What and Whom Deserve your Vote on Nov. 2?

 

Updated Oct. 29, 2010

 

By now you’re weary from all the political ads, and the false claims about candidates, tax issues and initiatives. But what have you done about it?

If you want a strong economic climate and job creation, and freedom from bad public policy and public officials, obviously it’s time to act. This is a critical time. What is decided at the polls will affect us now and our grandchildren, too, when they’re in the business world.

Similar concerns are felt and expressed by the leadership of Washington’s state chamber of commerce –the Association of Washington Business (AWB).

“In my mind, it comes down to a choice of whether we are going to have a heavier reliance on government and more taxes and regulations;  or, whether we are going to allow the market-based, free enterprise system to be innovative, to create new products and jobs, wrote Don Brunell, president of AWB.  “That is the bottom line in this election.”

So this is the most succinct business-coaching column ever published here on this site. The message is simple. If you haven’t already, please do your homework and discuss these issues with your associates, friends and relatives. Then vote by Tuesday, Nov.2.

From the Coach’s Corner, visit these Web sites: 

•  AWB – www.awb.org
• Enterprise Washington - www.growwa.com
• Washington Policy Center – www.washingtonpolicy.org

This all about knowing and implementing what’s important for economic development and job creation. You’ll be glad you did.

Job Creation: Will Public Officials Listen to Intel’s CEO?

 

Intel CEO Paul Otellini laments it costs $1 billion more to build a semiconductor factory in America than it does abroad, and he’s calling for regulatory cutbacks and tax cuts – the two quickest ways to stimulate job growth.

Those are the messages he gave in a widely publicized speech to the Council on Foreign Relations in New York on Oct. 5, 2010.

His salvo blames government for the lack of jobs in America.

“…contrary to public opinion, this is not because of labor cost differences,” says Mr. Otellini. “Ninety percent of the cost difference is the result of tax and incentive policies.”

To boost domestic production and technology, he asked for government policy reforms:

• Tax credits or a 5-10 year tax holiday to companies, domestic or foreign, that want to set up or expand a factory in the U.S.”
• Adjusting our tax rate to a level approximately equal to our global competitors for investment.
• Removing regulations that needlessly deter investment…Given the urgency of our situation, we should create a fast track permitting process for companies that want to build new factories here.

Obviously, he’s convinced new tax policies will work.

“This will bring more manufacturing jobs back to the U.S.,” he says. “It will employ our workers and stimulate the economy, all at no cost to us.”

Mr. Otellini says his proposal to reduce the tax rate would “reverse the flow of capital and jobs out of this country.”

Frequent readers of this Web site know that the Intel CEO has Biz Coach support for his public-policy ideas.  Countless columns have been published here.

From the Coach’s Corner, here is the text of Mr. Otellini’s speech.

WA Election Reminder: Business Issues to Ponder

 

Updated Aug. 17, 2010

Today is Washington state’s Primary Election Day. Be sure to vote.

Meantime, there are valid reasons why Washington state public officials’ pleas of poverty and and justifications for tax increases have fallen on the deaf ears of most businesspeople. The overwhelming majority of companies – large, medium and small – have had to resort to cost savings.  But only recently in mid-2010 have state leaders finally admitted state government needs to be downsized by as much as 7 percent across-the-board in the wake of declining revenue and continuing forecasts of $3 billion deficits.

However, for years, many of us have warned about the state’s propensity to spend wastefully in the face of multi-billion- dollar unfunded state pensions and $3 billion deficit forecasts. Again this year, the Legislature bypassed voter protections on transparency, and raised taxes by $800 million. In the last decade, there have have numerous Biz Coach columns about court cases and shell games by public officials in violations of state spending limits. But we’ve been ignored by public servants, which infuriates the electorate concerned about economic health and job creation.

Ironically, there have been numerous published reports of fiscal waste, mismanagement and abuse. That means if efficiencies were ever implemented– including the best-practices in fiscal management recommended by the state auditor – there would be enough tax revenue.

For example, the state was overcharged $306,000 for supplies by Office Depot in 2009, according to the state auditor. But the state’s Department of General Administration denies it’s overspending. We have to wonder how badly the other agencies are misbehaving.

The contract with Office Depot is part of a $24-million deal that includes other state agencies, institutions of higher learning and local governments.

The agency is part of a list of other state agencies also in denial, especially the Department of Social and Health Services (DSHS), and the Washington State Department of Transportation (WSDOT) and the ferry system.

As a business-performance consultant who has solved the financial headaches of public and private-sector clients since 1992 – often by not even having to look at numbers – just observing people at work – I have also interviewed State Auditor Brian Sonntag.

As I’ve written before regarding public policy, I’ve witnessed tons of waste at DSHS, WSDOT and the Washington State Department of Personnel.

My sense also is that Mr. Sonntag is a stellar public servant, and I would point a finger at Office Depot for not adhering to the contract rates, as well as at the Department of General Administration for being lazy in due diligence.

This summer, we finally heard about the flawed worked of state employees that caused two freeway projects in Tacoma to be torn down and rebuilt. It resulted in $1.5 million in more waste and no accountability. That wouldn’t fly in the private sector at most companies.

Don’t forget about the KING 5 series on mega millions in waste and inefficiency in the state ferry system.

Also, I’d ignore the disingenuous arguments in the $2 million Initiative 1098 campaign to start a state income tax. An income tax would soak the rich – many of the very people who hire workers and make investments.

A state income tax has not helped two states where I spend a lot of time: Oregon and California.

An income tax here would send a negative message to prospective employers around the globe that might consider establishing a presence in Washington. Why would anyone want to harm our potential to grow the economy and create jobs?

Another thought: Should this income tax pass this year, state officials will find excuses to broaden the income tax to include middle-income taxpayers, too. Have you ever known a tax not to expand or even disappear?

Now comes the disingenuous allegation in two state reports claiming that voters should not privatize liquor sales because they would cause shortages.  That’s bunk. Not only will we put a governor on the unfunded pensions of 1500 state liquor employees, the number of privatized liquor outlets will expand 10-fold. That enhances tax revenue — it doesn’t decrease it.

Please forgive me for being a tad gauche, but you’re best advised to consider all the government waste and mismanagement, as well as the candidates’ philosophies before going to the polls or returning your absentee ballot.

Courtesy of Enterprise Washington, here are two research resources:

• Reviewing candidates’ answers to the Enterprise Washington & WashACE Candidate Questionnaire, accessible through the GROW Voter Guides.
• Viewing incumbent candidates’ legislative voting records.

May Washingtonians decide on a business-friendly environment on Aug. 17 and in Nov.

From the Coach’s Corner, this Web site has more than 50 national and Washington state public-policy columns regarding the governments’ adverse impacts on the economy and business climate in this section.

Options for Hotel Owners – Seattle Ranks Among Worst 5 Cities in Travel Taxes

 

July 23, 2011 – updated 12:14 a.m.

Yes, hotel owners are panic-stricken – hospitality profits are down in Seattle and everywhere else.

But for the second consecutive year, Seattle ranks among the most-expensive for travelers, and hotel owners want to hike room taxes for a tactic that will not work. Not to criticize, they have better options, which I’ll explain later.

Seattle imposes the third-highest car rental, hotel and meal taxes among the 50 largest markets in the nation, according to a 2011 business study by the Global Business Travel Association Foundation.

Taxes include: A general sales tax, and taxes on car rentals, hotels and meals.

Ironically, the Seattle Hotel Association wants to tack on another $2 tax for each room per night for travelers. That’s in addition to the 15.6 percent in sales and room taxes already levied on hotel guests.

Unfortunately, they think the excess funds should be used in an advertising campaign to boost tourism. The Seattle City Council will vote on the issue.

The five highest-taxing cities: 1. Chicago. 2. New York City. 3. Seattle. 4. Boston. 5. Kansas City.

Ironically, Seattle ranks among the three most-expensive but is only the 15th-largest city in America.

The foundation’s director of research, Joe Bates, says there’s a huge difference among the 50 cities – as much as 80 percent. It’s not surprising that such taxes affect the travel plans of business people.

“If you are a travel manager planning a meeting, this is important information to take into consideration,” says Mr. Bates. “And if you are a retail business attempting to lure travelers, this tax rate differential is a competitive advantage or disadvantage.”

Better Options for Seattle Hotel Owners 

In my experience as a confidential business-performance consultant, who has also produced hundreds of radio-television commercials, my sense is that an increase in Seattle hotel taxes to fund an advertising campaign is ill-advised. There are good reasons why stay-cations have been prevalent.

Sometimes you can’t buy the market, especially in the tourism sector for a rainy region in a downturn. In addition, Seattle hotel owners have already committed missteps — three of the 14 reasons for the failure of a marketing campaign (How to Win Your Major Marketing Campaign).

Don’t get me wrong, I love Seattle, but hotel owners would be better served using other less-costly strategies for a positive return on investment.

Short-term, in times like these, it’s much better to be creative in strategy with an effective public-relations campaign and strategic partnerships with contests as the anchor element in a promotion.

Consider a Seattle asset: Alaska Airlines. Why do you think Alaska Airlines is loaded with Seattle passengers in February for flights to warm-weathered Mexico and Hawaii? Conversely, Alaska Airlines would love to strategize as a partner in savvy promotions to bring tourists to Seattle in the wintertime.

Long-term, strategies should include sharing the cost with other groups in underwriting image-building initiatives. For example, Washington Filmworks (www.washingtonfilmworks.org) and the Seattle Film Office (www.seattle.gov/filmoffice) to promote filmmaking.

It was a win-win with these two organizations until legislators killed a great tax-incentive program and opportunities for growth (How Washington Fails in Filmmaking for Economic Development). Maybe it happened but I don’t recall the Seattle Hotel Association lobbying the Legislature last session.

Films create emotions, which fill hotel rooms in rainy weather by helping to overcome resistance by winter travelers who’d prefer to visit sun-soaked locales.

So, a two-pronged strategy — a strategic public-relations program and partnering for image-building films — are the solution.

Oh, by the way, filmmaking also creates jobs while enhancing both the city’s and state’s economic image. In terms of public policy – for a region that’s thirsting for jobs and tax revenue – hotel tax increases and eliminating tax incentives are deterrents to economic development.

Consumers, out-of-state  corporations and small businesses have budgets, too.

From the Coach’s Corner, are you surprised Washington state also doesn’t even rank among the top 10 pro-business states? That’s according to a 2010 study by Pollina Corporate Real Estate.

Pollina’s 2010 top 10 pro business states:

1. Virginia
2. Utah
3. Wyoming
4. South Carolina
5. North Carolina
6. Nebraska
7. Kansas
8. South Dakota
9. Alabama
10. Missouri

Here’s more information.

Over-taxing business travelers and maintaining anti-employer public policies hurt Washington state’s business competitiveness. Job creation and economic health will not be enhanced. The prescription: A heavy dose of economic patriotism.

“The economy is bad. It’s so bad, third graders in China are being forced to take second jobs.” 

-Jay Leno

_________

Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complementary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

 

How Sen. Dodd’s Financial Reform Would Hurt Financing of Startups

 

March 28, 2010

On the surface, Sen. Christopher Dodd’s financial regulatory bill seems like a good idea. After the monstrous financial meltdown with far-reaching consequences, most Americans probably would support a strong consumer protection agency and measures to prevent systemic risk.

However, portions of the 1336-page bill, “Restoring American Financial Stability Act of 2010,” are perplexing.

Perhaps it’s my antenna. A central theme of The Biz Coach column has been advocating policies for a healthy economic environment and creation of jobs. Growth of the U.S. economy will depend heavily on the formation of new businesses. Angel investors play a salient role in the development of new firms.

Economic growth is exactly what policymakers should promote. But the bill, supported by the Obama Administration, has provisions that would stifle financing of startups that have the potential to attract investors.

Marianne Hudson, the executive director of the Angel Capital Association has indicated her concerns:  

• Section 412 and 413, “Adjusting the Accredited Investor Standard for Inflation,” would prevent up to “77 percent of accredited investors” from investing in new firms.
• Section 926, “Authority of State Regulators Over Regulation D Offerings,” would complicate the raising of funds from “different states, make it unclear what entities regulate angel investments, and introduce potential lengthy waiting periods for businesses to receive their capital, possibly resulting in the death of those businesses.”

In a letter to Sen. Dodd, she listed a full slate of concerns and made several recommendations.

Two Seattle attorneys who work for competing firms are also at the forefront of the offensive to persuade Sen. Dodd to amend his financial reform bill. They are Joe Wallin, a partner at Davis Wright Tremaine LLP, and Bill Carleton, a member of McNaul Ebel Nawrot & Helgren PLLC.

They are circulating a petition to Stop The Repeal of Federal Preemption of Reg D Securities Offerings.

Here’s an interview with Mr. Wallin:

Q: What are the current rules?

A: The current rules allow companies to raise money from accredited investors with no advance filing with the SEC or any state securities regulators. All that is required is a simple notice filing and a small fee after the closing of the financing.

Q: What would be the new rules?

A: Before companies could accept money from investors they would have to file paperwork with the SEC and wait 120 days. If the SEC didn’t review the filing and conclude that the filing qualified for the federal securities law exemption, companies would have to file paperwork with the states in which the investors lived and wait for the states to determine that the sale of the securities qualified for the securities law exemption.

Q: What are the impacts?

A: Huge delays that will be very harmful to companies and job creation. YouTube was created from scratch and sold for billions in less time. The vibrancy of our early stage companies and their ecosystem would be destroyed.

Q: What is the timeline for the bill?

A: Passage is expected before November.

Q: What might be the motive for such legislation?

A: Federal legislators are reacting to frauds like the one Bernie Madoff committed. State securities regulators want more power to regulate early stage company security offerings in the hopes of preventing frauds.

Q: What do you recommend for readers who might be adversely affected?

A: Call your congressman or congresswoman every day and voice your opposition. The government is about to destroy one of the most positive aspect of our economy.

Q: What else would you like to add?

A: A big theme for the Democrats is returning power to the states so that the states can make their own rules for businesses and not be stuck with federal rules that they might not like. This might make sense in certain circumstances but I don’t believe this is one of them.

Resource links:

• Mr. Carleton’s blog.
• Mr. Carleton’s bio.
• Mr. Wallin’s bio.
• From Sen. Dodd’s Web site, here are the specifics of his proposal – bill summary, section by section, bill text

From the Coach’s Corner, to benefit entrepreneurs, a noted angel investor provides numerous important tips in these two Biz Coach columns:

• How to Attract an Angel Investor
• Investor: Tips for Increasing Cash Flow, Profits

Idaho Governor Recruits Washington and Oregon Companies – Thanks to Legislatures

 

March 9, 2010 

Call it brazen. Call it economic development. Whatever your preference, Idaho Governor C.L. “Butch” Otter is an opportunist.

In the wake of out-of-control policies and behavior by public officials in Washington and Oregon, he’s issued a press release to recruit companies to his business friendly Idaho.

That’s right, dated Monday, March 8, 2010, the headline reads:

“LOVE LETTER TO OUR NEIGHBORS: IDAHO IS OPEN FOR YOUR BUSINESS.”

No joke. In capital letters complete with the word “YOUR” in italics, I’ve cut and pasted the headline verbatim.

Here’s an excerpt from his combination “love letter” and news release:

“We now are reaching out to hundreds of Oregon businesses, and will do the same with those in Washington if the legislature there follows Oregon’s lead. We aren’t offering many bells and whistles, but what we can offer is a business-friendly State government, a highly qualified and motivated work force, and communities where people understand that while government cannot be the solution to their problems it can and must be a champion for their own solutions.”

Here’s his salient comment about the Washington State Legislature:

“Legislators in the state of Washington are talking about even bigger tax increases to tackle a budget deficit that figures to be as big as Idaho’s entire State budget. Businesses in both states are like those in Idaho; they are facing the most challenging times in decades, and even incremental cost increases can mean the difference between surviving and closing up.”

About Oregon, he writes: 

“The problem in Oregon is that folks were convinced that state government was what needed to be shored up rather than the jobs- and revenue-producing private sector for which state government is supposed to work. As a result, they’re chasing some of their cash cows to the border. And I welcome those businesses with open arms.”

People have stopped asking me why I write about public policy so much or why I’ve created an Op-Ed category on this Web site. They know significant action is needed for a strong economic climate and the creation of jobs. 

The record is clear. At all levels, government is hindering economic growth and job creation with unproductive policies and behavior.

My hope for Washington state is that voters wake up and smell the coffee for a revolution in this November’s elections and successfully demand government reform – reminiscent of 1994 after the Washington State Legislature imposed huge tax increases on business in 1993. You might recall countless politicians were swept out of office.

Even the Washington State Association of County Assessors took note of the voters’ angst. In Nov. 1994, the association invited me to advise them on media strategies to lower property taxes. Only then-interim King County Assessor Scott Noble opposed me.  As a result in the ensuing legislative session, lawmakers lowered property taxes by 4.7 percent. (Mr. Noble later became the permanent assessor but was driven from office in 2009 after his drunk-driving accident injured two female motorists.)

The 2010 legislative session has grossly increased taxes and destroyed standards of government transparency instead of implementing efficiencies. As a management consultant who performed services at two state agencies, I’ve witnessed the state of Washington is sorely lacking in best-practices management and performance. And as I’ve often warned, this is resulting in more theft of our economic and political freedoms.

From the Coach’s Corner, see for yourself. Here’s the link to Gov. Otter’s invitation.

My thanks and appreciation go to Jason Mercier of the Washington Policy Center for distributing it.

Why You Can’t Get Work or Hire Workers

 

Are you one of the countless baby boomers who is relying on Social Security before you reach retirement age? You’re not alone. The dearth of jobs has prompted many Americans to accept lower Social Security payments at the age of 62. This means Social Security is forecast to start paying out more in benefits than it receives starting in 2017.

The Labor Dept. says some 2.7 million Americans will lose their unemployment parachute checks near the tax-filing deadline of April15. About 6.3 million folks have been out-of-work for six months or longer.

The government believes 15 million people are jobless. That’s only an estimate. It doesn’t include the high number of self-employed people desperately taking independent contractor projects because they can’t find jobs, or the under-employed taking temporary jobs.

These numbers also jurt job creation. Higher unemployment rates charged to business by government is a disincentive, too.

After having worked through 6 major economic downturns, my analysis of the data and the trends is that the real unemployment rate is about 25 percent. That’s depression-like, not recession-like numbers.

A recent study proves it’s getting worse for American workers. The Center for Labor Market Studies at Northeastern University in Boston sums up the problem in its study’s subtitle – “A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent.”

For the nation to catch up, most experts believe 100,000 new jobs need to be created every 30 days. But veteran pragmatists know it won’t happen. Count me as one of those.

The job drought is not a new phenomenon in the sense that it’s been years in the making. The federal government began tracking the number of unemployed in 1948.

Many jobs have not and will not return. Not to over-simplify, institutional investors own increasing numbers of companies. Largely, they extract profits by slashing payrolls and encouraging offshoring of jobs in Latin America and Asia where labor is cheaper.

Since 2000, automation is responsible to cutting 5.6 million jobs.

After each recession since 1970, job-growth rates have decreased. Published reports indicate that even before the Great Recession, it was less than one percent a year and was only 2.4 percent in the 1990s and 1980s, according to the Labor Department figures.

Based on trends following recessions, I’m in agreement with economists who forecast it will be at least five years before the unemployment rate returns to more palatable levels – hence, the term, jobless recovery. Even then, I’m not sure it will happen.

Historically, consumer spending has been a key ingredient for economic recovery. But that won’t happen unless there’s a fundamental economic change.

This also means the tax revenue pie for governments at all levels will remain flat.

For good reason, Americans have returned to 1930’s money values. They’re becoming tight-fisted with their money and are demanding government accountability.

The housing bubble resulted in a high volume of excise taxes, but the high rate of foreclosures alters that scenario.

Talk to anyone who checks credit for consumers or small businesses. The aggregate level of bad credit is huge –largely caused by the predatory behavior of big lenders. They’ve nearly destroyed the livelihoods of small businesses with mega interest rate hikes for bogus reasons.

Small business has historically has been the main job-creation engine, but no more.

Small businesses do not have the financial firepower expand and create jobs. New credit card legislation does nothing to correct the injustices.

Instead of focusing on helping business, government at every level, is hindering the economic climate. Economic and political freedoms are being stolen each day by bad government policy (See this site’s other Public Policy columns). The largest employer in many communities is government. Public-sector agencies are still growing, not laying off, while spending and taxing at ever-increasing levels. For the common good of all Americans, change is needed.

Businesses and consumers can no longer afford the status quo in taxes. Government must reform.

From the Coach’s Corner, effective on Feb. 22, 2010, here is the essence of the credit card law:

1. Credit card companies cannot increase the rate in the first year until the introductory rate expires. The banks must give 45 days notice to change the rate.
2. Unless two months past due, rates can’t be changed.
3. The original interest rate must be granted once payments are on time for six months.
4. The fine print will be easier to grasp.
5. Activation and annual fees can’t exceed 25 percent of the credit limit in the first year; and will be unlimited after 12 months.
6. Credit card statements must be sent three weeks in advance.
7. Transactions can’t take place over the credit limit unless the cardholder agrees.
8. The “universal fault” nonsense (if you were late one day on one payment, the other credit card companies jacked up your rate) is stopped and interest rates on existing balances must stay the same (see No.1).
9. Companies can’t give students or anyone under 21 a car unless she/he has a co-signer or the autonomous ability to pay statements. Schools have to make public any credit-card marketing deals, and companies cannot stage publicity or giveaway events on or near campuses.

Sen. Cantwell Is Right to Question Risky Derivative Dangers, Geithner

 

Updated July 15, 2010 – 3 p.m.

An influential U.S. senator, Sen. Maria Cantwell (D-WA), worked to regulate the perilous use of derivatives by Wall Street bankers, and criticized the Obama Administration in the process. But her derivative strategy worked. The sweeping financial reform legislation will regulate the risky, intangible instruments.

This means derivative trading now faces regulation, and financial institutions will have to set up a fire wall by moving their derivative departments elsewhere.

“This isn’t about poking the White House, it’s about getting capital flowing to small businesses,” Sen. Cantwell said in an interview with Les Blumenthal, a reporter for McClatchy’s Washington state newspapers.

She helped lead the fight against investment bankers, who were bailed out by taxpayers only to shell out big bonuses and who are at it again. Instead of extending credit to business, Wall Street is back to the old tricks of playing risky derivative games that helped lead to Wall Street’s meltdown and the global-financial disaster.

She’s also had a testy exchange with Treasury Secretary Timothy Geithner over the failed efforts to bail out community banks and the associated credit issues faced by her Washington state constituents and other American businesses and consumers.

“We are trying to keep the focus on what needs to be done to get credit flowing and avoid another bubble,” Sen. Cantwell also said. “Do I wish the White House team was more attuned to these issues? Yes.”

 Yes is right. It’s commendable that she’s become outspoken about regulating Wall Street’s behavior.

If she’s successful, we’ll see job creation – the only way out of this mess. I’ve been harping about this and asking for answers to questions for an extended period of time starting with this column, “Is it Time to Police Pay at Wall Street Banks?”

And she was right about voting against the reappointment of Fed Chair Ben Bernanke. Few in Congress seem to understand Main Street issues and his tardy, tepid handling of the Great Recession at the Fed.

Firewall partnership

Sen. Cantwell partnered with Sen. John McCain (R-AZ), the former GOP presidential candidate, to bring back the commercial/investment banking firewall. This will prevent risk-taking by commercial banks that exacerbated two downturns in the 1930s and the most-recent  financial chaos. The two worked together on the Senate Commerce Committee.

Cash flow and credit are critical for operating a business. With too-few funds available in loans, businesses have been failing or, at least, suffering from bad credit as a result of not having access to capital.

Efforts by the Obama Administration and Small Business Administration to provide more loans are to be commended. However, they are way too-little and too late. Most afflicted small businesses now have poor credit because of the cash cutoffs and they won’t qualify for any the funding.

Credit card regulations were too late, too.

Nothing has been done to help repair the credit of the millions of small businesspeople and consumers who were victimized by the credit card companies – domiciled in a handful of states that permit predatory behavior – their rapacious interest rate hikes for bogus reasons and slashed credit lines.

Sen. Cantwell also indicated her disappointment that the Obama Administration twice reneged on promises for action on the proposed firewall between commercial and investment banks.

“Their economic team is not living up to what they said they would,” she explained to Mr. Blumenthal.

Hmm. Broken promises? That’s not what America needs, but we can appreciate Sen. Cantwell’s candor and successful efforts.

From the Coach’s Corner, on another somber note regarding credit: Customers of the hospitality industry are ostensibly the No. 1 target of hackers, here’s the article.

New Threats to Economic Liberty: Cap-and-Trade, Spending Bills

 

Updated 11:30 a.m. PT Monday, Dec. 14, 2009

Businesses face new threats to their economic liberty and their ability to create jobs.

This is the result of two developments: The U.S. Senate passed a $1.1 trillion spending bill last Sunday; and it is now considering yet another cap-and-trade measure.

The massive spending bill, in funding federal agencies, exceeds the rate of inflation by more than 700 percent. Critics also contend it has $3.9 billion in pork spending. I’ll have more on that later.

The cap-and-trade measure was introduced by Sen. Maria Cantwell (D-WA).

Reasonable people agree going green is healthy for all stakeholders. Indeed, Sen. Cantwell’s cap-and-trade bill seems better for consumers than the current legislation being debated in Congress, but it still threatens businesses and their ability to create jobs.

In essence, her bill would fund rebates to consumers via emission credits by requiring manufacturers and other companies to buy credits in conjunction with government auctions. She contends an average household of four would receive $1,100 a year for 18 years from 2012 to 2030 – a total of $21,000.

The government auctions would keep the Wall Street investment banks out of the process.

Cap-and-trade is a controversial, complex subject and I’ve already voiced my opposition to the current House-passed bill (http://bit.ly/8E7Hs2). So I turned to a highly respected business spokesperson, Don Brunell, who is the president of AWB, the Association of Washington Business. AWB and he are known for moderate views on behalf of business. I managed to reach him while vacationing out-of-state with his family. He says he has not seen Sen. Cantwell’s bill, but he graciously responds.

“Generally, cap and trade proposals have created winners and losers which public policy and politicians should not do,” says Mr. Brunell. “That has been the experience in Europe, Australia and California where the government has passed and implemented cap and trade.”

He argues for a positive approach, incentives, to reducing greenhouse gases.

“For example, we brought a little home in Vancouver, WA, 1700 sq. ft., and replaced out water heater with a tankless heater which has dramatically cut our consumption of natural gas because we are only there on weekends. To offset the higher costs for the tankless system, we got a $1,500 federal tax credit,” he explains.

Mr. Brunell points out the progress already made by companies:

“Because of energy costs, many businesses and industries have dramatically cut consumption and thereby greenhouse gases.”

How serious is the problem of greenhouse gases in Washington state?

“Washington state produces less than .01 of 1 percent of the greenhouse gases but Gov. Gregoire wants us to sign on to the Western Climate Initiative along with California that would put us at a competitive disadvantage with Idaho which is not a cosigner of the Western Climate Initiative,” explains Mr. Brunell. “Apply that to a national level where the U.S. may be put at a competitive disadvantage with China, India and other countries which will ignore the Copenhagen agreements on climate change and greenhouse gas restrictions unilaterally by a government – such as the U.S. under either the Waxman-Markey bill passed last August by the House and proposals we’ve seen in the Senate.”

Spending Bill

The U.S. Senate’s massive $1 trillion-plus measure is a compilation of several spending bills and contains more than 1,000-plus pages. It dotes big money on such agencies as the Education Department, the State Department, the Department of Health and Human Services.

With a 10-percent increase, it spends far above the rate of inflation. Inflation was only 1.4 percent in August, according to Bloomberg on Dec. 8 (http://bit.ly/4ZzpNU).

Taxpayers for Common Cause, a watchdog organization, complained the bill has 5,224 pet-lawmaker projects costing $3.9 billion.

A published report indicates the pork includes a farmer’s market in Kentucky and rehabilitation of a theater in New York.

“You are spending money like a drunken sailor, and the bar is still open,” Sen. John McCain (R-AZ) was quoted to say in response to his colleagues regarding their earmarks.

Just so the U.S. Treasury can continue to borrow, also planned is raising the federal debt limit by $1.8 trillion to $14 trillion.

Ouch.

So, yes, in conclusion, my sense is that the cap-and-trade concept and heavy spending, which increases the national debt, constitute silent but ominous threats to the nation and business. They must have economic liberty if they are to succeed and create jobs.

From the Coach’s Corner, for Washington businesses, here’s the link to AWB:  www.awb.org.

It contains a wealth of information. If you’re not a member, you might wish to consider joining. The folks at AWB know what they’re doing.

(Disclosure: I’ve worked with AWB on projects in the past.)