Jobs outlook for small businesses may be getting bleaker

[nathanm]

LOL   Don't worry, they will never be any higher than what is needed to fund the government's operations.

The problem is that the "government's operations" continue to grow uncontrolled.

Well, no, that's not actually true, as a percentage of GDP.



I couldn't get OpenOffice to put the actual year on the X axis, so you'll have to count. Year 1 is 1930. As you can see, until the financial meltdown of 2008, we were running significantly below the Reagan/Bush41/Clinton plateau. Receipts last year, as a percentage of GDP, were at their lowest level since WWII.

[heironymouspasparagus]

Red Arrow,
Actually, Kennedy/Johnson was the event.  Even if one was too young to have lived through it, there is a lot of information out there in the world about the consequent tax hikes.  In part, one that particularly irked me were the "surcharge" taxes of about 1964 or 65 - am old, so can't remember the exact date.  That is an LAE for the reader.  (LAE = left as excercise)

Every tax cut we have celebrated has been followed by tax hikes within 18 months or so.  THAT is the combination, in conjunction with deficit spending (at least until BabyBush) that has given us the standard of living we had until the last couple dozen years.  It has, by any valid economic measure - as in non-Murdoch measure, been downhill for the last 30 years.

Goes to the lack of knowledge of history argument going around here for some time.

As for FOTD, I guess people here think he is me.  I think I addressed that before, but as then, I remain not him.  I saw some of his posts when I first got here, and he definitely seems much more liberal than I.  And I would bet you money that he would never be a lifetime member of the NRA.  (I am and have been for many years.)  And as I have said, I will not resign my membership like Bush I did - purely for political gain.

[Gaspar]

Applauding heiron's ability to get the word Murdoch in every post  .

Well done!

[Conan71]

I agree that some of the money could have been spent better, but it doesn't matter. As long as it's getting spent, it stimulates the economy. Even Jindal's failed sand berms did that, despite every red cent of the $360 million going to his fourth largest campaign contributor.

And really, saving is a bad thing. On the large scale. It's good for your or me individually, but collectively, it's just money that's sitting idle. That's why we let banks loan it. When banks are loaning, that works pretty well.

And actually, Keynes did address the end game. What to do when the economy is better, and why debt doesn't actually matter as long as we can keep borrowing. The extra spending, through its stimulation of the economy, increases GDP compared to what it would have been without the spending. That effect lasts through the entire business cycle, which then gives more revenue with which to pay off debt. Also, with a well-managed economy, inflation will slowly eat away at real value of the debt, making it more manageable.

Government should be countercyclical. In the good times, taxes should be raised and debts should be paid off. (what Clinton was doing in the late 90s) It both pays off government debt and helps prevent the economy from getting too good, which leads to rampant inflation. In a recession, the government should lower taxes and spend money. The concepts are simple, although understanding all of the nuance of Keynes' position takes a long time.

It's painfully obvious that fiscal austerity has done nothing for the Irish, the Greeks, or any of the Baltic countries, yet somehow we're still being sold this bill of goods. If there were some indication (other than talking head yammering..you know, technical indicators) that the market was the least bit concerned about our current borrowing, I'd be more amenable to that line of thinking. They're not. We really can't afford another 1937 right now. Not unless we want to end up like Japan, whose currency is deflating and looks to be on track for a second lost decade.

What we need to do in the short term is either grant the states a big block of cash or lend them said big block of cash. The massive cuts coming in many state governments will only serve to deepen the recession as state employees lose their jobs and states cut back on other expenditures as well.

Out of curiosity, Conan, what do you think we should have spent the stimulus money on? What do you see on stimulus.gov that you think was an utter waste? Personally, I'd like to see more funding for rail and more loan guarantees and/or grants for rural broadband, nuclear power plants, and real electric cars. As in ones that can go 150-200 miles on a charge. We should shore up our levees, and probably even move forward with marshland restoration projects in Louisiana. Concrete things that will improve our infrastructure and economy going forward. Much better than make-work, although if all that can pass Congress is digging holes and filling them in again, that would be better than nothing, at least until we're no longer staring deflation in the face.

And Conan, if anything, WWII bringing us out of the funk, as you say, is probably one of the clearest and most obvious signs that Keynes was fundamentally correct.

Good post Nathan, some thought-provoking material.  I'll scan stimulus.gov further when I've got time.

Sorry for the delay, I was down in Texas with a client yesterday trying to stimulate the economy via private enterprise 

I understand how responsible borrowing increases growth and growth opportunities, that's not lost on me.  Many great companies were started with seed debt and have used debt to finance larger operations which have been able to grow employment from a handful to 30,000+.

But what we've also learned from this economic crisis is there are un-sustainable level of debt at some point.  Once the cost of debt service starts to outrun income and no one else is willing to loan additional funds, the jig is up.  Usually borrowing money to pay debt is considered a bad idea in business and a pretty good sign of instability and a potential for failure.  It's not a 100% guarantee of it, but certainly not a good sign of on-going fiscal health of a company, Nathan.  A government can continue printing money all it wants, but eventually there's going to be issues with inflation, deflation, and a gradual erosion of our debt ratings.  You simply cannot continue to borrow ad infinitum.

My industry is seeing benefit from the stimulus projects so from a business stand-point it's good (lower emission, higher efficiency large-scale heating equipment).  As a taxpayer I have to question how some of this is meted out.  A lot of the stimulus seems to be construction industry heavy on the benefits.  If this is the way we are going to go about cobbling the economy long enough for it to finally recover on it's own (I will be laissez faire to the end, I'm afraid  ) I would have liked to have seen more spent on education for grants to keep teachers employed, and utilizing unemployment benefits to do contracting with unemployed people who have marketable skills currently valuable to some government department much like you or Wevus proposed a week or so back. 

I also agree that at a time when everyone seems to be at least partially in agreement that we need energy and transportation alternatives which will reduce emissions and our dependence on foreign oil that more should have found it's way into alt fuels and light rail projects.  That's the kind of incubation which could help build new companies in the U.S.  That doesn't even have to take place as grants, low interest loans are great incentives.

We've got infrastructure needs, don't get me wrong, but the stimulus seems to have been heavy on construction.  I've simply lost faith in all but very few members of the Congress to cast aside their own special interests in managing our tax dollars.  I continute to be stunned at the waste and corruption.

The healthcare bill is full of crap too if you look at the $100 million set-aside for a new hosptial controlled by UConn (thanks Sen. Dodd!)

Eliminate the "Dodd Clinic" Earmark From Obamacare

Savings of $100 million over ten years
Section 10502(a) of the over 2,000 page recently enacted Obamacare government healthcare bill provides $100 million for construction at an unnamed "health care facility." However, the language in health bill is tailored in such a way as to ensure the funding is earmarked for the University of Connecticut. By eliminating this special interest funding, we can protect taxpayers while we work to repeal the entire health care law.

http://republicanwhip.house.gov/YouCut/

As far as waste directly from the stimulus, here's an interesting item:

"Prohibit Stimulus Funding for Promotional Signage And Recoup Previously Spent Funds
Saves: Tens of millions
Across the country, signs have been erected to alert citizens that certain projects are being funded by last year's stimulus bill. These signs, often along highways, provide no meaningful information, create no jobs, and have been criticized as taxpayer funded advertisements for the stimulus bill. Unfortunately, no accurate information exists on the total number of signs erected and their cost to taxpayers. Press reports from across the country indicate, however, that the costs could well be in the millions of dollars. This proposal would prohibit funding for any additional signs, would require agencies to report on the amount already spent on signs, and would recapture those funds for taxpayers by reducing the agencies' administrative expenses by an amount equal to that spent on signs. "

Everyone, except the government seems to be engaging in austerity.  How much did we over-spend on the census?  Why is the post office sending out a costly printed survey and follow up cards when it's mulling over yet another .02 rate increase on first class mail?  Why exactly are we having expensive signs made to declare progress on stimulus projects?

I'll look over the stimulus.gov site when I've got more time and reply further.

[dbacks fan]

Sorry for the delay, I was down in Texas with a client yesterday trying to stimulate the economy via private enterprise 

Businessmans lunch at Cabaret Royale in Dallas? 

[Conan71]

Businessmans lunch at Cabaret Royale in Dallas? 

Strippers put lots of money back into the economy as to their dealers and pimps 

[nathanm]

You make good points, Conan. I just want to make it clear that nobody (other than folks who are still deep into the "tax cut, tax cut, tax cut" mentality) is interested in seeing the current level of deficit spending go on forever. I fully agree that there be dragons down that road. My basic point is that now is not the time to reduce spending. As private businesses take up the slack, stimulus spending should be eliminated. That just hasn't happened quite yet. It's not helping that indicators are strongly favoring deflation at the moment and the Fed, despite finally acknowledging the threat this week, seems content to stay the course.

Deflation is simply not a risk worth taking. It leads to a full on depression or a long stagnation, and once it takes hold, it's nearly impossible to shake. Last time we were in that situation we had WWII to force investment in productive capacity.

Regarding the stimulus package being construction heavy, it is true that the most visible and obvious impacts are construction related. Do keep in mind that construction has been one of the hardest hit industries, though. It's a logically defensible choice, even if you or I would have made a different one.

And don't get me wrong, I'm not an unabashed fan of ARRA any more than I am of the health care bill or the financial reform bill. They're all obviously the result of sausage making. For better or for worse, that's how things get done in Washington. In any event, in each case they are better than doing nothing would have been. As far as waste goes, I've long resigned myself to the reality that there will be things the government does with my money that I consider waste. I try to do two things to keep from getting depressed or angry about it: First, I try not to sweat the small stuff. Big waste is a big problem. Small waste is a small problem. I'm more concerned with outright corruption. Secondly, I try to find the redeeming quality. What I may initially classify as waste may actually be filling a great need for some people. I'm sure the people of California, New York, Connecticut, and the rest of the 21 donor states see a lot of waste in the federal dollars we get.

[Conan71]

One more thing I think would be useful for an extension of UE benefits (if we have to have them) which can also put $$ into the economy is the government increasing grant funds for people to return to college or a technical program to give them better marketability or job skills to help find a job or to be prepared when hiring takes off at some point down the road.  More education is not a bad thing within communities.

[heironymouspasparagus]

Thanks Gaspar!  I pride myself on being able to inject reality into virtually any situation!  Even one so weirdly bizarre and convoluted (read that as "warped and twisted") as American politics.

As an aside; have you hired anyone this week?  Me neither.  Sucks big time.  I am ready to expand.

[nathanm]

One more thing I think would be useful for an extension of UE benefits (if we have to have them) which can also put $$ into the economy is the government increasing grant funds for people to return to college or a technical program to give them better marketability or job skills to help find a job or to be prepared when hiring takes off at some point down the road.  More education is not a bad thing within communities.

I also agree with you on that, although the stimulus did increase funding for Pell Grants and simplified and increased the size of the tuition tax credit(s), although the latter isn't much help if you don't have the money to pay for it in the first place. It also created a new scholarship worth $10,000 a year to single fathers.

But yes, we do need to do whatever we can to help people get the skills they need to get a new job. We are in a time of rapid change, after all.

[we vs us]

You make good points, Conan. I just want to make it clear that nobody (other than folks who are still deep into the "tax cut, tax cut, tax cut" mentality) is interested in seeing the current level of deficit spending go on forever. I fully agree that there be dragons down that road. My basic point is that now is not the time to reduce spending. As private businesses take up the slack, stimulus spending should be eliminated. That just hasn't happened quite yet. It's not helping that indicators are strongly favoring deflation at the moment and the Fed, despite finally acknowledging the threat this week, seems content to stay the course.

Deflation is simply not a risk worth taking. It leads to a full on depression or a long stagnation, and once it takes hold, it's nearly impossible to shake. Last time we were in that situation we had WWII to force investment in productive capacity.

Regarding the stimulus package being construction heavy, it is true that the most visible and obvious impacts are construction related. Do keep in mind that construction has been one of the hardest hit industries, though. It's a logically defensible choice, even if you or I would have made a different one.

And don't get me wrong, I'm not an unabashed fan of ARRA any more than I am of the health care bill or the financial reform bill. They're all obviously the result of sausage making. For better or for worse, that's how things get done in Washington. In any event, in each case they are better than doing nothing would have been. As far as waste goes, I've long resigned myself to the reality that there will be things the government does with my money that I consider waste. I try to do two things to keep from getting depressed or angry about it: First, I try not to sweat the small stuff. Big waste is a big problem. Small waste is a small problem. I'm more concerned with outright corruption. Secondly, I try to find the redeeming quality. What I may initially classify as waste may actually be filling a great need for some people. I'm sure the people of California, New York, Connecticut, and the rest of the 21 donor states see a lot of waste in the federal dollars we get.

Spot on.  +1

[Red Arrow]

I might bellyache about the cost but I would still support educational opportunities for those with obsolete skills.