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House GOP unfurls plan to create jobs
House Majority Leader Eric Cantor (R-Va.) (2nd L) holds a news conference with Rep. Vicky Hartzler (R-Mo.), Rep. Cathy McMorris Rodgers (R-Wash.) and Rep. Marlin Stutzman (R-Ind.) to announce the Republican's 'pro-growth job creation agenda' at the U.S. Capitol May 26, 2011 in Washington, D.C.
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Kai Ryssdal: The best hope to keep the economy from slowing down even more would seem to be getting more people working. To that end, Republicans in the House of Representatives introduced what they're calling new job-creation plan today. The ideas in the proposal aren't exactly new -- some of them were in the GOP's Pledge to America last year.
We asked Marketplace's Nancy Marshall Genzer to find out how exactly things like lowering the top corporate tax rate to 25 percent might create some more jobs.
Nancy Marshall Genzer: For some economists, it's a no-brainer. Of course corporations would plow money from a tax cut back into the business, creating jobs. And that would start a ripple effect.
Robert Dye is senior economist at PNC Bank.
Robert Dye: Tax cuts create jobs, jobs create income, income creates more jobs in other companies.
Dye says that was the rationale for tax cuts that were included in a compromise agreement between President Obama and congressional Republicans late last year. Does that mean tax cuts create jobs?
Bill Gentry says not necessarily. He teaches economics at Williams College. He says many companies are sitting on piles of cash right now, and not hiring. He doesn't think extra money from a tax cut would change that. Gentry says things would be different in a healthier economy.
Bill Gentry: Because if the economy is booming and companies are saying, "Wow we need cash," then that would be a different story.
Gentry says, right now, companies would be more likely to use money from a tax break to buy back stock, or increase dividends for shareholders. But Nomura Securities chief economist David Resler says, hey, what's wrong with that? Resler says the shareholders would use the money to create jobs.
David Resler: They're going to invest it in either other companies or they're going to use some of that money to buy goods and services that will require increased production by somebody.
But would that somebody be in the U.S. Or would the shareholder invest the money abroad? Or use it to buy something made in China? More tough questions for economists to chew over.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
I think it’s high time the Republican Party be declared public enemy #1, since the profits of private industry are their only real concern. It’s hard to believe that they’re still peddling trickle-down economics after thirty years of it, with nothing to show but unchecked corporate power and the greatest recession since the Great Depression. Consider GM: Instead of the “taxpayer-funded capital†model, heralded as a great success as labor is off-shored to give taxpayers the best return on their money, how about increasing corporate taxes and using the money to create an alternate, public manufacturing plant that produces hybrid vehicles, in direct competition with private industry? That would light a fire under their ass to retool (at their own expense), on threat of having their assets frozen in a wholesale nationalization the next time they come crying to Congress that they’re going to have to lay off workers if they don’t get a bailout.
Cutting corporate taxes is not about *cash*. It's about *income*. If a company can afford to pay its bills from its cash on hand, but its tax rate is sky-high on top of costs through the roof, the only rational approach is to wait for either the taxes or the other costs to settle down again. And if the rainy-day fund doesn't last long enough, well, regulators and the public are more sympathetic to a company pleading poverty if it doesn't have millions of dollars in cash on hand.
