Regarding Alan Blinder’s “Fiscal Fixes for the Jobless Recovery” (June 11): Prof. Blinder is absolutely right that there is an unfortunate air of complacency in Washington about job creation. The seemingly low 7.6% unemployment rate is masking an extremely low employment rate of just 58.6%—about the same as midyear 2009. At our current pace, we are a decade away from a full labor market recovery. Where he is wrong, however, is putting the blame on a lack of growth in government employment.
Fueled by the surge in government spending, total government employment hit a record high of 22.6 million in 2009—the same year the private sector lost five million jobs. Today, government accounts for 16.1% of total employment, the same as in 2007, before the start of the recession.
The biggest problem remains basic economic growth in the private sector. Over the past year, the private sector’s portion of real GDP grew 2.7%. At this point during the past two “jobless” recoveries (following the 1991 and 2001 recessions), the private sector was growing 5.2% and 3.8%, respectively.
If you ask most small-business owners, our biggest job creators, what they see as their single most important problem, you get an amazing answer. According to a survey by the National Federation of Independent Business, the two most common answers are “taxes” and “government regulations and red tape.” “Poor sales” comes in a distant third. Also, with all the recent talk of the need for government-funded job training, only 6% responded “quality of labor.”
We should listen to small-business owners. There is a great deal of economic policy uncertainty in Washington that needs to be resolved.
Keith Hall
Arlington, Va.
Mr. Hall was commissioner of the Bureau of Labor Statistics 2008-2012.
Prof. Blinder reflects the belief that government policy creates jobs. If that were so, after a trillion dollars of stimulus and a Federal Reserve focused on easy credit, we should have near full employment. We don’t. Now he suggests we lure offshore corporate profits back to provide more stimulus by using tax policy to make repatriation attractive for the short term. Perhaps instead of temporarily lowering the tax rate for a specific set of corporations, it would be a good idea to lower it permanently for all of them. Low taxes would go a long way to making fixed investment in the U.S. desirable and then, and only then, would companies find a reason to hire more employees.
Thomas M. Michaels Jr.
Wilmington, N.C.
Businesses don’t hire people because of a one-time tax break; they hire them because they will be productive and add to the bottom line. Taking on a long-term responsibility (new hires) for a one-time gain (tax reduction) is a recipe for going out of business. Mr. Blinder claims that a business increasing its payroll by $100 million will save $25 million in taxes. It will still pay $10 million in taxes, which is more than the $0 it would pay if it didn’t repatriate the income. Thus there are no savings, but an expense of $10 million.
Steve Haynes
Dallas
The professor’s comments that companies are “avoiding taxes by sheltering dollars abroad” somehow implies that these dollars belong in the U.S. Nothing could be further from the truth. These funds are almost always generated abroad as part of a company’s global operations. Aside from this flawed reasoning, why would these companies want to move funds to the U.S. when they are currently holding record cash reserves here? Restructuring business regulations, government controls and the cost of taxation is the real solution to creating more investment, expansion and jobs in the U.S. Proper restructuring in these policy areas would ignite the U.S. economy.
Mr. Blinder’s lamenting the recent decline in government employment is simply a Keynesian bad dream. The dramatic growth in government in the U.S. over the past few years and related salary, benefit and pension explosion are major hindrances to investment by the private sector. Reducing government spending and taxes and leaving more capital in the private sector will have an additional stimulative impact on job growth.
What we need today are economists willing to advocate the major changes required to make the U.S. competitive in the 21st-century global economy. Only then will we create the job growth and increasing living standards that our citizens deserve.
Dennis Raney
Ketchum, Idaho
Increasing public sector jobs isn’t an answer. The salary, benefits, operating and infrastructure expenses of government jobs are paid for by taxing the private sector. Will more IRS agents targeting 501(c)(4) applications, more Justice Department lawyers snooping on reporters or more NSA employees sifting through our “digital lives” turn the economy around?
The people are far better and more efficient allocators of their own capital than the federal government will ever be. Let them keep more of it, get the federal government off their backs and out of their way, and watch employment and the economy grow.
Steve Greene
Carlsbad, Calif.
Let companies repatriate profits and pay no tax if the money is used to pay dividends.
Democrats will be happy, as dividends are taxable, Republicans will be happy, as the money for dividends will only be taxed once, and stockholders will be happy to get more dividends. As Ted Lewis used to say, “Is everybody happy?”
William Victor
Concan, Texas
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