President Obama’s Council on Jobs and Competitiveness (“Jobs Council”) issued a report calling for fewer regulations and lower corporate tax rates. This doesn’t have to be a bad idea.
- Prepare the American Workforce to Compete in the Global Economy
- Foster a Climate that Lets Innovation Thrive
- Adopt an “All-In” Strategy on Energy
- Revitalize the American Manufacturing Sector
- Enhance American Competitiveness through Smart Regulatory Reforms
- Reform the Outdated Tax System to Enhance American Competitiveness
Council Heavily Weighted Toward 1%
The Jobs Council is heavily, heavily, heavily weighted to tilt toward the 1%. The list of members reads “Chair and CEO” with a smattering of ultra-wealthy finance types thrown in, and then a couple of token union leaders.
I agree with the overall spirit and a number of the specific recommendations in today’s report … I absolutely agree … that the United States is falling behind our international counterparts in investing in modern infrastructure, education, and skills; supporting a vibrant manufacturing sector; developing cost-effective and globally responsible energy practices; and supporting innovation. …
Unfortunately, I believe the report downplays the need for a proactive role for the U.S. government in many of these areas; fails to address the significant additional revenues needed to address the challenges identified on an appropriate scale; and in many cases erroneously identifies the root causes of the underlying structural problems.
… the report addresses regulatory issues as if we were not in the midst of a prolonged economic crisis whose proximate causes clearly included inadequate regulation of business, and in particular financial markets and institutions.
With respect to corporate tax reform, I believe that corporations as a group pay too low a share of taxes to support the kind of infrastructure investment and education/skills upgrades that are so urgently needed at this time… The report places way too much emphasis on statutory tax rates, mentioning only as an aside that the effective rates paid by corporations are much lower, and that overall corporate tax revenues as a percent of GDP are the fourth lowest in the OECD.
Yes, We Can Cut Corporate Taxes … If
Actually, we can cut corporate taxes, increasing our international competitiveness, while We, the People still fund our democracy and get paid back for our investment that enabled the prosperity of the corporations. Here’s how: Cut corporate taxes, but raise taxes on the 1%er owners of the corporations. Stop the nonsense of lower capital gains tax rates, and restore pre-Reagan top tax rates. Also, require corporations to either use their cash or pay it out to shareholders instead of just sitting on it as many do now.
Capital gains are taxes at a lower rate because most of the income of the 1% is from capital gains, and most of the income of the 1% is from capital gains because the tax rate is lower. The “incentive to invest” should be a good investment, period.
What does cutting corporate tax rates accomplish? First, by cutting corporate tax rates the right ways our companies could become more competitive with companies in other countries. This can be an incentive to locate companies here. But we don’t have to just sacrifice this revenue by any means. Instead we can tax it when it becomes personal income. But cutting corporate tax rates without increasing personal income tax rates to make up for it — which happens to be the DC elite consensus as voiced by Simpson-Bowles — is complete folly, nothing more than another scam by the 1% to rob We, the People. It is essential that a cut in corporate tax rates happen at the same time as taxes on the resulting personal income are increased, along with requirements that corporate money is either used inside the company or paid out to shareholders.
Look at this chart, which tells you everything you need to know about the who what when where and why of corporations. Corporate wealth is also personal wealth. When you hear about corporations doing well, think about this chart:
Yes, the top 1% also own 50.9% of all stocks, bonds, and mutual fund assets. The top 10% own 90.3%. And it’s most likely only gotten worse since these figures were gathered.
Cut The Right Regulations
When the elite DC consensus calls for cutting regulations, they mean regulations that hamper the 1%’s ability to fleece us even more. But there are regulations that actually do impede competitiveness.
Here is what usually happens in DC. After Congress passes laws the regulatory bodies translate the laws into a regulatory framework. This is where the giant companies and their lobbyists get to work. The work they do is influencing these agencies to write regulations that help them, the 1%er corporations that can afford to swarm the agencies with lobbyists — and that obstruct their competition. So we end up with a situation where small businesses and startups don’t have a chance making it through the regulatory maze. They either have to hire specialized, $1000-an-hour DC law firms to help them out, or give up. This is by 1%er design, not because of “big government.”
So yes, there are regulatory impediments to competition, but I don’t think this form of “cutting regulations” means what the 1%ers on the Jobs Council and the big corporate-elites think it means.
On education, the Jobs Council recommends,
In order to stay competitive in a global age, we must invest in our future by ensuring Americans have the right education and skills to realize their full potential and drive our nation’s economic success. … These measures will create a purposeful educational system that produces work-ready graduates, satisfied employers with access to a talented labor pool, and a vibrant economy poised for growth and success.
With respect to the education section of the report, I believe that the Jobs Council’s education recommendations begin and end in the wrong place: focusing on providing businesses with an endless supply of workers — as opposed to supporting, improving and sustaining a strong public education system.
So the report calls on government to reconfigure our education system to provide companies with trained worker-bees, which means companies don’t have to cough up the dough themselves to train their own workers. The report actually goes even further, basically calling for government to replace think-for-yourself education with do-what-we-say job training. There’s a difference. And they ask for this after already asking for tax cuts, too. Sheesh.
On energy the 1%ers of course mean “drill, baby, drill.” But the council is correct, we do need to go “all-in” on energy, with massive Green Energy investment, freeing us from the damage Big Oil and King Coal do to our environment, our economy, our politics and our democracy.
On manufacturing the council notes that since 1980 manufacturing has slipped from 20% to only 9% of total employment,. The report calls for adding “three to four percentage points of global value added market share—an ambitious but achievable goal.” They say we should :take share from our global competitors.” There are wonky but great suggestions like “cluster development” and important ideas like going after in promising new manufacturing sectors. The President has formed an Office of Manufacturing Policy that is taking up many of the kinds of recommendations in this report.
In fact, we also need to rewrite our trade agreements so they provide a win-win for the working people here and across our borders, and incentives to manufacture here rather than move jobs, factories, companies and industries out of the country.
And So In Conclusion
Trumka sums things up nicely at the end of his dissent:
Perhaps most profoundly, the report does not ask the critical question: why is our country suffering a manufacturing crisis, complete with massive job loss and a structural trade deficit, when countries with higher overall taxes, higher wages, and more robust health, safety and environmental regulations are enjoying trade surpluses?
The answer lies in the view that we share with so many of our fellow Americans: that our country has become dominated by the interests of the wealthiest 1% at the expense of the remaining 99%. It turns out that a country run in the interests of the wealthiest 1% systematically underinvests in public goods;systematically silences, disempowers, and underinvests in its workers; and in the end is less competitive and creates fewer jobs than a country that focuses on the interests of the 99%.
Echo and amplify what Trumka said: Perhaps most profoundly, the report does not ask the critical question: why is our country suffering a manufacturing crisis, complete with massive job loss and a structural trade deficit, when countries with higher overall taxes, higher wages, and more robust health, safety and environmental regulations are enjoying trade surpluses?