Archive for July, 2010

The recent release of the unemployment numbers indicate a very unsettling trend in our nations future for an economic recovery. In spite of the numbers showing a .2% decline in unemployment, the real disturbing numbers were the number of permanent jobs lost that are never to be recovered and the number of people who have simply given up on ever finding work.

There reasons for such miserable numbers recently cited by the L.A. Times include the following:

• Slump in retail sales and no plans for any expansion. Unemployed people simply can’t purchase things.
• Uncertainty on tax increases when the Bush tax cuts expire, increased government regulations on the financial sector, and uncertainty on energy costs as the Cap and Trade bill looms in Congress.
• Inability to obtain capital from previously available sources as well as uncertainty in the effect of the Financial Regulations being placed on our Banks and lenders.

Small business accounts for more than 70% of our workforce. In spite of incentives for new start up businesses, the growth rate among this group is near zero. Fewer and fewer people are willing to overcome the mountains of regulations, unwillingness to invest capital during uncertainty in the global economy, and uncertainty in taxation due to mounting government deficits. Add to the mix, the costs associated with the new Obamacare are directly impacting the bottom line of every small business and few are willing to venture into a new startup with requirements to provide healthcare benefits from day one, face the prospects of fines if they don’t, and have needed capital to overcome that 3 year window of uncertainty in which over 70% of the failures occur.

Let’s also add to the mix the increases in government jobs at every level of local, state, and Federal government. Those are additional taxes needed to pay the salaries and benefits of newly hired government employees. At the time when government deficits on every level are climbing due to losses of previously stable tax revenue, government still insists on creating jobs with the Stimulus dollars with “use it of lose it” rules. Instead of using those dollars to temporarily fund the deficits, new government jobs are created and more debt is incurred.

These state and local governments are also facing budget shortfalls that has resulted in the loss of many teachers, policemen, and firefighters. Yet, due to the rules of the Stimulus money, few of those funds are being used to save those jobs. The talk of tax increases to maintain these lost jobs are receiving push back from those citizens who understand they are being squeezed so much now in taxes, that there is nothing left to pay higher taxes with. Countless small businesses too, are feeling the burden of increased local government taxation needed to keep their budgets balanced.

We are in a death spiral of government debt, excessive regulation, and more mandates from the Federal government. Washington has failed to “get it”. The solutions are simple and lead down one path alone and Mike believes that until that uncertainty is removed, we will not see our economy recover. His plan is simple:

• Enact the FairTax. Removing the burden of Income taxes puts more money in peoples pocket and allows them to have the needed money to make buying decisions, not wishful thinking. It will bring over $13 TRILLION in private investment dollars into our economy and allow free market principles to work when there are no tax implications from those investments. This alone will begin the job creation needed to spur economic growth.
• Cut the deficits in half this year. Until our government can learn to live within it’s means and end the borrowing just to pay for basic government needs, taxes will escalate and those burdens are being passed through “generational theft” to our heirs.
• End any additional Stimulus and TARP spending. These programs have failed in their intent and are simply adding to the debt of this nation.
• Repeal Obamacare and end the uncertainty of higher taxes to our small businesses. The promises of lower health care costs are false promises and already escalating premiums, higher costs, and loss of coverages are occurring. The $1.3 TRILLION dollar price tag again, adds to the debt of this country and we can ill afford to be faced with increased taxes to pay for it.
• Begin serious reforms of our entitlement programs. We are faced with over $106 TRILLION in unfunded liability(DEBT) over the next 20 years in these programs. Since they are NOT part of the Government budget- that spending is on automatic pilot- we are facing financial collapse in paying for these programs.

We as a nation must return to the principles and foundation of our Founders of smaller government, regulations that do not impede business but PROMOTES it, and low taxes to fund a smaller and less intrusive government. It is time to head the warning of Jefferson:

A government big enough to give you everything you want is strong enough to take away everything you have.