Let's take his statements today on the extension of the federal gas tax. Here is what will happen should Congress fail to extend those taxes, according to Obama's view of the world:
According to the White House, there are a million jobs riding on the highway bill and over 4,000 workers will be furloughed immediately if it is allowed to expire. “That’s just not acceptable,” Obama said. “It’s inexcusable to put more jobs at risk in an industry that’s already been one of the hardest hit over the last decade.
Okay..........let me see if I can make this simple. Businesses create jobs by staying in business and being profitable. Profits are created when revenues are higher than costs. Taxes are part of a business' costs, as are regulations, and fees, and paperwork, etc. If the federal taxes rise, costs in that industry will rise, output falls, unemployment goes UP -- not DOWN -- and prices to you and me would rise. So, taxes UP, employment DOWN. Fact.
I suppose Obama is talking about the government jobs paid for with this period's tax revenues, but those are not real jobs. Those are not the same as the jobs created in private industy. No, this period's government "jobs" are paid for with this period's tax revenues confiscated from private industry, which then slither through the political bureaucracy losing 40-50% of their value along the way, finding their way to unions, special interest groups, and causes that will support the Obama White House. And that is just this period; next period, the process starts anew, except they always need more, because they can't ever cut any government spending.
Private industry jobs are, well, actual jobs! They are evidence of something working right. They are the result of real business producing a real product or service and selling it to a free people who voluntarily choose to spend their hard-earned money on that item. If a business does all of that well they earn --on my gosh, brace yourselves for a dirty word -- PROFITS!! And they can then use this period's profits to reinvest in the business in order to try to earn even higher profits, can hire more people, produce more products..you know, employment and GDP and quality of life? Businesses can actually support themselves! They generate funds internally or, if they have to borrow or sell equity, they have to convince the lender that their future profits are sufficient to pay the lender back. None of it by force or edict or regulations or threat -- all due to the wonderfully objective, voluntary free-market system.
No, folks, it is a fact of life just like gravity and matter: when you raise costs to business, profits fall, less is produced, unemployment goes up, prices go up, and we are all less well off. Any one who has run a business, or known someone who runs a business, knows this is true. It's the economics that sometimes confuses them. Maybe because people like President Obama and the popular press are the ones trying to invoke economic theory and facts to make claims that make absolutely no sense. Hence, the offer of the remedial training for our Commander in Chief.
And don't even bring up the deficit....our second remedial lesson for the day, Mr. Obama, is the deficit. Mr. President: when government spending, G, is greater than tax revenues collected, T, we have a deficit. The accumulated deficit is the debt. You know, the two things that are increasing at record levels under your leadership? So, you can either lower G, which would help lead the country back to economic liberty and its bounty, or we can raise taxes, which would lead to the series of negative events noted above. And every time you ask for more tax revenues to fix the deficit, you make it abundantly clear that you do not understand that spending is the problem, not taxation.
This, sir, is not an opinion, it is not wishful thinking, a theory or a political point of view. It is such basic economic fact that I cannot find any more basic words to try explain it to you. Maybe a set of props that you could touch and smell and move around and count, like in a shell game? Maybe you are a tactile learner! I'd be happy to give it a try -- just get and touch and we'll get it done!
Sherry L. Jarrell, Ph.D.