Do Higher Taxes and More Government Rules Create Jobs?

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Published June 28, 2011

| FOXBusiness

Do more government rules create private sector, or government jobs? Do more government rules incentivize bureaucrats to keep the rule machine grinding, to justify their jobs?

Do more government taxes create private sector, or government jobs? Do more taxes create more government jobs, and a bigger government machine to collect them?

Does more government spending create private sector jobs, or just more government jobs? Does more government spending create more taxes to pay for that spending?

Federal Reserve chairman Ben Bernanke said recently that improvement in the labor market is frustratingly slow, adding: We dont have a precise read on why this slower pace of growth is persisting. Unemployment has stayed stubbornly above 12% in 69 cities, says IHS Global Insight.

Really? No idea? 

It's 1932 all over again--a Great Depression year when unemployment was actually falling, until the government intervened. Listen to what economic historian Thomas Sowell has said of that time: "Although the big stock-market crash occurred in October 1929, unemployment never reached double digits in any of the 12 months after that crashed. Unemployment peaked at 9%, two months after the stock market crashed--and then began drifting generally downward over the next six months, falling to 6.3% by June 1930."

Okay, 1929 started out with unemployment at just over 3%. We know that the economy was having severe problems separate from the crash, as business inventories started to back up, public spending dropped, and also construction and manufacturing fell. The crash happened, and then unemployment then rose to more than 6% by the end of the first half of June 1930, but just six months later, at year end, it was 8.7%. 

But what happened was, the government intervened in the economy, Sowell says, with massive import taxes starting in June 1930, a protectionist measure to save jobs by slashing imports. And then, from February 1932 to January 1935, the unemployment rate never dropped below 20% for any month. In January 1935, it fell to 19.3%, Sowell says. President Ronald Reagan didn't intervene in the U.S. economy after the 1987 stock market crash, Sowell adds. 

So where is the economic growth purchased with about $4 trillion in taxpayer money since Nancy Pelosi gaveled in as House Speaker in January 2007, to the time the California Democrat gaveled out last fall? If government spending creates jobs, then why does her home state have an unemployment rate hovering around 12%?

Has it occurred to you that the White House's top economic advisors--Larry Summers, Christina Romer, and Austan Goolsbee--have achieved "maximum escape velocity" from the Administration by quitting, as the U.S. economy has yet to achieve "maximum escape velocity" from the downturn, as former White House economic advisor Summers last year said would happen?

How come the media doesnt get it that there is no lock box anywhere in government that holds those tax revenues from tax hikes? That the real issue is spending on cruise control? 

That those revenues are not going at all towards paying the deficit, but instead towards interest on the Himalaya of debt, which if the government doesnt pay, then the U.S. loses its Triple-A rating? And that downgrade would cause bond yields to soar, and in turn loan rates to spike higher too, because theyre pegged to those bond yields?

Even the non-partisan Congressional Budget Office has already said that the U.S. Congress has put America on the brink of a European-style debt crisis unless decisive action is taken. 

CBO director Douglas Elmendorf recently told the House Budget Committee that higher marginal tax rates do reduce economic activity to some extent by views of most economists.

A group of 150 economists also said earlier this month that we will not succeed in balancing the federal budget and overcoming the challenges of our debt until we succeed in committing ourselves to government policies that allow our economy to grow.

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http://www.foxbusiness.com/markets/2011/06/28/do-higher-taxes-and-more-government-rules-create-jobs/