Romney Jobs Plan Will Create Millions of Jobs vs Obama's Job Record of Lost Jobs--Which Would Americans Prefer? Self-determination or Welfare Slavery is the Price of Your Vote
Wednesday, September 26, 2012 at 12:46PM Audio Link To Interview-Click here
Excerpts from Henry W. Burke’s report, “Romney’s Plan Will Create Millions of Jobs” –
When we are dwelling on all of these job numbers, it is easy to forget that we are dealing with real people, people who have tangible needs. I cannot get the 13 million unemployed persons or 23 million underemployed persons off my mind. These people are being deprived of the dignity and satisfaction that flows from having a good job…
Unemployment is a serious matter. All of us know people who are out of work. They frequently lose confidence in themselves; they feel unworthy; and they often are depressed. Financial problems ensue; homes are lost; marriages are destroyed; and bankruptcies occur. Unemployment can impose a very heavy human toll…
In Obama's first 3.6 years, he has created a net total of zero jobs; in fact, he has actually lost 120,000 jobs! By any measure, Obama has failed miserably at handling the economy. Obama could not get the job done in just under 4 years yet he pleads for 4 more years. The Reagan experience tells us that huge strides can be made in three years!
=========================
Romney’s Plan Will Create Millions of Jobs
by Henry W. Burke
9.08.12
http://libertylinked.com/posts/10085/romneys-plan-will-create/View.aspx
INTRODUCTION
Mitt Romney gave a very exciting acceptance speech on 8.30.12 for the presidential nomination at the Republican National Convention (RNC). Among other things, he said:
What is needed in our country today is not complicated or profound. It doesn't take a special government commission to tell us what America needs. What America needs is jobs. Lots of jobs.
http://www.gopusa.com/news/2012/08/31/romney-america-needs-jobs-lots-of-jobs/?subscriber=1
Many newspapers picked up those key words and entitled Romney's acceptance speech -- "What America needs is jobs. Lots of jobs."
Later in his talk, Mitt Romney made this promise: "And unlike the President, I have a plan to create 12 million new jobs."
I will explore this subject in some detail to foster a better understanding of the issues. To support the statements and conclusions, I will utilize data from reliable sources (Heritage Foundation, BLS, OMB, NBER and the Fed). Because the Reagan Plan produced proven results, it will play a central role in this discussion.
The following sections are included:
A. Current Employment Picture
B. Job Creation under Obama
C. New Jobs Required for Population Growth
D. Cursory View of Romney Plan
E. Lessons from the Reagan Recovery
F. Comparing the Reagan Recovery with the Obama Recovery
G. Romney's Plan for Tax Reductions
H. Evaluation of Romney's Job Creation Plan
A. Current Employment Picture
The "Employment Situation Summary" for August was released by the Bureau of Labor Statistics (BLS) on 9.07.12.
Current Employment Situation (August 2012)
(Millions of Persons)
|
Category |
Aug. 2012 BLS Data |
|
Civilian Non-institutional Population |
243.566 |
|
Civilian Labor Force |
154.645 |
|
Labor Force Participation Rate |
63.5% |
|
Not in Labor Force |
88.921 |
|
Employed |
142.101 |
|
Unemployed |
12.544 |
|
Unemployment Rate |
8.1% |
|
Long-term Unemployed |
5.033 |
|
|
|
|
Unemployed |
12.544 |
|
Part-time for Economic Reasons |
8.031 |
|
Marginally-attached |
2.561 |
|
Total Underemployed |
23.136 |
|
|
|
|
Underemployed Percent |
15.0% |
Source: Bureau of Labor Statistics (BLS), 9.07.12.
http://www.bls.gov/news.release/empsit.nr0.htm
The unemployment rate dropped from 8.3% in July to 8.1% in August. The fact that 368,000 people dropped out of the labor force suggests that many workers are giving up hope on finding a job.
The number of new jobs added during August was 96,000. Our country needs to add 135,000 jobs per month to just break even with population growth. This means that the Obama Administration was short 39,000 new jobs last month.
In August, 12.5 million persons were unemployed; the total number of underemployed persons was 23.1 million. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.0 million people; these individuals accounted for 40.1% of the unemployed.
Based upon the August labor statistics, if I were to ask 100 able-bodied workers to assemble in a room, 8 people would not have a job; and 4 of those people would have been out of work for at least six months. An additional 7 people would be working only part time.
It is easy to view these figures as just "numbers." These numbers represent real people. Think about it -- 23 million people are "underemployed" in this country and are struggling to pay their bills. How do the 5 million people survive when they have been out of work for over six months?
Out of the total number of people who are able to work in America today, only 63.5% are employed. The labor force participation rate of 63.5% is the lowest since 1981. Many people have simply given up on finding a job and have dropped out of the labor force.
In fact, the report shows that 88.921 million people are not in the labor force (an increase of 581,000 from July). This means that almost 90 million working-age adults are not participating in the workforce.
Unemployment is a serious matter. All of us know people who are out of work. They frequently lose confidence in themselves; they feel unworthy; and they often are depressed. Financial problems ensue; homes are lost; marriages are destroyed; and bankruptcies occur. Unemployment can impose a very heavy human toll.
No matter how Obama tries to spin it, the employment news is not good. This economy is sick!
B. Job Creation under Obama
I presented a detailed discussion of job creation during Obama's term in the following report: "Obama Has Failed to Create Jobs."
http://libertylinked.com/posts/10068/pt-1-of-2----obama-has/View.aspx
The following conclusions can be drawn from this report:
1. Over Obama's full time in office (42 months), he has created zero jobs. Actually, the number of employed workers dropped by 1,000 between January 2009 and July 2012.
2. Over the last 29 months (since March 2010), Obama claims that he has created 4.5 million jobs. If this figure were correct, he created 155,000 jobs per month over this 29-month period.
[4,500,000 / 29 months = 155,000 jobs per month]
3. These are the correct figures for the period from March 2010 to July 2012. According to BLS data, the correct figure is 3.268 million jobs.
[142.220 million - 138.952 million = 3.268 million]
This equates to 117,000 jobs per month.
[3,268,000 / 28 months = 117,000 jobs per month]
[I used 28 months in the denominator to be fair.]
Under Obama, job creation is very weak. For the 29-month period from March 2010 to July 2012, Obama has created 3.3 million jobs not the 4.5 million jobs he has claimed. During this 29-month period, job creation has averaged 117,000 jobs per month.
Additional conclusions (based on the August report) include:
1. For Obama's full 43 months in office, it does not look good. He has actually lost 120,000 jobs!
[142.221 million - 142.101 million = 0.120 million jobs] (or 120,000 jobs)
2. Nearly all of those 120,000 jobs were lost in August. The number of jobs lost in August was 119,000.
[142.220 million - 142.101 million = 0.119 million jobs] (or 119,000 jobs)
C. New Jobs Required for Population Growth
Several conclusions can be drawn from the report "Obama Has Failed to Create Jobs:"
The U.S. population has grown by 205,000 per month in the last 3.5 years. With the historical labor force participation rate of 65.8%, we need to add about 135,000 new jobs per month to just break even with population growth. [65.8% x 205,000 = 134,890]
With the population increasing by 205,000 per month, the number of workers in the labor force needs to grow by 135,000 per month.
Unemployment will not improve significantly unless the economy is producing about 200,000 new jobs per month.
D. Cursory View of Romney Plan
Is it reasonable for Romney to create 12 million jobs in four years? This plan equates to creating 250,000 jobs per month over his first four-year term.
[12,000,000 jobs / 48 months = 250,000 jobs per month]
It is understandable why people are asking, "When I compare Romney's promise of 250,000 jobs per month with the 117,000 jobs per month under Obama, is Romney's goal reachable?" Let history be the judge.
E. Lessons from the Reagan Recovery
I need to move this discussion out of the "theoretical" category and include much-needed historical perspective. We will see what Ronald Reagan actually was able to accomplish. These are facts, not academic theories.
Ronald Reagan served as the 39th President of the United States from 1981 - 1989.
Reagan inherited a terrible economy from Jimmy Carter with double-digit inflation rates, high unemployment, and heavy deficit spending. For example, the prime interest rate was 21.5%! The country spiraled into a deep recession in July 1981 that lasted 16 months and ended in November 1982.
Thanks to "bracket creep," the double-digit inflation of the 1970s pushed millions of Americans into higher tax brackets. To help offset this tax increase and improve incentives to work, President Reagan proposed sweeping tax reductions.
In 1981, President Reagan formulated a plan to revitalize the economy. His plan included:
1. Reduce tax rates across the board.
2. Decrease unnecessary regulations.
3. Work with the Federal Reserve to maintain a stable monetary policy.
4. Slow the growth of federal spending.
In August 1981, President Reagan signed into law the Economic Recovery Tax Act (ERTA, also known as the Kemp-Roth Tax Cut). The ERTA slashed marginal earned income tax rates by 25 % across the board over a three-year period.
The Reagan tax cut plan also included a reduction in the capital gains tax rate from 28% to 20%.
What happened when Reagan's Plan was implemented? After the economy received an unambiguous tax cut in January 1983, personal income tax revenues soared! Lower tax rates do not mean less tax revenue!
According to the Office of Management and Budget (OMB), tax revenues nearly doubled during the 1980s. Revenues went from about $525 billion in 1980 to about $1 trillion in 1990. By 1995, tax revenues had climbed to over $1.3 trillion. (Source: Heritage -- Chart 10).
http://www.heritage.org/research/reports/2003/08/the-historical-lessons-of-lower-tax-rates
Following the 1981 cut in the capital gains rate, capital gains revenues leaped from $12.5 billion in 1980 to $18.7 billion in 1983; this was a huge 50 % increase!
The rich pay more when incentives to hide income are reduced. The Heritage Foundation determined that the share of income taxes paid by the top 1% of earners jumped from 17.6% in 1981 to 27.5% in 1988.
On December 31, 1981, the stock market (Dow Jones Industrial Average) was at 875.00; it is around 13,000 today. Reducing income and capital gains tax rates in 1981 helped to launch what we now appreciate as the greatest and longest period of wealth creation in world history!
President Reagan "had faith in the American Promise" and believed the American people would do the right thing. We can learn a great deal from his pro-growth lessons.
President Reagan made these statements in his first inaugural address:
We are a nation that has a government—not the other way around. And this makes us special among the nations of the Earth. Our government has no power except that granted it by the people. It is time to check and reverse the growth of government, which shows signs of having grown beyond the consent of the governed.
http://www.reagan.utexas.edu/archives/speeches/1981/12081a.htm
President Reagan is often called "The Great Communicator." In Reagan's farewell address, he explained:
I never thought it was my style or the words I used that made a difference: it was the content. I wasn’t a great communicator, but I communicated great things.
http://www.reagan.utexas.edu/archives/speeches/1989/011189i.htm
Democrats often forget that President John F. Kennedy saw the wisdom of making tax cuts. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions. These cuts reduced the top tax rate from more than 90 % down to 70 %.
What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 %.
http://www.heritage.org/research/reports/2003/08/the-historical-lessons-of-lower-tax-rates
F. Comparing the Reagan Recovery with the Obama Recovery
Before we compare the two recoveries, we will highlight the differences between President Reagan and Obama:
- ·
- ·
- ·
- ·
- ·
America has experienced 11 recessions and recoveries since World War II. The Minneapolis Federal Reserve has produced an interactive chart that allows a side-by-side comparison between any of the 11 recessions or recoveries. When you click on a box at the bottom, it plots that particular recession (e.g., this recession is 2007). You can also change the chart to plot recoveries instead of recessions. This is the link:
http://www.minneapolisfed.org/publications_papers/studies/recession_perspective/index.cfm
According to the National Bureau of Economic Research (NBER), the last four recessions and their durations are as follows:
Last Four Recessions
|
Recession Started |
Recession Ended
|
Duration of Recession |
|
July 1981 |
Nov. 1982 |
16 months |
|
July 1990 |
Mar. 1991 |
8 months |
|
Mar. 2001 |
Nov. 2001 |
8 months |
|
Dec. 2007 |
Jun. 2009 |
18 months |
http://www.nber.org/cycles.html
The recent recession began in December 2007 and ended in June 2009. The so-called "Obama Recovery" is presently underway.
I will focus on the Reagan Recovery and the Obama Recovery.
The 1981 Recession began in July 1981, lasted 16 months, and ended in November 1982. Unemployment climbed to 10.8 % in November 1982 then dropped in 1983 and 1984. By June 1984, unemployment was 7.2%. This was a 3.6% drop in 19 months.
The recovery witnessed strong growth in jobs, housing starts, productivity, and GDP. The prime interest rate was almost cut in half by January 1983, two years into Reagan's presidency.
According to the National Bureau of Economic Research, the recent recession began in December 2007, lasted 18 months, and ended in June 2009. The unemployment rate peaked at 10.1 % in October 2009 and stayed above 9.5% during 2010. It dropped slightly in December 2011 to 8.5%; unemployment stands at 8.1% today.
We are now in the 37th month of the Obama Recovery and unemployment is still high at 8.1%.
DIRECT COMPARISON BETWEEN REAGAN AND OBAMA
Let us compare these again; this time, we will use percent increase in employment. In the Reagan Recovery, employment increased 3.5% in 12 months and 6.0% in 18 months. By 36 months, the Reagan Recovery recorded a 10.9% increase in employment.
With the Obama Recovery, employment dropped 0.4% at 12 months and dropped 0.1% at 18 months. At 36 months, the Obama Recovery showed an employment increase of only 2.0%. The Obama Recovery is sick!
By 36 months, the Reagan Recovery recorded a 10.9% increase in employment; the Obama Recovery showed only a 2.0% increase.
This Table compares the Reagan and Obama (R & O) Recoveries on Employment:
Comparison of R & O Recoveries (Employment)
(Cumulative Percent Increase in BLS Employment)
|
Months After Start of Recovery |
Reagan Recovery of 1981 (1982) |
Obama Recovery of 2007 (2009) |
|
6 months |
1.0 |
-0.9 |
|
12 months |
3.5 |
-0.4 |
|
18 months |
6.0 |
-0.1 |
|
24 months |
8.1 |
0.6 |
|
30 months |
9.6 |
1.3 |
|
36 months |
10.9 |
2.0 |
|
37 months* |
11.1 |
2.1 |
* Current
Source: Minneapolis Fed
This recession is supposedly over, yet unemployment remains high (a "jobless recovery"). The unemployment rate remains high because America isn't creating enough new jobs.
It appears that the only way the Obama Administration can get the unemployment rate to drop is by convincing people to quit looking for work. As the number of weeks for unemployment compensation is increased, it discourages workers from seeking employment.
If the U.S. economy loses more jobs than it creates, the unemployment rate rises. If the job losses are low but few jobs are created, the unemployment rate treads water. During this recession, job losses increased, hitting 8.5 million jobs lost in the first quarter of 2009.
Also, welfare programs decrease the incentive to work. The Obama Administration is actively encouraging people to sign up for food stamps. The 50% increase in the number of food stamp recipients under Obama provides evidence that the efforts have been successful.
The 1981 Recession began in July 1981 and ended in November 1982. The Reagan Recovery started in December 1982. I obtained the employment figures for the Fourth Quarter of 1982 (Q IV-1982) and the Fourth Quarter of 1985 (Q IV-1985) from the BLS. (The fourth quarter is October, November, and December.)
Employment Growth in the Reagan Recovery
(Millions of Persons)
|
Description |
Beginning of Recovery Q IV-1982 |
36 Months into Recovery Q IV-1985 |
Change in the 3-Year Period |
|
Employed |
99.120 |
107.973 |
8.853 |
|
Civilian Labor Force |
110.959 |
116.187 |
5.228 |
|
Unemployment Rate |
10.7% |
7.1% |
-3.6% |
Source: BLS, "The Employment Situation during 1986..."
http://www.bls.gov/opub/mlr/1987/02/art1full.pdf
During the Reagan Recovery, employment grew from 99.120 million persons to 107.973 persons in the 36-month period. This is an employment growth of 8.853 million people (8,853,000).
[107.973 million - 99.120 million = 8.853 million persons]
This equates to an average employment growth rate of 250,000 jobs per month.
[8,853,000 / 36 months = 250,000 jobs per month]
How do the Reagan and Obama Recoveries compare in GDP growth? The Minneapolis Fed also provides an interactive chart on Change in U.S. Output (GDP) during recoveries. (This chart shows quarters instead of months.)
http://www.minneapolisfed.org/publications_papers/studies/recession_perspective/index.cfm
In the Reagan Recovery, GDP increased 7.7% in 12 months and 11.7% in 18 months. At 36 months, GDP in the Reagan recovery had improved 18.5%.
With the Obama Recovery, GDP increased 2.5% at 12 months and 3.8% at 18 months; and GDP was up 6.8% at 36 months.
Obama's "recovery" is showing about one-third the strength of the Reagan Recovery, and is taking much longer.
Comparison of Reagan and Obama Recoveries (GDP)
(Cumulative Percent Increase in GDP)
|
Quarters After Start of Recovery |
Reagan Recovery of 1981 (1982) |
Obama Recovery of 2007 (2009) |
|
2 Qtrs. (6 mos.) |
3.5 |
1.4 |
|
4 Qtrs. (12 mos.) |
7.7 |
2.5 |
|
6 Qtrs. (18 mos.) |
11.7 |
3.8 |
|
8 Qtrs. (24 mos.) |
13.7 |
4.4 |
|
10 Qtrs. (30 mos.) |
15.8 |
5.8 |
|
12 Qtrs. (36 mos.)* |
18.5 |
6.8 |
* Current
Source: Minneapolis Fed
G. Romney's Plan for Tax Reductions
The Mitt Romney-Paul Ryan Team has developed an excellent plan, entitled "Mitt Romney's Plan for Jobs and Economic Growth." The Plan includes the following sections:
1. Tax
2. Regulation
3. Trade
4. Labor
5. Human Capital
6. Spending
TAXES
The Romney-Ryan Team knows the importance of taxes in the overall scheme of job creation. The Campaign website states:
Tax policy shapes almost everything individuals and enterprises do as they participate in the economy. With bad design, tax policy can discourage economic activity. With good design, it can encourage it.
http://www.mittromney.com/issues/tax
Tax reductions play a major part in achieving their stated goals. The Mitt Romney website provides this information about Taxes:
Mitt's Plan
Individual Taxes
America’s individual tax code applies relatively high marginal tax rates on a narrow tax base. Those high rates discourage work and entrepreneurship, as well as savings and investment. With 54 percent of private sector workers employed outside of corporations, individual rates also define the incentives for job-creating businesses. Lower marginal tax rates secure for all Americans the economic gains from tax reform.
- · Make permanent, across-the-board 20 percent cut in marginal rates
- · Maintain current tax rates on interest, dividends, and capital gains
- · Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains
- · Eliminate the Death Tax
- · Repeal the Alternative Minimum Tax (AMT)
Corporate Taxes
The U.S. economy’s 35 percent corporate tax rate is among the highest in the industrial world, reducing the ability of our nation’s businesses to compete in the global economy and to invest and create jobs at home. By limiting investment and growth, the high rate of corporate tax also hurts U.S. wages.
- · Cut the corporate rate to 25 percent
- · Strengthen and make permanent the R&D tax credit
- · Switch to a territorial tax system
- · Repeal the corporate Alternative Minimum Tax (AMT)
[I would suggest that the reader examine other sections of "Mitt Romney's Plan for Jobs and Economic Growth." In the Spending section, for example, government spending is capped at 20% of GDP.]
H. Evaluation of Romney's Job Creation Plan
I will pose the question again. Is it reasonable for Romney to create 12 million jobs in four years? This plan equates to creating 250,000 jobs per month over his first four-year term.
Again, let's look at the facts that describe the Reagan Recovery.
When President Ronald Reagan implemented his plan to revitalize the economy, economic activity soared. Unemployment dropped by 3.6% in 3 years. Employment grew by about 9 million people in the 36-month period. This equates to an average employment growth rate of 250,000 jobs per month.
The economy quickly expanded under Reagan's plan. The Real Gross Domestic Product (GDP) increased about 8% in 12 months and 18% in 36 months.
In 1981, the stock market was at 875 (compared to about 13,000 today). The Reagan Plan launched an extended period of wealth creation. (Of course, much of this wealth was decimated in the last few years.)
Fact: Reductions in the tax rates actually produced an increase in total tax revenues. According to the OMB, tax revenues went from about $525 billion in 1980 to about $1 trillion in 1990. By 1995, tax revenues had climbed to over $1.3 trillion. Lower tax rates do not mean less tax revenue; the opposite is true.
COMPARISON OF ROMNEY'S PLAN WITH REAGAN'S PLAN
How does Romney's plan compare with Reagan's plan?
Reagan cut marginal income tax rates by 25% across the board over a 3-year period. Romney proposes a 20% cut in the marginal rates.
Reagan reduced the capital gains tax rate from 28% to 20%. Romney would eliminate capital gains taxes for taxpayers with incomes under $200,000. Also, Romney would repeal the unfair and ever-expanding Alternative Minimum tax (AMT).
On the corporate front, the Romney plan would cut the corporate tax rate from 35% to 25%. Currently, the U.S. has the highest corporate tax rate in the world!
The similarities between the Reagan plan and the Romney plan are amazing! I think it is obvious that the Romney team based much of their plan on the very successful Reagan Plan. We know what the Reagan Plan accomplished; we can expect similar results from the Romney Plan.
The Reagan Plan resulted in an average job growth rate of 250,000 jobs per month over the 3-year period. Because Romney's plan is similar to Reagan's fruitful plan, we can predict that Romney's Plan will also succeed. Romney will create an average of 250,000 jobs per month over his first 4-year term.
CONCLUSION
Mitt Romney has a plan to create 12 million new jobs in four years.
Many lessons can be learned from the Reagan experience.
The Reagan Plan produced an economic recovery that created 250,000 jobs per month over the first three years. Romney's Plan for 12 million jobs in four years also equates to 250,000 jobs per month. These 12 million jobs will help middle class families move forward and restore the American dream.
Because of the similarities between Reagan's Plan and Romney's Plan, I can safely predict that the Romney Plan will be successful! A Romney White House will create an abundance of jobs and will put millions of people back to work!
After Reagan's tax cut plan was implemented, tax revenues almost doubled in 10 years. Just think what will happen when more tax revenue flows into the federal treasury. In combination with spending cuts, the deficits will be reduced and America will eventually see a balanced budget.
We must elect Mitt Romney and Paul Ryan in November to make this happen!
When we are dwelling on all of these job numbers, it is easy to forget that we are dealing with real people, people who have tangible needs. I cannot get the 13 million unemployed persons or 23 million underemployed persons off my mind. These people are being deprived of the dignity and satisfaction that flows from having a good job.
If 100 able-bodied people gathered for an event, 15 of those people would be "underemployed."
Before we vote in the November election, we need to picture these 23 million people (nearly 10% of our population) who are struggling to provide for their families. Are we willing to allow Obama and Biden more time to lead us to "a better place?"
In Obama's presidential nomination acceptance speech on 9.06.12 at the Democratic National Convention, he said:
Our problems can be solved. And the truth is, it will take more than a few years for us to solve challenges that have built up over decades.
In Obama's first 3.6 years, he has created a net total of zero jobs; in fact, he has actually lost 120,000 jobs! By any measure, Obama has failed miserably at handling the economy. Obama could not get the job done in just under 4 years yet he pleads for 4 more years. The Reagan experience tells us that huge strides can be made in three years!
Why would we give Obama four more years to try the same failing strategies?
During his acceptance speech, Obama said this about his Republican challengers: "They want your vote, but they don't want you to know their plan." Did Obama's speech writers go to Mitt Romney's website or listen to any of Romney's speeches or Ryan's speeches? Apparently not.
Please make the right decision in November! The future of our country is on the line!
Bio for Henry W. Burke
Henry Burke is a Civil Engineer with a B.S.C.E. and M.S.C.E. He has been a Registered Professional Engineer (P.E.) for 37 years and has worked as a Civil Engineer in construction for over 40 years.
Mr. Burke had a successful 27-year career with a large construction contractor.
Henry Burke serves as a full-time volunteer to oversee various construction projects. He has written numerous articles on education, engineering, construction, politics, taxes, and the economy.
Henry W. Burke
E-mail: hwburke@cox.net