State of the Onion, I Mean Union

This traditional speech, 

given by every President since George Washington, is filled with drama.  Or, at least, people act like it.  One side stands and claps and hollers, while the other sits stoical in opposition to the proposals of the President.  During the past decade, there is little difference between the parties in practice. But, the State of the Union is the place to be seen and sometimes heard.

This year promises to be much like recent years; full of yelling "you lied," and threats and blame spoken in every passage.  Maybe, if we are lucky, someone will throw a shoe!

The outward appearance of outrage will mostly be feigned.  However, legitimate looks of disgust can and will be found in the audience.   Ah, if only the looks from real Americans were transmitted from homes across America!  Shoes will be thrown, surely "you lied" or worse will be yelled, and the looks would be quite interesting.

Where are the Jobs Mr. President?

President Obama fails to recognize that Americans need jobs; not unemployment, socialized medicine, stimulus, more war, or excessive spending.  We need economic growth policies, which will lead to jobs.

President Obama contradicted his 2012 campaign today, again.  In 2012, his campaign focused heavily on "the economy is doing fine."  This time, rather than focus on creating jobs, it was all about defending unemployment.  No longer can Obama blame Bush; he has went to the well too many times and it is no longer effective.  Instead, he is attempting to distract us from the failure of Obamacare while admitting to the failure of his economic policies.  In reality, he is choosing which political suicide may be the least impactful to the upcoming elections.  But, here is the thing...current polls are leaning towards Republicans more and more.

It is a harsh reality when Obama has to face the music.  It seems as though he is ignoring reality at the times when it is politically convenient.  The economy was just fine when voters were concentrating on Obamacare being passed against their will.  Now, as Obamacare goes south, Obama suddenly admits the economy stinks and we need to extend unemployment?   How convenient for his reality....

Opposition to the President and Democrat Congress policies has been present throughout.  It is time to start looking at the alternatives to today's mess.

Once again, we hear about the great "emergency" of unemployment benefits, for the 4th time in 5 years.  Continually, Democrats contend that unemployment benefits will create jobs. Heck, if this is the case, maybe we should ALL go on unemployment!  We would create so many jobs.  Yet, that does not work, now does it?

No one necessarily opposes supporting those whom cannot support themselves for a time, but when is it too long?  This extension will cost another $6 Billion over the next three months.  As discussed in The Welfare State: Increasing Government Dependency, it is hard to differentiate between those who truly need help and those whom abuse the system.  With over 90 million Americans now unemployed, there is no doubt that some are not using this as a safety net.

Image source: Washington Examiner

Today, the Washington Examiner made it simple to see the problem with Obamacare.  They produced a fantastic comparison (on left) between Obamacare and Wal-Mart.  No explanation is needed, as the result is clear.  Obamacare is a failure, as written about in the Continued Failure of Obamacare.

What is the alternative?

Most recently, The American Health Care Reform Act was drawn up as a job producing healthcare alternative to Obamacare.  There are many others out there, but this is the most widely supported alternative.  Instead of killing jobs, let's implement a plan that does not bring down several industries and tax Americans further.

The stimulus, passed in 2009, at a cost of over $1 Trillion dollars did little to nothing to stimulate job growth.  At a cost of $266,000 per job created, it was a massive waste of taxpayer money.

The alternative to this would have been simple, had we not incurred so much debt.  The following are all alternatives that have been proposed and ignored:

The Spending and Reduction Act

Cut, Cap, and Balance

The Spending Reduction Act 

...and many more.  Or, even take it from someone who knows something about economics and simply cut corporate or individual tax rates by $1 Trillion and see what happens.  The impact of this suggestion is detailed in Want Jobs?  Cut Corporate Taxes!

None of the proposals, put forth by the President or Democrats in Congress will lead to jobs.  The facts speak for themselves, these policies have failed the country the last 5 years.  It is time for a new direction and new leadership.  At a minimum, it is time for Democrats to start listening to the crazies who have been right all along; Conservatives, Libertarians, Tea Partiers, Freedomworks, and many other groups whom have been proven right about the policies enacted under this President and Democrats in power.  And, that is not to mention, the Republicans who have not used the power of the purse to stop any of this nonsense.

Want Jobs? Cut Corporate Taxes!

The American economy, which trickles down through the world economy, is growing anemically at best.  Politicians seem more intent on scoring points than actually working towards an improvement that could easily be achieved.  People need jobs and the fastest way to bring them about is to cut the Corporate Tax Rate. That is all of the opinion that is blatantly offered in this article because the rest speaks for itself.  Facts are facts, and the fact is corporate taxes are holding our economy back from creating jobs.

Often times, tax discussions become very complex and most well-informed participants will rightly point out that growth and shrinking economies have many other causes.  To look at the effects, one must account for such other factors and their impacts.  Numerous studies have been done that look at the issue of Corporate Taxes and their effect on the economy.

Progressives argue that high tax rates of the 1950's stimulated the economy during the 1950's.  They often cite the CRS report which looked at this time period in specificity.  There is a major issue which is well addressed by William McBride in the following excerpt:

For instance, the Congressional Research Service (CRS) has found support for the theory that taxes have no effect on economic growth by looking at the U.S. experience since World War II and the dramatic variation in the statutory top marginal rate on individual income.[1] They find the fastest economic growth occurred in the 1950s when the top rate was more than ninety percent.[2] However, their study ignores the most basic problems with this sort of statistical analysis, including: the variation in the tax base to which the individual income tax applies; the variation in other taxes, particularly the corporate tax; the short-term versus long-term effects of tax policy; and reverse causality, whereby economic growth affects tax rates. These problems are all well-known in the academic literature and have been dealt with in various ways, making the CRS study unpublishable in any peer-reviewed academic journal.[3] (What Is the Evidence on Taxes and Growth?)

When accounting for other causes in the economy, what effects does a change in the corporate tax rate do to GDP?  GDP is the economic output of our country and thus, a good measure of business growth.  But, you don't have to take my word on GDP, here is the definition and explanation.

When taking into account, the other variables that change GDP, research has found the same conclusion time and time again.  An increase in the corporate tax rate has a negative effect on GDP.  A decrease in corporate tax rates has a positive effect on GDP.  For a list of the peer-reviewed studies and their findings, please follow this link to Table 1.  The actual effects of corporate tax increases to GDP decreases is approximately a 1% to 1% relationship.  For our economy, a 1% decrease is an enormous drop in GDP.

In addition, throughout these studies, one will find that there is an effect on individuals as well:

1. A reduction in corporate taxes can increase revenue to the government.  Why do we care?  It is assumed that a tax cut equals higher taxes for others.  In the case of corporate taxes, this is not the case.  The reduction causes so much growth that the growth covers the loss in tax revenue and then some.  Meaning, individuals will not be burdened with additional taxes.
2. Costs of goods and services are shown to drop for individuals when corporate taxes are decreased.
3. Jobs, jobs, jobs....an increase in jobs for others, lessons the burden carried by our current tax payers.  The more people are employed, the lesser amount each working individual needs to be taxed.
4. Aforementioned above, but equally important are tax rates.  All of these studies allude to the fact that individual tax rates have the same effect on the economy.  It should also be noted that decreasing corporate tax rates allows for the cutting of individual tax rates with similar effects.

What can we conclude from the look at the corporate tax rates?  They are one major solution to our current economic failures.  According to these studies, if we cut the corporate tax rate by 10%, we should see a 10% increase in GDP within the year and even more after that.

But wait, no one has to take my word for it, the empirical evidence is enormous.  A recent analysis looked at cutting corporate taxes by 10%.  Here is a summary of the findings:

The CDA analysis of a reduction in the corporate income tax rate to 25 percent shows impressive growth for the U.S. economy.[3] For example:

• The number of jobs in the U.S. would grow on average by 581,000 annually from 2011 to 2020, with 531,000 on average being created in the private sector each year;

• U.S. real gross domestic product would rise on average by $132 billion per year;

• A typical family of four’s after-tax income would rise on average by $2,484 per year;

• U.S. capital stock would grow by an average of $240 billion more per year; and

• Gross private domestic investment would increase by $57.2 billion per year.[4]

When looking at solutions for our ailing economy, keep in mind the above information.  There is no reason that we tax corporations at the highest rates in the world.  These taxes are hurting the people they are supposedly trying to protect, the American worker.  It is time to cut corporate taxes and start creating jobs once again, at a faster clip than now.