A breakthrough idea from “the gang of 6” 1

By Tom Quiner

Six Senators have presented a framework to tackle our deficits and the debt ceiling in a bipartisan way.

The plan is lacking in detail at this point and should be approached warily. There are things I don’t like about it.

Having said that, they have put a dynamic idea on the table ripped from the pages of a Steve Forbes’ campaign speech from years past. The “gang” is proposing to flatten income tax rates, an idea with a world-wide track record for boosting the economy.

They propose reducing the top marginal income tax rate from 35% to somewhere between 23% and 29%. In return, they would simplify the tax code by eliminating some deductions to offset the reduced rate.

The idea is a winner.

A simpler tax code boosts productivity by putting dollars to work creating jobs instead of paying lawyers and accountants to figure out thousands of pages of tax code.

I would love to see a pure flat tax. The gang of six takes a step in the right direction by moving toward just three tax rates.

We’ll see if it goes anywhere. As they say, the devil is in the details. Let’s see what the details look like.


The rationale behind “tax cuts for the rich” 1

By Tom Quiner

The President and his party are fixated on increasing taxes on America’s most-productive citizens, aka “the rich.”

That seems to be their solution to our debt-ceiling problems: tax the rich more.

So let me pose a question to you. Who is going to create the most jobs for America with extra money, the President … or a rich guy?

Let’s say the President wants to tax a super rich guy an extra $278,000. Would the government do a better job at creating jobs with that money than the super rich guy would with his own money?

We know how many jobs the government would create with that windfall:  one. [See a previous post: Is $278,000 per job a good taxpayer investment?]

The President would use it on public employee unions … or green energy … or high speed rails, jobs that require ongoing public subsidy.

The super rich guy would ONLY invest the money in job creation if the jobs were going to make him money. In other words, he would base his decision not on political considerations, but economic ones. His self-interest would be paramount.

The rationale is this: someone is going to spend their own money better than someone else will.

The conceit of the president and his party is that they think they know how to spend other people’s money better than they do themselves. “It ain’t necessarily so!” to quote the great Gershwin song.

The stakes are much higher when you’re spending your own money, because you feel the pain if you spend it poorly.

The stakes are much lower when you spend someone else’s money, because you don’t feel the pain if you spend it poorly. Take Mr. Obama. He took your money and used it to create or “save” jobs at a cost of $278,000 per job. Do you think entrepreneur, Steve Wynn, whom I quoted in my previous post, could do a better job than a man who’s never had to make a payroll in his life?

I’m not being critical or Mr. Obama as much as I’m suggesting that a guy with a proven track record of creating jobs, like Steve Wynn, is going to spend his next buck better than someone else will.

Interestingly, when we cut marginal tax rates for “the rich,” they end up paying more in taxes. Why? Because they invest that money in job-creating efforts that end up making them more money, money they have to pay taxes on.

The government, on the other hand, redistributes much of it to someone else.

What is the power behind government? Coercion. If they want you to do something, they’re holding a club in one hand.

What is the power behind the rich guy? It’s called the marketplace into which people freely enter and mutually benefit.

The marketplace is amazing. It magically gets people to cooperate through the power of mutual self-interest. Milton Friedman tells a great story in the video above on what goes into making a simple pencil. Not a single person in the world knows how to make a pencil! Watch the video and you’ll see Mr. Friedman’s point.

Let’s stop demonizing America’s most-productive workers. Let’s start figuring out a way to reduce government spending to the levels of the Bush or Clinton administrations. Let the rich get richer while they create new jobs along the way.

The president sure isn’t doing it.

Congress isn’t doing it.

The Steve Wynn’s of the world ARE doing it, but the president and his party have made it harder, much harder, for these super-producers to keep producing.

“It’s Obama that’s responsible for this fear in America” Reply

By Tom Quiner

I go to Las Vegas every year on business. I’ve been going there regularly since 1980. One can’t help but notice the impact real estate developer, Steve Wynn, has had on this gambling mecca of America.

He built The Mirage, Treasure Island, The Bellagio, and The Wynn in Vegas alone, and has developed properties in Atlantic City and Mississippi as well.

Mr. Wynn is an entrepreneur. He has used his entrepreneurial genius to become a billionaire as he has created tens of thousands of jobs in America either directly or indirectly.

He is a Democrat.

His political affiliation is relevant in light of his recent critical comments, that “this administration is the greatest wet blanket to business, and progress and job creation in my lifetime.”

Mr. Wynn makes things happen. He tells us he will not make things happen as long as Mr. Obama sits in the White House.  He characterizes the President’s thinking as a “weird political philosophy,” that “it’s Obama that’s responsible for this fear in America.”

He pulls no punches, telling us that “…until he’s gone, everybody’s going to be sitting on their thumbs.”

Mr. Wynn’s assessment of Obamanomics is worth reading in its entirety:

“Well, here’s our problem. There are a host of opportunities for expansion in Las Vegas, a host of opportunities to create tens of thousands of jobs in Las Vegas. I know that I could do 10,000 more myself and according to the Chamber of Commerce and the Visitors Convention Bureau, if we hired 10,000 employees, it would create another 20,000 additional jobs for a grand total of 30,000.

I believe in Las Vegas. I think its best days are ahead of it. But I’m afraid to do anything in the current political environment in the United States. You watch television and see what’s going on, on this debt ceiling issue. And what I consider to be a total lack of leadership from the President and nothing’s going to get fixed until the President himself steps up and wrangles both parties in Congress.

But everybody is so political, so focused on holding their job for the next year that the discussion in Washington is nauseating. And I’m saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime.

And I can prove it and I could spend the next 3 hours giving you examples of all of us in this market place that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right. A President that seems — that keeps using that word redistribution.

Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they are frightened of this administration. And it makes you slow down and not invest your money.

Everybody complains about how much money is on the side in America. You bet. And until we change the tempo and the conversation from Washington, it’s not going to change. And those of us who have business opportunities and the capital to do it are going to sit in fear of the President.

And a lot of people don’t want to say that. They’ll say, “Oh God, don’t be attacking Obama.” Well, this is Obama’s deal, and it’s Obama that’s responsible for this fear in America. The guy keeps making speeches about redistribution, and maybe we ought to do something to businesses that don’t invest or holding too much money. We haven’t heard that kind of talk except from pure socialists.

Everybody’s afraid of the government, and there’s no need to soft peddling it, it’s the truth. It is the truth. And that’s true of Democratic businessman and Republican businessman, and I am a Democratic businessman and I support Harry Reid. I support Democrats and Republicans. And I’m telling you that the business community in this company is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody’s going to be sitting on their thumbs.”


Is Obamanomics a better strategy than Reaganomics? PART 2 Reply

By Tom Quiner

President Obama is the anti-Reagan as I pointed out in yesterday’s Quiner’s Diner post. His economic policy is pretty much the opposite of the path taken by Mr. Reagan.

So the bottom line is the bottom line. How do results compare?

When Ronald Reagan took office, the misery index (the unemployment rate added to the inflation rate) stood at a staggering 19.33. By the time he left office, it had fallen to 9.72.

When Barack Obama took office, the misery index stood at 7.83. In his third year in office, it has risen to 12.67. His approach isn’t improving our economic misery and may be making it worse.

The economy began to boom in Mr. Reagan’s third year in office as the impact of Reaganomics was felt. The GDP increased between 5 to 8 percent per quarter in his third year and continued a torrid pace right into the election cycle in his fourth year in office.

Unemployment was still high, but dropping steadily, reaching 7.2 percent by election day.

Mr. Obama’s numbers don’t look so good. The Federal reserve projects a growth in GDP of less than 3 percent this year. And latest unemployment numbers continue to nudge upwards above 9 percent.

The impact of Reaganomics was felt for years.

The economy grew by a third over the next seven years.

Twenty million new jobs were created. Civilian employment increased by 20 percent.

The unemployment rate came down to 5.3 % by the time he left office.

Let us compare results as accurately as we can:

• The Reagan recovery averaged 7.1% economic growth over the first seven quarters compared to 2.8% for Mr. Obama. And its dropping during the current President’s watch.

• Unemployment fell 3.3 percentage points during Reagan’s first seven quarters compared to 1.3 for Obama.

It’s important to note that Mr. Reagan accomplished all of this while having to tame inflation at the same time. Mr. Obama, on the other hand, entered office with inflation relatively low.

At this stage in the game, the Reagan model is outperforming the Obama model.

Time for the President to shoot straight on jobs Reply

By Tom Quiner

Here is what President Obama’s job chiefs said in The Wall Street Journal:

“There are more than two million open jobs in the U.S., in part because employers can’t find workers with the advanced manufacturing skills they need.”

The solution? More big government. The president wants to spend $2 Billion on remedial job training for our high school graduates.

Do you really believe there are two million manufacturing jobs waiting to be filled right now? Seriously, do you? If you are a sceptic, join the club.

So how did the president and his team come up with two million jobs? The National Association of Manufacturers (NAM) are the source. Only, they say these are the number of manufacturing jobs that will open up during the next ten years due to retirements.

Let us recap:

• The jobs are not immediately available.

• They are not new jobs.

The president didn’t shoot straight with us. He tried to con us, just as he cons us when he lumps in the number of jobs “saved” along with new jobs created.

The president is correct when he identifies a skills shortage in our kids graduating from high school, a shortage that didn’t seem to exist before the Department of Education was formed. Hmmm … could there be a connection?

It’s time for the president to shoot straight with us on jobs and the economy. His approach has only increased government spending, government regulation, and government entitlements.

Everything but jobs.