How CEOs, Taxes and Policymakers Have Failed the U.S.



Updated March 28, 2017 –


Economic hope is one reason why the stock market and consumer confidence have soared since the election of Donald Trump.

Because of America’s precarious position, after two terms of the Obama Administration, there was the possibility of a double-dip recession.

Fourteen million Americans were unable to find a family wage job. For many available jobs, Americans lacked education and skills to meet the specific needs of employers. Some 43 million Americans have been receiving food stamps.

Until President Trump began enacting his policies, many big businesses were slow to hire. They have had healthy balance sheets after paying down debt, and they’re hoarding cash. 

ID-100123176 imagerymajesticMost small businesses haven’t had adequate credit and couldn’t expand.

Polls by the National Federation of Independent Business and other organizations showed small business owners have been angry about ObamaCare, which threatens their ability to stay in business. 

Consumers have been stunned by high food prices. Mortgage debt stresses many homeowners.

And they’re angry because of gluttonous Wall Street chicanery, and the so-called leadership in Washington hasn’t balanced the budget since the Clinton years. 

Voters want lawmakers to tackle urgent economic problems. Instead, only a minority of federal policymakers has an adequate understanding of economic-growth principles, and they have the image of acting like a ruling class at the public trough. 

The Obama Administration never produced any sound economic solutions. 

Did I leave anything out?  

Morale-busting headline 

Consumers and small business owners were angered by a Bloomberg headline: “CEOs Earned More Than U.S. Companies’ Tax Bills, Study Finds.” Incredibly, the Institute for Policy Studies issued a report divulging that 25 chief executives were paid more in 2010 than their companies actually paid in federal taxes. 

The report showed such companies averaged $1.9 billion in global profits. They include Boeing, Ebay, Cablevision Systems, and Verizon. What’s worse, while their CEOs were paid in the seven figures, some companies received government tax refunds. 

The Institute for Policy Studies’ examples: 

  • Cablevision CEO James Dolan was paid $13.2 million, but the company had a $3 million corporate income tax benefit.
  • eBay CEO John J. Donahoe received $12.4 million while his firm got $131 million in tax write-offs.
  • Verizon CEO Ivan Seidenberg was compensated $18.1 million and his company netted $705 million in tax benefits. 

The Bloomberg article also reported a study by another nonprofit group, Citizens for Tax Justice. It claimed 11 companies received $62 billion in domestic profits, but only paid a “negative 3.6 percent tax rate in 2010.” 

True, the U.S. has a high corporate tax rate, but it’s negated by countless loopholes. 

Job stimulus is anything but 

Another disturbing headline: “Study: Half of Hired Stimulus Workers Were Already Employed.” 

The Obama federal-jobs stimulus was not well-designed because the stimulus only resulted in job shifting. But that’s what’s been happening, according to the study by George Mason University. 

Even though workers have jobs, they’re hired by other firms – with the help of stimulus funds. The government led us to believe new jobs were being created, but 47.3 percent of the workers already had jobs. 

How can new consumers’ money enter and circulate in the economy, if we’re merely moving workers around?

Clearly, what needs to occur is widespread economic patriotism: 

  • The tax code has to be rewritten and simplified to eliminate the unpatriotic tax write-offs.
  • Public policy has to become productive – money for jobs and has to be invested for economic development, not wasted.
  • Voters have to elect representatives who understand basic economics and who will work for the common welfare of this great nation.
  • Parents should encourage their children to take advantage of educational opportunities when they first start school.
  • Workers should understand inertia doesn’t work – they need to adapt so that their skills match employers’ needs.

When progress is made in these areas, confidence in the free-enterprise economy will return. 

From the Coach’s Corner, here’s more: 

Federal Reserve Typifies What’s Wrong with Economy — There’s still a troubling schism in U.S. politics, monetary policy and management of the economy. The Federal Reserve keeps printing money, which risks inflation and only encourages more bad monetary policy. For another example, consider Bloomberg ‘s shocking expose: “Wall Street Aristocracy Got $1.2 Trillion in Loans from Fed.” Yes, $1.2 trillion in secrecy.

Does the Federal Reserve Understand Small Business? — To answer the question, I have a simple one-word answer: No. It appears at least one of the Federal Reserve’s 12 districts does not have a practitioner’s understanding of small business.  Small business is really the straw that stirs the drink in the nation’s ability to increase the number of jobs in this country.

Only Fiscal Sobriety Will Prevent Further Fiscal Chaos — We’re way past the deadline to demonstrate financial leadership. It’s time for economic fundamentals and teamwork focused on economic patriotism. As the world’s largest-economy, threats for a double-dip recession will only worsen unless the Unites States stops the fiscal dysfunction.

“You can always count on Americans to do the right thing — after they’ve tried everything else.”                   

 – Winston Churchill

__________

Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Photo courtesy of imagerymajestic at www.freedigitalphotos.net

Seattle business consultant Terry Corbell provides high-performance management services and strategies.