Elections 2010: Tax Cuts and Job Creation

Alaska Senatorial candidate Joe Miller, and Nevada Senatorial candidate Sharron Angle among others (including arguably the entire Republican Party) want to “privatize” Social Security. Miller thinks the Federal Minimum Wage is unconstitutional. Christine O’Donnell thins the separation of church and state is a myth. I can’t type fast enough to keep up with the stupid to dangerous positions coming out of various candidates.

But the majority of us do not live in states or districts with such “high-profile” candidates. What issues should we focus on? Although some of these “high-profile” positions (such as the privatization of Social Security) have become wide-spread enough to warrant a blog post dealing with them individually. But there are two major issues which—for reasons that will soon become apparent—cannot be separated and which every voter should review when evaluating their candidates: Tax Cuts and Job creation.

To illustrate the kinds of distinctions you are apt to find, I will look at the campaigns of Carly Fiorina and Barbara Boxer for Senate.

The clearest cut distinction can be seen on the issue of Job Creation. If you look at Senator Boxer’s “Jobs and the Economy” page, you will see that Boxer sites a specific plan to create new jobs which includes:

creating thousands of clean energy jobs; making California the hub of the clean energy economy; ending tax breaks for companies that ship jobs overseas; cracking down on Wall Street speculation and instead lending to small businesses; investing in infrastructure and creating new jobs.

Boxer follows this with examples of specific legislation to advance her plan. While Senator Boxer’s opponent might well question whether Senator Boxer can ever implement such a sweeping plan, Senator Boxer’s presentation shows a high level of serious thought given to job creation.

Compare this to Carly Fiorina’s Creating Jobs page. Her solution is to extend the Bush tax cuts, repeal health care reform, and reduce regulation. The standard Republican cant, most of which flies in the face of history—apparently she thinks American voters have short-term memory loss.

If you think you don’t like Healthcare reform you might be tempted to buy this as a job creation measure. First remember much of healthcare reform is included as part of the Republican “Pledge to America.” The Republicans promise to re-enact at least 7 of the currently more popular provisions of current healthcare reform—we have their word on it and the are always as good as their word, right? And the Republican Pledge says nothing about notices that the document doesn’t explain how Republicans plan to offset the $140 billion deficit increase that will result from repealing the ACA or what they’ll do to lower health care spending. Tying job creation to this is just air.

Reducing regulations may encourage some long-term job growth, particularly in the funeral industry. Did you enjoy the economic crash brought on by the lack of regulation in the banking industry? Did you love the National-Geographic-like coverage of the BP oil spill? Did you thrill to the Russian-roulette feeling of eating spinach or eggs during their salmonella crises? All of these disasters were brought on my lack of regulations or ineffective enforcement. Yeah, sign me up for less regulation.

Ms. Fiorina does mention some targeted tax cuts for businesses small and large some of which may have some merit. Would these be enacted? We cannot know, but we can remember that Republicans recently filibustered a very attractive small business tax cut bill. This bill, which contains tax breaks similar to some Ms. Fiorina is touting, finally passed the Senate 9/16/2010 on a 61 59 vote when Republican Senator George Voinovich joined Senate Democrats in voting for cloture and final passage (61 to 59). It does make you wonder how serious the Republicans are about helping small business and the country.

But the center piece of Ms. Fiorina’s job creation strategy is the extension of the Bush tax cuts for America’s richest people (one of whom is Ms. Fiorina, what a surprise). Her chief argument for this is that during a recession we should not be raising taxes on anyone and she sites the views of economist Mark Zandi who has made some negative projections of the effect of this tax increase on job growth and GDP.

It is true that Mark Zandi in among a group of economists who see raising taxes on the rich as having a negative impact on the economy (other economists disagree). But we don’t need to speculate about how great these cuts are for the economy, we have the history of the Bush years.

David Cay Johnston at Tax.com gives this summary of the economic data from the Bush years:

The tax cuts did not spur investment. Job growth in the George W. Bush years was one-seventh that of the Clinton years. Nixon and Ford did better than Bush on jobs. Wages fell during the last administration. Average incomes fell. The number of Americans in poverty, as officially measured, hit a 16-year high last year of 43.6 million, though a National Academy of Sciences study says that the real poverty figure is closer to 51 million. Food banks are swamped. Foreclosure signs are everywhere. Americans and their governments are drowning in debt.

 Oh yeah, and the rich got richer. Pardon me if I am skeptical that doing the same again will get us a different result.

Senator Boxer’s presentation details a long history of voting for tax breaks aimed at working and middle class families. Unfortunately her position on the Bush tax cuts is less clear. She does want the tax cuts on the wealthy to expire, but she has played with the notion that the tax cuts should be extended up to those earning $1 million or less. I guess it depends on your view of who is rich. My guess is that Boxer will go along with the rest of the Democratic Senate and vote for not extending the tax cuts for families earning more than $250,000.

I will not summarize the difference between Senator Boxer and Ms. Fiorina on job creation and tax cuts, but I will point out that there are real and stark difference. And I will encourage you to check the positions held by your candidates for the Senate and the House.

It’s easy to say you are for job creation and lower taxes. We are all for job creation and lower taxes. But ask yourself which candidate has detailed and realistic plans and which is just mouthing the words.

Study your candidates and vote. Pass it on.

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