President Obama Suggest Tax Cut
President Obama and his White House have put to Congress a plan for a payroll tax holiday for next year. It would lower the social security tax from 6.2% to 4.2%, savings of about $800 for a person making $40k a year.
I like it!
I need to hear more about how this will work and what effect this would have on the economy, but I can tell you one thing it will do, help consumers. Not sure what effect it will have on an already low social security fund (remember this is the President that wanted to raise the cap for social security payments in any given year), but I think the immediate impact on citizens would be good.
Also, I don't think this should be an and / or. This needs to be done in conjunction with extending the tax cuts for the next two years. If we raise taxes on the highest among us, we are likely to hurt unemployment further.
***updated after first publish***
Had I read the rest of the news of the day, I would have found that they reached a deal to extend all tax cuts (yea!), this payroll holiday, and extend unemployment benefits for another 13 months (boo).
***
But, for those of you keeping score, that's two - count 'em two - things that President Obama has done in the last ten days that I like. I maintain the right to change my mind on this one, should I read details I disapprove of. But on it's face ...
***Updated after first (and second) publish***
Okay having thought about this some more, and reading some more opinions, I am wondering if we can afford 13 months of additional unemployment benefits. Will the savings in social security taxes from employers make the rise in unemployment insurance premiums easier? Because otherwise the extension of unemployment benefits hits the job creators pretty hard. I read one article that said a business owner saw their UI premiums rise from around $450 a year to $2,200 a quarter.
So, this compromise between Reps and President Obama ... I'm not sure what to think. Many of the tea partiers in congress are already saying they will vote no if there is a long term extension of unemployment attached. Which there is. So ... is this compromise another smoke and mirror? Is the hope that Congress will be held at a stalemate so that the taxes just lapse?
Because if the middle class is hit with the tax hike now, and the economy does not improve next year, I can guarentee you that President Obama will lose in 2012.
Which, is what I think the White House knows, which is why this compromise is out there.
But the unemployment thing ... we can't continue to pay people to not work forever. It's just not a tenable situation. I understand wanting to help people ... I knew a family who were unemployed for two years and collecting insurance, and it probably saved their house and their kids birthday's, Christmas, etc. But he kept looking for work and eventually found something.
For many hopefully that's the case. But I think there are more still - no, I know there are more still - who look at the jobs out there, see that they can collect the same or better from unemployment, and they stay home and watch TV. On their satelite dish. And I know this because Megan is a recruiter, and she can't get enough applicants to fill her positions. They are low paying (like $10-12 an hour), and don't require a degree or anything, but she can't get people to take them. Granted, the pay, but still.
Surely there's a recent grad somewhere that could quit sponging off mom and dad and go take one of those jobs and live cheap and eat cheap, etc, etc. You know ... LIKE I DID.
I like it!
I need to hear more about how this will work and what effect this would have on the economy, but I can tell you one thing it will do, help consumers. Not sure what effect it will have on an already low social security fund (remember this is the President that wanted to raise the cap for social security payments in any given year), but I think the immediate impact on citizens would be good.
Also, I don't think this should be an and / or. This needs to be done in conjunction with extending the tax cuts for the next two years. If we raise taxes on the highest among us, we are likely to hurt unemployment further.
***updated after first publish***
Had I read the rest of the news of the day, I would have found that they reached a deal to extend all tax cuts (yea!), this payroll holiday, and extend unemployment benefits for another 13 months (boo).
***
But, for those of you keeping score, that's two - count 'em two - things that President Obama has done in the last ten days that I like. I maintain the right to change my mind on this one, should I read details I disapprove of. But on it's face ...
***Updated after first (and second) publish***
Okay having thought about this some more, and reading some more opinions, I am wondering if we can afford 13 months of additional unemployment benefits. Will the savings in social security taxes from employers make the rise in unemployment insurance premiums easier? Because otherwise the extension of unemployment benefits hits the job creators pretty hard. I read one article that said a business owner saw their UI premiums rise from around $450 a year to $2,200 a quarter.
So, this compromise between Reps and President Obama ... I'm not sure what to think. Many of the tea partiers in congress are already saying they will vote no if there is a long term extension of unemployment attached. Which there is. So ... is this compromise another smoke and mirror? Is the hope that Congress will be held at a stalemate so that the taxes just lapse?
Because if the middle class is hit with the tax hike now, and the economy does not improve next year, I can guarentee you that President Obama will lose in 2012.
Which, is what I think the White House knows, which is why this compromise is out there.
But the unemployment thing ... we can't continue to pay people to not work forever. It's just not a tenable situation. I understand wanting to help people ... I knew a family who were unemployed for two years and collecting insurance, and it probably saved their house and their kids birthday's, Christmas, etc. But he kept looking for work and eventually found something.
For many hopefully that's the case. But I think there are more still - no, I know there are more still - who look at the jobs out there, see that they can collect the same or better from unemployment, and they stay home and watch TV. On their satelite dish. And I know this because Megan is a recruiter, and she can't get enough applicants to fill her positions. They are low paying (like $10-12 an hour), and don't require a degree or anything, but she can't get people to take them. Granted, the pay, but still.
Surely there's a recent grad somewhere that could quit sponging off mom and dad and go take one of those jobs and live cheap and eat cheap, etc, etc. You know ... LIKE I DID.
Comments
When the economy turned and people began to cut their discretionary spending my shop was hurt, BAD. So much, that I was forced to lay off my only assistant butcher. Apparently people would rather go to Walmart to get their meat than from a small community butcher shop (we just can't compete with the prices!). Anyways, since I laid off this butcher THREE YEARS ago he has worked long and hard at finding ANY work that would support his family of six. The poor guy has gone on countless interviews (in and out of the industry where he is trained), but nothing comes through for him. Now, when he might be able to get another few checks to help pay for his families livelihoods, STUPID repubs start CLAMORING that HE is LAZY!!! It makes me so angry! He is just trying to do the best by his wife and kids. The blessed Democrats give away the tax cuts and DUMB republican(t)s try to hold my dear friend hostage over a measly unemployment check. This is wrong and anyone who would argue a differently is WRONG TOO!
But how do you balance that with the people that worked for three months, got laid off, and have been collecting unemployment for over 2 years? They have no incentive to look for work because they are making as much if not more in some cases on unemployment than they did working. And either way, getting paid to do nothing is much easier than looking for work.
Or, and I know this happens because I was encouraged to do it, the people who had two incomes, but one individual lost their job, and then that individual collects unemployment with no intention of looking for work because the unemployment is enough to keep them living in the style they've grown accustomed? When they could very easily live on the one individuals salary?
We can not afford to pay unemployment benefits for ever. An individual should be given a year to find new work. And I think that's generous. If my husband lost his job and within six months couldn't find something in any given field, I would expect him to start looking in other fields. I know how hard that would be, but you can not have a society where half works and pays for the other half that doesn't. It simply won't work. Eventually, Atlas will shrug.
We were just talking about this yesterday. I find this incredibly ironic.
As for your husband, I would encourage him NOT to go back into the butchering profession. We don't need a bunch of willy-nilly ne'er-do-well fair weather butchers! We need MEN who stand CLEAVER IN HAND ready to cut 1.25" short loin on demand. If he USED to be a butcher he probably doesn't have what it takes to BE a butcher.
Butchering is in the HEART of the man, not in the financial windfall that comes from the shop. Tell him to stick to slinging whatever FLANK STEAK quality product he sells and leave the butchering to us REAL MEN!
When you have 2 million job openings, but 10 million unemployed people, for instance, that means 8 million people are going to be unemployed regardless of whether they get unemployment insurance or not. That is the situation we are in now. There simply are not enough jobs.
Your example about someone not being able to find workers for low pay is likely more about mobility than laziness. There are plenty of people willing to work for those wages right now - the problem is, they may not live locally. And wages that low are simply too low to get someone to relocate (with all of the expense that entails).
What this tells me is that, under the laws of supply and demand, if you can't find someone to do a job for X dollars in an economy with a lot of people looking for work, you are offering too low a pay rate to attract workers. Ten dollars an hour is already more than unemployment pays, with the added bonus of being, you know, employed, and able to plan for the future. If your friend can't find workers, she needs to increase the pay she is offering to attract them. That's the libertarian solution.
In her particular field, it's hard to get ANYONE to show up. Also, they have to pass a test (which is basic communication skills "Hello, thank you for blah blah blah" and spelling and basic computer skills. According to my sister, an 8th grader could pass it). It's very hard to find someone that will SHOW UP TO WORK and pass the test. If she's reading this she can post more about her issues.
Your basic assumption about the number of jobs to unemployed sounds correct - but there is research out that proves that people on unemployment really only start to look for a job in the last months / weeks of their benefit. Europe found this to be true and scaled back how much unemployment they offered. They found that people went out and got a job the month that their benefits ran out, and not before.
Regardless of how many job openings there are, we can not pay unemployment forever. And necessity is the mother of invention. New businesses are started when people HAVE to start doing something. When they HAVE to try. And there are jobs (not 10 million, as you point out) but there are jobs out there that some of these unemployed could take.
However, if we changed the tax enviornment in this country a little, we might be able to keep some of the jobs here instead of so many of them going overseas. But as long as people working in call centers here want $12-$15+ an hour, those jobs are going to India were they can pay $5 an hour, and probably don't have to provide benefits.
And as far as libertarian solutions - it would never be libertarian to offer 3 years of unemployment.
I was on unemployment once - I started looking for work the day I lost my last job. It took six months to find another job, and that was in a much better economy. Fortunately, my benefits lasted six months - I had like two weeks left when I started work at my new job.
I saw the writing on the wall (I was in IT) and so the day I started my new job I also applied for law school. By the time I was laid off from that, I was almost done with school and I was lucky enough to find a job, and then when that ran out (it was limited term) I found the job I have now, which hopefully will be til retirement.
But in this current climate, there simply are not enough jobs to go around.
By the way, it is a condition of receiving unemployment that you actively look for a job and you can't turn one down if it offers pay reasonably close to what you had when you worked. Plus, everyone knows that it can take up to two years to find a job right now while actively looking, so really, you can't wait until the last minute to start looking. Finally, the notion that we ought to cut people off and let them starve to force them to come work at crappy, underpaid, low-benefit jobs is just evil.
If you want good workers, that costs money. A lot of it. In the past 30 years, executive pay and corporate profits have skyrocketed while worker pay has stayed stagnant. This is because of what you describe - your friend's company refusing to pay a decent market wage, so no self-respecting person with any degree of skill would even want to apply, and certainly would never relocate.
The fact that starvation wages are paid in other countries should not be a justification to starve workers locally as well.
Libertarians like to talk about how employment should be all about the free market, people freely trading their services for pay, but that only works when a worker isn't basically a hostage to starvation and employer monopolys that offer only starvation wages.
Being able to feed yourself, have shelter, medical care, and basic needs like clothing should not be something you have to get as scraps from a rich employer's table. Those are rights for every dignified person to have. Now, if you want more than the basic gruel of life, you need to work for it. That's why I think it would be best if everyone were given the basic necessities (but no more) and then employers could not count on starving workers to work below market rates, they would actually then have an equal negotiator at the other side of the table, employees who can take it or leave it, but who will only take it if what the employer offers is really worth it.
Employers seem to think they can offer $100 and get a fully decked out BMW, and it doesn't work that way. You want that BMW of a worker, you gotta pay $70K, not ten bucks an hour. Sure, that may cut into million dollar golf course memberships for some executives, but then really, it is the executives who have unrealistic expectations of what they should be paid, not the low-end workers.
(Oh, and no one gets three years unemployment - 99 weeks is the maximum, and lots of people have already gotten it, so they get no more. They still can't find jobs.)
Okay my math is bad. You are right, 99 weeks. Just about 2 years of unemployment. Does that not seem like enough time to either 1) find something else or 2) get trained to do something else? After 2 years of not working, what does a person expect to do?
The market does dictate what jobs are available, as we are seeing now. The government can not FORCE businesses to hire. So if you want to go find a job where you can get pay raises year over year without adding any responsibilities or adding education to your resume, than I suggest taking a civil service exam.
$70K is what the average worker is worth? Really?
The vast majority of Americans are unskilled labor. The reason CEO's and management make so much more than labor is because there are fewer people qualified for those jobs than those qualified to flip burgers, for instance.
I'm not defending my sister's company, by any means. They are morons. And she hates it there, and is trying desperately to leave. But, she NEEDS A JOB. So she's working where she can, when she can, as long as she can. I would call her the underemployed. Even though her situation is due to a relocation based on her husbands employment, and not a lay off or anything.
I want jobs to come back too. But the only way that can happen is through growth and demand. I'm hopeful about next year. We shall see.
That's why the only stimulus that matters is stimulus to the masses. Cutting taxes on the rich just increases the money they will use to speculate and create the next bubble. Giving money to the poor results in greater demand, increasing economic activity, increasing profits, increasing jobs.
Whether they are lazy or not, workers with unemployment SPEND it and stimulate the economy. They also, by the way, don't starve, they pay their rent, they pay their other bills.
If you truly think unemployment is just about lazy people not wanting to work, then why not advocate getting rid of it entirely? That'll show 'em. I'm sure there are lazy people. There are also plenty who are not. Just because you don't like the lazy people, is that a good enough reason to eliminate it for all of the non lazy people who are earnestly trying and have families to support?
I mean, really, what are you advocating?
Another reason that companies aren't hiring is because its so expensive to hire. A person takes home $30K, but the cost to that company is closer to $60-$70K after the insurance and taxes. Companies in many states pretty much have to pay the state a finders fee for that employee. A tax on the person becasue he's a resident of that state and therefore the state should get a cut.
And people wonder why so many are moving to Texas and other states that don't have such ridiculous regulations.
Anyway, that's off topic.
I'm advocating an end to endless unemployment benefits.