Updated May 23, 2013
Like it or not, stagnant growth increases the possibility of a double-dip recession. We’re in a precarious position, largely, because businesspeople and consumers lack confidence in the economy – for good reasons.
Fourteen million Americans are unable to find a family wage job. For many available jobs, Americans lack education and skills to meet the specific needs of employers. Nearly 50 million Americans are receiving food stamps.
Still, many big businesses are slow to hire until uncertainty is alleviated. They have healthy balance sheets after paying down debt, and they’re hoarding cash.
Most small businesses don’t have adequate credit and can’t expand. Polls by the National Federation of Independent Business and other organizations show small business owners are angry about ObamaCare, which threatens their ability to stay in business.
Consumers are stunned by high food and gasoline 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.
After 4+ years, the Obama Administration hasn’t produced any sound economic solutions.
Did I leave anything out?
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 but 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 federal jobs stimulus is not well-designed when the stimulus only results in job shifting. But that’s what’s 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 would lead us to believe new jobs are 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
- Does the Federal Reserve Understand Small Business?
- Only Fiscal Sobriety Will Prevent Further Fiscal Chaos
“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.