business needs “tax cuts” to invest in jobs is BS. The business community is sitting of the highest profit margins and financial reserves in the history of our country. I repeat: THE HIGHEST EVER.
The entire argument is political BS designed to scare the uninformed public and once again, make the rich richer. I’m not buying it…
William, you are partly correct, but you’re not looking at it from the perspective that they (small & large businesses)are.
First, you are not correct in reference to small business. You are right about business in general and also some well established small busnesses. The issue of “tax cuts” have long been established and were budgeted for years now. Allowing them to sunset would amount to a tax increase. Even if you wish to raise taxes on the wealthy, let’s admit to ourselves that this might not be the best time for that. At least wait until the economy is in better shape.
You are not correct in regards to Start Ups that always have to struggle to become stable businesses. Especially in this economy. They don’t have those reserves you mention. If you want domestic growth as well as for employment’s sake, you can’t make it financially more worthwhile to quit your business/lay off your employees and just go to work for your competitor that no longer faces that competition.
Where you are absolutely correct is on the businees community and them sitting on nice nest eggs in the general sense. You can also point at banks that have reserve capacity to make business loans, but choose instead to take a safer garaunteed route of taking the practically zero cost of money arranged by the Fed and investing it in government debt.
Back to your arguement on Businesses and their reserves to point to:
1)They need to know how to budget. Unfortunately, the government of “change” has brought potentially costly change to the table. It would be far easier for the Business community to act if all the damage was already done.
As it stands:
Will they increase taxes or not? Will there be Obamacare that trashes my current health plan or will the Republicans whittle it down to where I might have to make adjustments, but not a total restructuring. Can I buy an “Indulgence” from Pope Obama (no offence to Catholics, just making an analogy to that part of history) as other corporations have already recieved exemptions from law that allegedly applies to everybody? Ok, we beat Cap & Trade which could have cost us a lot just in changing protocol, but now they try to sneak it in under the authority of the EPA. To what extent will that affect me… or not, if it fails. With all of these potential changes, is it better to invest in my company or in different investment vehicle not tied to equity of firms facing the same potential problems? Maybe I will wait until we know what will happen and MAKE AN INFORMED BUDGETING DECISION.
Then of course, the banks see the same thing. Do they risk their capital in this environment or wait until they can at least entertain the idea that businesses can make an informed budgeting decision and write accurate presentations of risk as part of their business plans?
The answer there is a no-brainer. Better to buy government debt. It might be repaid in a devalued currency, but at least repayment is a near given.
That is just the state of things, William. Business can not intelligently act. It isn’t so much the tax rate, which an increase certainly would be damaging,but they can’t even reasonably move and try to mediate any damages that are not yet known. Part of this can be blamed on Obamacare, precisely because much of the more costly portions that will negatively affect our debt and economy don’t occur until a few years later. That means time for Republicans to save them from it and a virtual paralysis until an outcome can be reasonably forecast.
Little David, you are right about one thing. If taxes are increased and an employee is still creating a profit, that employee will probably be kept. However, you ignore a few things:
1)Not all employees are equal. I am sure you measure yourself to your fellow truckers and fail to see how some make it. When times are tight, the weakest link is cast out into the unemployment line first.
2)As the cost of taxation and regulation go up and the compensatory profits and product demand do not, suddenly profitable employees lose that distinction. They no longer are profitable. They also become risks if you are on the cusp of being a larger sized business that must abide by more costly regulations. They are also a risk in that, you don’t know how the upcoming healthcare changes will affect you. True enough, many are not even affected until such a time comes to where the cost of compensation increases when employer provide health insurance is potentially taxed years later. Current structure determines that. Some however, are in a state of limbo for the moment.
Speak to business owners, you will hear tales of how letting good people go took such emotional tolls on them that they wanted to just give up and work for somebody themselves. That was even before all this mess started. It happens.
@William, as a small business owner I can tell you my profits are not so high that I don’t need loans to make my payroll. and good luck being a small business trying to grow getting the credit you need.
So what your telling me is our “Jobs Gov and his Lt.” are failing the business community and the economic growth of Virginia?
Yes, it is astounding that the effects created by Bush’s total abandonment of rational fiscal policies created a mess that will take years, if not decades to resolve. First, he and the republicans in Congress cut taxes, then they fought two wars off the balance sheet, then they spent like there was no tomorrow on things like the drug benefit in Medicare, all of which caused the great recession, and folks expect President Obama to snap his fingers and immediately things get better. So we all wish, yet rational business folks know that the Bush period of irrational exhuberance is a stain on our history as a nation, yet we have put this same miscreants back in power.
Hey, this thread is really, really old, but I can’t help but note:
If you look carefully in the Virginia Beach budget proposal, there is a tax cut included on businesses so as to encourage economic development. Which taxes? Not sales taxes, not taxes on profits but the exact same taxes I complained about in comments above.
I complained that even if I lost money on a business enterprise, I would owe the gross receipts taxes on my gross, not my net, to the city of Virginia Beach.
I am sure that others have complained about this specific business unfriendly tax policy, but I know of no one else other then myself to complain so publicly. So now in exchange, I am very publicly going to praise this aspect of the proposal and applaud the Virginia Beach City Council for listening to the concerns of a small business man.
I am also going to praise J.R. for allowing me the venue to get my concerns heard very publicly. No back room political deals, just one small business man venting his frustration about how unfair it is out in the extreme open. Anyone disagreeing with me had their opportunity to voice their viewpoint.
Thank you J.R., evidently your blog is read by local politicians and my concerns are at least being addressed. I am still keeping my fingers crossed my hopes will be realized.
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