A CEO’s Decision!

If you were the CEO of a large, very profitable, cash plush, corporation employing thousands of workers, which of the two scenarios below would encourage you to hire more employees.
Scenario one: Congress enacts a new bill lowering your personal and corporate income taxes
Scenario two: Congress enacts a bill to spend money to repair the nations infrastructure and education. Under this scenario your advisers believe that the demand for the products you produce will increase and therefore, so should your sales and profits.

Remember, when making your choice, the question is which alternative is most likely to cause you to add to the number of workers you employ.
Scenario one represents what the Republicans are advocating and scenerio two represents the plan favored by most Democrats.

Why Not Stimulate?

If you believe in America’s future, we should stimulate.

The purpose of a stimulus is not to create permanent jobs. Its purpose is to increase the demand for goods and services produced by the private sector, which results in the private sector hiring more permanent workers  so they can fill the new demand from the market. Once the stimulus kicks in, the cycle of creating permanent jobs continues as demand continues to expand..
The problem is the nation must go deeper in debt to fund the stimulus and the average American has been “burned” by his debt load and he is in no mood to increase his debt burden, personal or national. For the past 20 years, the average American lived beyond his means. He maxed out his credit cards and used his home equity loan as a piggy bank to consume way more than he was earning. When the housing bubble burst, he not only was unable to use his home equity line to maintain his life style, but his net worth dropped as a result of a 40% decline in the value of his home.This is also why the stimulus should be significantly funded by those who benefited the most from our recent excesses – The super wealthy.
Many Americans looked at the equity in their home as a nest egg for retirement and their children’s education. This was wiped out. Who can blame them for being adverse to more debt, whether personal or national? He has experienced first hand what can happen by excessive borrowing.

To further complicate the problem, to get back to the employment levels of 2006-2007 we must match the demand for goods and services that was present during the period when everyone was maximizing their debt. This cannot, should not and will not happen. This demand must be made up by concentrating on increasing our exports to growing countries such as China, India and Brazil.
A stimulus can help. The question is do we believe in America. Can we overcome the problems that we all helped create? Yes, much of the blame can be placed on our leaders. We should have never invaded Iraq. When we went into Afghanistan we should have taken austerity measures, including raising taxes, to pay for the war. Our government failed to properly regulate Wall Street, banking and the rating agencies that all heavily contributed to the housing bubble and sub-prime loan debacle.
If you believe, we should be upgrading and building infrastructure. Competition from the rest of the world demands it. Without it, we cannot compete. Now is the time to do it; interest rates are low and there is an excess supply of labor.
If you believe, we must invest in education. Competition from the rest of the world demands it.
If you believe, we must invest in research and development. We cannot compete with the low labor rates of developing countries. To offset this, we must be the leaders in the development of new ideas, inventions and processes. We then must do a better job of protecting what we create.
If you believe in America, we also need to amend the constitution outlawing campaign contributions from corporations and unions. They cannot vote for our elected officals. Why should they be able to buy votes.
If you believe in America we also must demand our elected offical enforce anti-trust laws. We have lost our “Free Markets” to oligoplolies and monopolies.  This must change if free markets are to work.

Can we afford it? Can we afford not to do it?

The Director of the Congressional Budget Office, Douglas W, Elmendorf, recently said,
“There is no inherent contradiction between using fiscal policy to support the economy today and imposing fiscal restraint several years from now.”

Obama – Lead Don’t Follow

“”If he believes in something, then he needs to stand for it,” said Dumas, the North Carolina independent who works in video production. “He needs to back it and not play both sides. It hasn’t really served him well.”
Obama has pledged to stand firm on the jobs program. “This isn’t about giving Democrats or Republicans a win. It’s about giving the American people a win,” he said at a jobs event in Columbus, Ohio, yesterday.”” Bloomberg, September 14, 2011

 Mr. President, your job is to lead and not follow the polls. Your jobs plan is the right one. Now your job is to convince the American public. Do not get caught holding your finger up to the wind. Instead, be relentless about your jobs package. 
With or without a surge in jobs, we need to repair and build infrastructure for the future. It will simply makes us more competitive. Interest rates are low and we have an excess supply of labor. Improvement in employment numbers is an added bonus. 

So keep your finger in your pocket and keep explaining your jobs package.

Obama’s Jobs To Do List

  • Stay on the road talking to the voters about the urgency of getting it done and implemented.
  • Put Biden on the road and maybe Bill Clinton.
  • Outwardly solicit ideas for prioritizing what jobs/projects to start working on. Get input from Congress, Industry, labor and economists. The decision should be based on the optimization of return on investment and the speed at which jobs can be created. Go down the list until the entire stimulus is used
  • Consider having union members accept a temporary “below market” wage so more can be hired. Ubion members should be willing to help out other union members.
  • Simultaneously, set up a structure to address the deficit problem. This is a good start.
  • List to be expanded.  Please provide your ideas by sending in comments. Let’s kick butt.