General Question

cockswain's avatar

Warren Buffet believes taxes on the rich should be raised and won't harm job growth. Given his credentials, do you agree?

Asked by cockswain (15181 points ) August 15th, 2011

Here’s an article about it.

Lots of people have different opinions on higher taxes for the wealthy, their effect on job growth, and whether or not they are fair. In my opinion, Warren Buffet’s opinion on economics should be given more respect than someone less knowledgeable (such as myself).

What do you think?

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155 Answers

Simone_De_Beauvoir's avatar

Yes. Even if we tax the rich just 1% of their income, we can solve many many problems ailing out country like education and healthcare failures. Another solution is to cut the ridiculous war budget. Even if we cut it a little bit, same positive result would ensue.

marinelife's avatar

Buffet pays less tax (on a percentage basis) than I do—by a long shot!

cockswain's avatar

@marinelife He says he paid 17.4% last year. But the middle class pays up to 25%.

LostInParadise's avatar

The economy is in trouble because people are out of work and can’t afford to buy goods. Letting the rich keep their money is not going to solve this problem. There is no incentive to build new factories when there is no demand. The U.S. GDP is at an all-time high. We are not broke. The problem is that all the money is in the hands of the most wealthy. The distribution of wealth has not been this lopsided since the Depression. It makes a lot more sense economically to take from the rather than to take more from the poor and middle class in the form of cuts in benefits.

Rarebear's avatar

It depends on what is meant by “rich”. Obama defines it as anybody making over $250,000, but that also includes small business owners. If you raise taxes on small business owners, then yes, you’re potentially decreasing job growth.

cockswain's avatar

@Rarebear good to see you! He says raise taxes on those making over $1M.

CWOTUS's avatar

I do not agree. I’m not going to say that I think Buffett is showing signs of dementia, and I don’t think that he’s being intentionally dishonest, but… I thought he was smarter than this.

The problems with the US budget deficit and total debt have very little to do with “taxing too little”, but are entirely the product of “spending too much”. It’s been shown over and over, too, that when Congress gets a whiff of “more revenues” that they promptly and inevitably spend more than the new revenue. In other words, more revenue = higher debt.

If he’s claiming that he doesn’t recognize or understand that, then he’s less intelligent than I had thought.

cockswain's avatar

@CWOTUS I don’t think he has dementia. He’s saying it won’t kill jobs to raise revenue. Possibly you’re being too pessimistic and I’m being too optimistic, but I think the US is finally going to start taking substantive action towards our fiscal problems. So why not raise revenue if we can pay it down faster?

Hawaii_Jake's avatar

I’m inclined to agree with Mr. Buffet. Raising tax rates on people making over $1 million/year would not affect job growth, but it would help reduce the budget deficit.

Aster's avatar

I agree with Buffett . It’s at least a good start. But , then, I“d probably fall for anything he said.

gorillapaws's avatar

I think taxes were pretty fair under the Clinton administration. The economy was booming at the time and we actually had a surplus that could have been used to pay down our debt… Instead we got tax cuts that disproportionately favored the top 1%, and the beginning of the crisis we’re in now.

JLeslie's avatar

I think cutting taxes on people over $1million will not affect job growth. I think giving everyone under $250k a pay increase, not to be confused witha tax cut, would increase spending, stimulate the market, create more jobs and positively affect the economy. People below $250million had a tax decreases during Obama, I don’t think they even know it, the message did not get out well, and it is small of course. I really see the biggest problem being an expectation of huge profits, rather than good/moderate profits.

Adirondackwannabe's avatar

I think he’s correct in his concept, but I think the 250K number may be a little low. I think it’s closer to 350K. In my experience the people making that kind of money pay the minimum taxes they can and than they don’t spend the rest. If they get a tax cut that money they save or set aside.

dappled_leaves's avatar

I have no idea why anyone believes that allowing the rich to go untaxed will create jobs, thus improving the economy. Economists have roundly denounced this as lunacy, and we’ve seen from Reaganomics that it does not work. As @LostInParadise mentioned above, there is simply no incentive for corporations to do all of the economy-building things that are expected from them under this ideology. Obviously large corporations want to keep their own tax rates low because it is in their own interest, and since they are driving the Republican party right now, Republicans are pushing hard to keep their tax rates low… but why do the very people who are hurt (through cuts to social programs like Medicare, social security, unemployment insurance, etc, etc, etc) by strangling the government’s income argue FOR tax cuts to the wealthy? This is a total mystery to me.

ETpro's avatar

I absolutely agree with Warren Buffet on this. I am not in any way anti-rich, nor is he. But the best years for the US economy were ones where real tax rates paid by the very wealthy were FAR higher than they are now. Ever since the Reagan Revolution when we slashed the top rate from 70% (which was by then to high) to 28% which was too low—and we started piling loophole upon loophole, and we cancelled the estate tax (which only applied to estates over $10 million); the US has been piling up massive debt. We had been paying down the debt as a percent of GDP ever since it peaked at the end of WWII. Reagan reversed that trend and tripled the national debt in his 8 years in office. And jobs have been flying offshore since the 1980s. Over the past 30 years, the gap between the wealthiest Americans and the rest of us has been growing steadily larger. Scroll down to the charts to see. The wealthiest 400 Americans now hold more financial wealth than the bottom 50% of the US population. Our middle class is slowly dying.

We are on a course to become a third world banana republic with a few fabulously wealthy families owning virtually all the wealth of the nation, buying off its politicians, and using the government and police to ensure that all but the ruling Oligarchs are kept in poverty and must work for a bare subsistence wage.

JLeslie's avatar

Why would businessmen not grow their business because they have to pay a few more percentage points in taxes. Oi’s like saying I don’t want to win the lottery because I have to pay tax. Um, ok, then I won’t give you the $6million, whatever.

wundayatta's avatar

It’s not the issue of jobs that is so important here as the issue of fairness. The more money you make, the higher your marginal tax rate should be. People who are poor need the money to survive. The wealthy don’t have a survival problem.

As far as jobs are concerned, it seems to me that money spent here is the same as money spent there. If there is a difference, then it seems to me that ten dollars spent by 200 million people is probably going to have more effect than two billion dollars spent by billionaire.

Billionaires probably aren’t going to be spending money on services, which employ a lot of people. They’ll probably be spending on capital intensive items—things made with much less labor. I don’t have any research to support this, but intuitively, it seems right.

Spending by ordinary people is much more important than spending by the hugely wealthy as far as jobs are concerned. Buffet is right. For fairness and jobs, follow his advice.

tedibear's avatar

This is a fast, off-the-cuff response:

If he believes that, he needs to write a check to the government for the amount that he thinks he should have been taxed. If he’s not going to do that, the only reason I can come up with is that he’s waiting for the expletives deleted by me in Congress to wake up and figure out how to run the government correctly.

I had something else to say but it whooshed out of my head. Will come back if it reappears.

dappled_leaves's avatar

Buffet pledged the vast majority (over 40 billion dollars) of his fortune to various charities back in 2006. I would not be surprised if he is also donating to the US government. But he certainly can’t cover the entire US deficit, nor would that be a long term solution, would it? The US government needs to be taught to fish, apparently.

tedibear's avatar

@dappled_leaves – Nope, it wouldn’t be a long term solution, nor would he have to cover the whole debt. Just give the percentage that he thinks is appropriate for his income. As well, I heard someone fairly cynical on NPR today say that they think he made the donations for the tax break. While that may have been part of it, I would like to think it wasn’t the whole reason.

Qingu's avatar

@CWOTUS, Buffet has been saying this for decades; you can’t ascribe it to dementia.

And speaking of intellectual honesty:

“The problems with the US budget deficit and total debt have very little to do with “taxing too little”, but are entirely the product of “spending too much”. It’s been shown over and over, too, that when Congress gets a whiff of “more revenues” that they promptly and inevitably spend more than the new revenue. In other words, more revenue = higher debt.”

So please explain why our debt went down during Clinton, and went up during Bush.

Jaxk's avatar

@Qingu

Easy, we cut the rate of spending during Clinton and went hog wild under Bush.

JLeslie's avatar

@tedibear I don’t agree. Buffet wants the system to be fair. We are all responsible for the financial health of the country. If we spend too much we need to pay the bills. If my husband charges our credit card for something I didn’t want to buy, I am still repsonsible for the debt. I don’t like that Bush went to war, but I would have kept paying higher taxes to not be borrowing money from other countries. I would vote agaist affirmative action, but I will take advantage of it if I can qualify.

Jaxk's avatar

The real trick in Buffets comments are that his proposal would not have much affect on his taxes. Raising the top rate won’t raise his taxes by any noticeable amount. It would however have an impact on those earning a paycheck or operating a small business. When he comes out with a recommendation that closes his loopholes, we’ll talk.

Qingu's avatar

@Jaxk, what do you mean “cut the rate of spending” during Clinton? Defense maybe, but most other categories (i.e. health care, pensions) spending continued to increase at the same rate as under Bush Sr. if not more:

http://www.usgovernmentspending.com/downchart_gs.php?year=1980_2010&view=1&expand=&units=b&log=linear&fy=fy10&chart=10-fed&bar=1&stack=1&size=l&title=&state=US&color=c&local=s

And are you actually saying that increased taxes did not lower the deficit under Clinton? I know you’ve previously expressed the belief that lowering taxes never lowers the debt because of your dishonest reading of the Laffer curve and/or faith in magic; but maybe you should put your theory in your own words.

Qingu's avatar

@Jaxk, nope, raising top rates for millionaires and billionaires would not have an effect on small businesses. And how the hell would it affect those “earning a paycheck”? Stop lying.

cockswain's avatar

@Jaxk What do you mean Buffet’s proposal wouldn’t have much affect on his taxes? Why would raising rates on those earning >$1M/year have impact on those earning paychecks? Note that Buffet is saying it won’t kill jobs to do that.

dappled_leaves's avatar

@Jaxk, you are totally misinformed. Anyone who tells you that tax cuts on the wealthiest Americans are going to harm the poor and middle class is lying to you. They have to steal your support because you would not give it freely if you knew what they were trying to do.

Qingu's avatar

A better source for debt, revenues and spending by year:

http://www.cbo.gov/budget/data/historical.pdf

I’m not seeing this “slower rate of spending” under Clinton. Maybe a little compared to the 80’s. Though revenue increased faster. It’s also true that spending as per GDP went down during the 90’s… but then revenue per GDP went up simultaneously.

missingbite's avatar

I don’t agree with him and in fact will go a step further. If he only pays 17.4% while the middle class pays more, it speaks volumes about our tax CODES, not our percentages. It tells me that the rich can afford tax lawyers to help him and others out of paying taxes. Is that the direction we should be going? On top of that, if he wants to pay more he can donate all he wants to the government. Ever notice that the rich who want higher taxes don’t seem to do that?

WestRiverrat's avatar

Buffet makes his money on capital gains. Raising the income tax will not have any effect on what he pays in taxes. Now if you got rid of the capital gains tax and taxed capital gains as income, then he would be affected.

Qingu's avatar

@WestRiverrat, that’s what he’s suggesting:

“But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.”

Edit: wait, didn’t read what you said closely enough. Buffet does have an income; he doesn’t pay much (anything?) in payroll taxes, however.

Jaxk's avatar

@Qingu

Spending under Reagan, Bush 1, and Bush 2 increased by about 8%/year. Under Obama it has increased by about 10%.year. Under Clinton it increased by about 3%/year. A rather dramatic difference.

As for lying, I’m not. When I say paycheck, I’m not referencing any particular class. It is a means of defining wages. If you are being paid by an employer, the wages are taxed at the prevailing rate for you income. It doesn’t matter how big that paycheck might be. If your earning in excess of $250K your paying the top rate on that excess (currently 35%). If however you making several million on investing type incomes, you’re not paying that rate but rather the capital gains rate (currently 15%). So the result is raising the income tax rate will effect those earning a paycheck (albeit a large one) but not those earning at the capital gains rate.

@cockswain

It’s easy to say it won’t hurt but you need to look at how it works. If I’m a small business and I earn $500K. That is taxed as normal income. Now, say I want to Invest in plant or equipment. Build a new building or buy a major piece of equipment. Say that investment will cost me $400K. I don’t get to write that off but rather the depreciation expense on it. Depending on the depreciation schedule that may be as little as $20K (20 year depreciation) a shorter term would make it larger. So the result is I’m paying tax on $500K which is $175K at 35% and I only have $120K left in my pocket to do so.

Now you can jockey around the numbers and figure the same numbers using a $200K investment or a $1 million income but the same principle applies. As you increase the tax rate the investment is only made more difficult and the bleak future deteriorates the outcome even more. Those investments are the key to getting out of this recession and we’re making it harder. IMHO

Qingu's avatar

@Jaxk, there are numerous breaks in the tax code for small businesses, as you are well aware, so your fearmongering about small business owners being screwed is dishonest. See also:

http://www.politifact.com/truth-o-meter/statements/2010/jul/27/stephen-hayes/so-called-wealthy-are-actually-small-business-owne/

http://www.politifact.com/truth-o-meter/article/2010/nov/23/top-5-falsehoods-about-bush-tax-cuts/

“Under the Democratic plan, a small business owner would have to report profits of more than $250,000 before the tax increases kicked in. (Rates would rise for the top two brackets, from 33 percent to 36 percent and from 35 percent to 39.6 percent.) But most small businesses aren’t nearly that profitable. In fact, Internal Revenue Service data shows that of all taxpayers who declare business income, only 2 to 3 percent declare that much.”

As for “paycheck earners” being harmed by higher marginal income tax rates, you are also obviously aware that the term “paycheck earner” is generally understood to mean working class people, not the rare (or probably nonexistent) workers who somehow manage to get multimillion dollar paychecks. Also, as I noted, Buffet explicitly said he wants to raise capital gains and noted how little payroll taxes work into wealthy taxation.

I know you’re not ignorant of these things, so that only leaves the possibility of you being a liar. Plus you often lie on Fluther.

JLeslie's avatar

@missingbite Right, tax codes and loopholes. That is what Obama talked about recently in his speech regarding the debt ceiling, getting rid of some of those advantages in the tax code the richer among us use to pay a lower percentage in the end.

Jaxk's avatar

@Qingu

You definitely make any discussion with you a test. I’m not sure why but you seem to think that if you call me names, it somehow makes you sound more intelligent. It doesn’t.

“But most small businesses aren’t nearly that profitable”

Very true. But the ones that aren’t making any money are neither hiring nor investing, either. It is the ones that make money that we need to open up. According to the SBA there are 29.6 million small businesses in the US. The top 2–3% of them earn the bulk of the income. Those are the guys we want to invest and hire.

As for buffet, I find his recommendations somewhat lacking. If we changed the loopholes that he is using to gain most of his income, things like the Futures Trading and Carried Interest, or merely refined the capital gains to hit this high income (top 400) at normal income rates, he’d have some credibility. But changing the capital gains rate as he suggests, would at best change his tax rate from 15% to 20%, still way below the income rates he wants for everyone else at 39.5%. I find his recommendation lacking and disingenuous. Show me an article where he wants his rate to go to 39.5% and I’ll give it some credibility.

And how do any small business tax breaks you seem to know so well affect my point here.

missingbite's avatar

@JLeslie I can agree with Obama on closing tax loopholes and simplifying the tax codes. Unfortunately, what I can’t agree to is more spending and raising taxes on anyone. JMHO. Let’s look at GE and his buddy Jeffery Immelt. GE pays lots of money to tax attorneys to utilize every tax loophole he can while he decreases GE’s workforce, then lectures for higher taxes and moves workers overseas. Hypocrite if you ask me.

incendiary_dan's avatar

Anyone ever consider that the rich hire people to make money, and therefore it’s a ridiculous idea entirely on the surface that taxing them reduces hiring? It’s not as if this hiring they’re doing is altruistic charity.

Just something I’ve been thinking.

JLeslie's avatar

@missingbite I don’t think it is hypocritical to use laws in place. I think it would be hypocritical or unfair if he fights to keep the loopholes in place. I am fine with getting rid of the loopholes and leaving the rates as is, and cutting spending. That is a good start to me. But, I was wondering if some of the write-offs and loopholes is part of the game, the trickery, that gets people to give to charitable causes, or buy a house? Forget about big corporations and the wealthy, many of our average middle class Americans do not necessarily really do the math, and simply believe they are better off having a mortgage and giving away some money, better with regards to taxation. I just wonder if some people need the game.

RareDenver's avatar

If we don’t tax the rich the wealth will trickle down

Qingu's avatar

@Jaxk,

“Very true. But the ones that aren’t making any money are neither hiring nor investing, either. It is the ones that make money that we need to open up. According to the SBA there are 29.6 million small businesses in the US. The top 2–3% of them earn the bulk of the income. Those are the guys we want to invest and hire.”

1. You’re moving the goalposts. Originally, you said: “It would however have an impact on those earning a paycheck or operating a small business.” Apparently what you meant was that it would have an impact on the tiny sliver of paycheck earners who earn more than 250k and the tiny sliver (2–3%) of small businesses who earn enough money to be affected. That’s dishonest.

2. I don’t see how a slightly higher marginal rate for small businesses meaningfully hinders the ability of said businesses to hire new workers. If I run a profitable business and there is a higher demand for my products than I am able to produce, it would be irrational not to hire another employer—even if my marginal tax rate is slightly higher. On the other hand, if I am making lots of profits but there is no demand for additional products (i.e. our present economy for most businesses), the tax rate is moot; I’m not going to hire anyone because there’s no demand for their extra services. So what subset of the 2–3% of small businesses you are concerned about would the higher marginal tax rate be sufficient enough to actually prevent them from being able to afford to hire another worker as determined by surplus demand? Because it seems like we’re going to need to move your goalposts even further into decimal territory.

3. Your citation doesn’t even say what you are claiming. What is your source for “2–3% of small businesses earn the bulk of the income”? And you say it’s a test to talk to me. Try making arguments in good faith and I’ll have an easier time holding in my hostility.

ETpro's avatar

@RareDenver Ha! Great photo link. Here’s a unique thought. Instead of sending all the wealth of the nation to the richest billionaires here, and waiting for it to trickle back down, hows about we just keep it in our own pockets to start with?

@Jaxk, You’ve got it just backwards. Small businesses, as defined by the SBA, are any business with 100 or fewer owners. By that measure, Bechtel, one of the world’s largest construction companies with sales of over $35 billion a year is a small business. Pricewaterhouse is a Small Business. The top 2 to 3 % of small businesses are BIG businesses in sales and cash, and are off-shoring more and more of their jobs and investment. It is the true small businesses like you and I own that are creating most of the new US jobs, because we aren’t big enough to operate in the multinational arena. Unfortunately, corporate income taxes hit us whereas the big multinationals often reap huge profits and pay absolutely nothing in US taxes.

cockswain's avatar

Here’s a point-counterpoint from CNN on why Buffet is right/wrong. Despite some differences, they are in agreement about the need for tax reform.

Qingu's avatar

@ETpro, even so, I don’t see how higher marginal taxes are preventing much hiring, even among these big small businesses.

Businesses aren’t hiring because there is no demand for their products. If a business is selling a product with excess demand, it should hire more labor to produce more products—regardless of whether or not that business’ profits are taxed at a marginal rate of 25 o5 35%.

I mean, this is the same fricacta argument for trickle-down economics. Don’t take away rich people’s money with taxes because if rich people have less money to spend, less people will have jobs to supply rich people with products and services. Well, not if rich people aren’t spending the money to begin with—just like how businesses aren’t spending the money to begin with, since there’s no demand for their products.

ETpro's avatar

@Qingu I certainly didn’t say they are, and the history of the tax code shows that the top marginal tax rate has almost nothing to do with hiring. Other factors driving the economy have a far greater impact. The top marginal rate dueing WWII was 91% and the country produced an enormous quantity of new jobs. The top rate today is 35%, but the mega rich pay rates similar to the 17% that Warren Buffet paid last year. If lower rates create massive hiring, where are the jobs?

WestRiverrat's avatar

I found this on another forum. No thank you Mr Buffet.

_In 2005, $1.5M was gifted to the IRS to reduce public debt. I’m going to hazard a guess that Mr. Buffett gave zero dollars. If he really feels that he should pay more to the government, there is NOTHING to stand in his way.

Also, it is interesting to note that Berkshire Hathaway does NOT issue dividends. By choosing to do so and rolling corporate profits back into the B-H balance sheet, Mr. Buffett prevents the collection of tens/hundreds of millions of dollars in tax revenue every single year that would come from paying out dividends to investors. For the B-H net income of $13B in 2010, if they paid a typical payout ratio of 20%, taxed at 15%, could potentially net nearly $350M in tax revenue. Way to go, Buffett.

And by choosing to keep his salary of $100k suppressed significantly below what would be commensurate for someone of his stature and ability, he keeps his income tax much lower than his peers. Raise your salary, Mr. Buffett, to $10M so you can pay the same income taxes as the “wealthy” people you claim to be similar to. If you don’t need that high income, just donate it to philanthropic purposes.

In summary, Mr. Buffett likes to talk about raising taxes on people like him, but he actually chooses to operate his business in a way that minimizes the tax burden. If he were to operate it like most others of similar wealth, he’d significantly increase how much he pays in taxes. In reality, he has no box to stand on to criticize tax policy when his own actions are adverse to the suggestions he makes._

We certainly need to reform tax policy, but Mr. Buffett is not the person to do it.

Jaxk's avatar

@Qingu

The term earning a paycheck is a common way to delineate between those working for a company and getting a paycheck (thus the term) and those that invest or trade stocks for a living (and don’t get a paycheck). Also when discussing a tax bracket it is assumed that you know, only those that fit that bracket would be affected. Just because you don’t understand these simple concepts does not mean I’m lying to you. It merely means you don’t understand these simple concepts.

Also you seem to have difficult time understanding how the economy works. First of all consumer spending is up. It has been above the 2008 peak for more than a year. Inventories are also back down to pre-recession levels and as of June the Inventories/Sales Ratio was down to 1.16 (pre-recession level). That means 1.16 months of inventory. And to add insult to injury, the saving rate has risen from 2% to 5% over the past couple of years. The idea that no one has money to spend is simply not borne out by the facts.

What is happening is that small businesses are seeing in thier margins squeezed by regulation and taxes. Businesses that want to upgrade/repair/expand are not doing it. Credit is difficult at best and those that have the money are hording because that can’t tell what’s coming next. Generally business expands or upgrades anticipating future returns. No one has any confidence that there will be any future returns. We could pull out of this recession if we just stopped trying to penalize business and actually encourage investment. Instead we’ve got an administration that wants to rob existing profits through regulation and future profits through taxation. It’s idiocy at best.

And your 2–3% came from you. Look at your own post for Christ’s sake.

“only 2 to 3 percent declare that much.”

Jaxk's avatar

@ETpro

I’m not sure what you think I have backwards. This is what the SBA thinks is a small business:

500 or fewer employees for most manufacturing and mining industries (a few industries permit up to 750, 1000 or 1,500 employees)

100 or fewer employees for all wholesale trade industries

$6 million per year in sales receipts for most retail and service industries (with some exceptions)

$27.5 million per year in sales receipts for most general & heavy construction industries

$11.5 million per year in sales receipts for all special trade contractors

$0.5 million per year in sales receipts for most agricultural, forestry and fishing industries

Maybe they’re wrong and you’re right. I think I’ll stick with them.

ETpro's avatar

I am not talking about the SBA definition. I failed to make that clear,m and for that I apologize., I am talking about the RNC talking point claiming that tax increases would hurt the top 2 to 3% of small businesses. For those numbers, a small business was defined as one with fewer than 100 owners. And that puts some *very8 heavy hitters in the small business mix.
http://www.factcheck.org/puncturing_a_republican_tax_fable.html

Jaxk's avatar

@ETpro

I’m not sure what the argument is here. The 2–3% came from @Qingu which I accepted because it sounded reasonable. According to the SBA there are 29 million small businesses. That means that 60–90 thousand fall into the top income category. There are 140 million taxpayers so about 2.5 million are in the top 2% and 60–90 K of them are small businesses. According to you post from 2003, 22% of the income in the top bracket is small business income. Where’s the conflict?

Qingu's avatar

@Jaxk,

So just to be clear, here is your original quote:

“It would however have an impact on those earning a paycheck or operating a small business.”

And here is what you actually meant in your quote (bolded words added by me for clarification)

“It would however have an impact on the tiny fraction of those earning a paycheck over 250k or the tiny fraction of those operating a small business earning more than 250k in profits

Seems dishonest to me. And now you’re claiming you expected people to understand that your quote was only referring to the tiny fractions of people actually potentially affected by such policies, and not paycheck-earners and small businesses as a whole? That also seems like a dishonest claim.

Your graph is misleading, for several reasons. First, you only went back to the beginning of the recession. Look at the graph from 2000, and note the rate of change:

http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=65&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=2000&LastYear=2010&3Place=N&Update=Update&JavaBox=no#Mid

Since the recession, consumer spending has barely recovered to the level it was in 2008. But every year before the recession consumer spending grew significantly. (This holds true for the 90’s as well). We are treading water now when the economy is built around growth.

Secondly, the raw data in the graph doesn’t give a sense of scale for how big this spending slump is. Remember how you evaluated Clinton’s debt reduction in terms of spending increase %? Look here:

http://www.nytimes.com/interactive/2011/07/15/sunday-review/consumer-spending.html
http://globaleconomicanalysis.blogspot.com/2010/10/gallup-poll-shows-discretionary.html

By your own metric, this is a tremendous spending slump, and we’ve barely begun to dig ourselves out.

And I don’t even understand why you think consumer spending has recovered, simply on an intuitive level it’s nonsense. I mean, massive unemployment means massive spending reduction. Even employed people are spending less because (1) they’re paying off debt or (2) they are trying to be frugal. For example, I still have a job, but my fiancée doesn’t, and the economic climate in general is scary… so I’ve cut back my spending.

Now, if you are right and consumer spending is just fine, then I’ll admit that a lot of my economic arguments lose steam because they’re based on an assumption of demand slack. But if you’re wrong and consumer spending is bust, then surely you have to admit that businesses have no incentive to hire, because consumers aren’t spending money for their products. This is actually something I think we’re capable of coming to an agreement on, because the facts are unambiguous.

Jaxk's avatar

@Qingu

I will try to be reasonable here. I know you think I’m trying to trick you in some fashion. I’m not. I have a problem with being brief in my posts and tend to drag on ad infinitum. So when I’m making a point I don’t spend a lot of time on issues where I think everyone knows the data or it has been discussed over and over. For instance we already know that half the tax returns pay no income tax. So if we raise the tax rate to 100% only half of the people are affected. I didn’t think that needed to be stated again. We also know that since Obama was a candidate, he has been talking about the top 2%. So when he talks about raising taxes on the wealthy, we know he’s only talking about the top 2%. I didn’t think that needed to be stated yet again. If you object to my not stating it, you can always clarify it without resorting to the mudslinging that we seem to deteriorate into.

You want to criticize the fact that I didn’t provide ‘Scale’ on my post. you claim it was a significant change yet provide no scale of your own. Let me help. From 2004 til 2007 we grew our consumer spending by $1.987 billion or about $124 million per quarter. If we look at the last 6 quarters (2010 and 20011) we get a growth of $111 million per quarter and the last 4 quarters work out to $118 million per quarter. Now I could have used the entire bush term (2001–2008) and yielded a growth of $90 million per quarter. I didn’t because I’m not trying to trick you. My point was and is, consumer spending is higher than it was in 2008 and is accelerating. The problem is we are spending just as much but getting less. Things like energy are stripping us of expendable income and regulation is raising the cost goods in a very real way but it is invisible to the average citizen. Margins are being squeezed even though the actual spending is increasing.

It should be obvious to everyone that the price of gas has stripped everyone of expendable income even though they may be spending the same dollars as they were before, they’re getting less. It seems to me that addressing that issue would have a major impact on the economy. It is also obvious to me that regulation has stripped my business of significant income. Another place where we could have significant impact in the short term. We are spending as much as we were before, we’re just sending it overseas or wasting it on bureaucratic red tape. Instead of addressing the issues that are draining our money, we’re hell bent on finding ways to either inject more money into the economy (spending) or ways to replenish that which is being wasted (taxes). Neither is addressing the source of our problem.

Qingu's avatar

@Jaxk,

I guess I have trouble believing that you seriously expected people reading this question to interpret “paycheck earners and small businesses” as meaning the top 2% of paycheck earners and small businesses, regardless of the context of the discussion. Especially considering this is a constant partisan attack line.

Re: scale, my second link provided it in abundance. Consumer discretionary spending fell by almost 7% in the recession, more than twice as much as the recession of 1980.

I’m not sure why you are using those numbers, particularly those averages. Look at the trends. Here are the numbers for 2000–2010:

6,830.4
7,148.8… (+318)
7,439.2… (+291)
7,804.1… (+365)
8,270.6… (+466)
8,803.5… (+533)
9,301.0… (+490)
9,772.3 ... (+471)
10,035.5 ... (+263)
9,866.1 ... (-169)
10,245.5… (+379)

Anyway, there are several problems with your assessment.

1. You are missing the fact that the downturn carved out a hole. Yes, spending is now growing (this is of course partly why we are not technically still in a recession). But we have not made up what we’ve lost; there is still “demand slack.” Unsurprisingly this is the exact same pattern we see in unemployment. The recession caused millions of people to lose their jobs. We are now adding jobs at a rate commensurate with previous non-recession quarters. But this rate is not fast enough to make up the hole.

2. I am particularly concerned that consumer spending is petering out this year. Look here, for example:
http://eresearch.fidelity.com/eresearch/markets_sectors/sectors/sectors_in_market.jhtml?sector=25&tab=learn
The trendline is good for ‘10, but in ‘11 it starts to fluctuate but overall peters out. This would be bad. It’s also expectected. The stimulus provided a lot of income for people to spend; so did the payroll tax holiday in Obama’s 2010 deal. These policies have now run their course, and it appears that spending growth has followed suit.

3. You seem to undercut your own argument; you say consumers are spending more money but buying less stuff. I agree (though I don’t think they’re spending that much more money to begin with). But if consumers are buying less stuff because non-discretionary items are more expensive, there is still demand slack, which is precisely what I’m arguing.

Finally, to address your argument about regulation and taxes being the root cause of this. First of all, this is what conservative always argue, no matter what problem we are facing. Nobody would trust a doctor that prescribes the same medicine for every ailment.

I’m also confused about what regulations and taxes you are talking about, and how you perceive them to actually influence business decisions, particularly hiring. Obama has not passed any energy regulations. He passed fuel efficiency regulation—which truck manufacturers actually support, because it will help convince people to buy new trucks. The vast majority of Dodd-Frank and ACA have not taken effect yet. I am unfamiliar with any new regulations that would be raising the cost of food.

What is obviously raising the cost of food and oil are emerging markets in China, India, and Latin America where billions of people suddenly want meat, cars, and electricity.

Now, you said regulations are stripping your business of significant income. Can you be specific? What regulations, and how? And more importantly, what does this have to do with the current problem of recession and (I’d argue, and I think you are on the cusp of agreeing) low consumer demand? Didn’t these regulations exist before Obama? If your business had more income, would you hire more employees or would you reinvest or pocket the extra cash? And how can you argue that “lack of income” is a problem with respect to unemployment when corporations are currently sitting on record amounts of cash, but not hiring?

cockswain's avatar

@JLeslie After reading that, it’s less clear than ever to me where Trump stands on the issues. Mostly I think he’s a media whore that hasn’t had enough attention lately, and thought he’d sound off on the Buffet thing too.

JLeslie's avatar

@cockswain I think he is a media whore, but he has always, since I have listened to him on Larry King and MSNBC for the last three years, cared about our debt to other countries, being in bed with the Saudi’s, he has never been a right winger, he is much more of an independent.

cockswain's avatar

@JLeslie That may be, but that stupid birther thing he tried to resurrect sounded pretty right-wing to me.

Qingu's avatar

The birther thing was pure, distilled, neutron-star-level condensed naked opportunism.

JLeslie's avatar

@cockswain True, that really dissappointed me after liking a lot of what he said on other shows prior, before he decided to run for office.

Jaxk's avatar

@Qingu

Actually I do. Hell, Buffet is only talking about 400 people with his argument about the rich and then applying it to the top 2% (about 2.8 million people). So yeah, I expect everyone here to know what we’re talking about.

As for your your spending numbers, I had intended to post this which is the same data with better granularity. It provides a more recent picture and the recent trend in 2011. Consumer spending isn’t petering out even though discretionary spending might be.

As for your argument about the same resolution regardless of the problem, I feel the same way about the liberal solution always being higher taxes and more spending and more regulation.

Taxes and fees for virtually every license I have have gone up several hundred percent. As have the maintenance costs (inspections) for those licenses. I pay a tax on underground storage tanks that was .01/gallon a couple of years ago now it’s .025. I paid about $250 for my air quality license a couple of years ago, last year it was $2500 and this year I’ve paid $5500 so far and they’re telling me another bill will be coming this fall. Two years ago I had to up grade my air filtration system to improve from 95% of emissions being captured to 97% of emissions being captured. That cost me about $40,000 and still paying the note on that one. I could go on for quite a while on this but you should be getting the gist of it. Two years ago I had 7 employees, today I have 5. Not because I don’t have the sales but rather because I don’t have the money. My parking lot is cracking up pretty bad. I had an estimate to fix it but to keep the cost down, I’m only fixing the very worst parts. The contractor is getting a smaller job which restricts his income as well. All this cascades.

What you have to understand is that congress doesn’t pass regulation. That comes from the various regulatory agencies. And it comes with little fanfare but carries the weight of law. For instance the EPA is regulating Carbon Emissions. Take off your partisan hat for a second and take a look at what the regulatory agencies are doing. You may feel that carbon emissions are necessary, or that universal health care is good, or that financial regulation is required, but it comes at the cost of the economy. Dodd-Frank is a massive bill that regulators are actively creating using to create new rules, Health care (if you read the bill) is mostly a list of areas to be regulated by the DoH. The recent announcement from Kathleen Sebelius that she will mandate coverage for womens health issues (birth control, breast feeding apparatus, women’s health counseling) was done with no congressional input and will not come free. Insurance premiums will have to rise to cover the cost. Dodd-Frank has the regulators working overtime to initiate new regulations for banks and financial institutions. Lending is difficult while they wait to see what shakes out. The idea that nothing has changed with this administration with regard to regulation is way off. And it is a big reason why corporations are sitting on thier cash (if they have any).

gorillapaws's avatar

@jaxk The problem with your argument is how you’re evaluating cost. It’s easy to make a profit when you externalize your costs onto society, which often creates a net increase in costs overall (but a handsome profit to the person doing the externalizing). For example, I could make a fortune doing toxic waste disposal by dumping it into the local river, but that would have massive impacts on the tourism industry, the fishing industry etc. (it would likely create a huge net loss for the economy as a whole). Likewise global warming has tremendous costs associated with it such as increases in the frequency and severity of natural disasters, and air pollution has major heath costs such as increasing rates of asthma and other respiratory diseases. Regulations are designed to internalize that cost so that profit generated is from actual value created and not from passing the burden onto others.

As far as healthcare is concerned there is a similar situation. The US already has universal healthcare, it’s called the emergency room, and it’s expensive as hell. Doctors and hospitals working for free are forced to increase their fees to cover these anticipated expenses which ultimately gets passed onto everyone in the form of increased insurance premiums, and poorer overall healthcare. Essentially, businesses that don’t provide healthcare for their employees are externalizing that cost onto everyone. Universal healthcare is an elegant solution to this problem because it frees up businesses from having to either pay this large expense or externalize the cost onto everyone. It also removes the insurance companies from the equation which are motivated to only cover healthy people, deny care, or delay treatment in the hopes the patient’s condition progresses to the point of not being treatable (i.e. becomes terminal) and therefore creates massive profits in the aggregate.

Furthermore, successful social programs that are designed to improve people’s ability to be a productive citizen are investments in the economy. If these people aren’t given these opportunities then a much higher percent will turn to crime, this is expensive to the victims, the police and legal costs associated with catching/convicting the perpetrator as well as the very expensive cost to imprison the guilty. Furthermore, successful people will generate greater income for the economy, may start businesses that can hire others, while the victims of crime will likely generate less money for the economy (what happens to the corner store when it’s owner is shot in a robbery?). It’s analogous to the Research and Development budget at a company like 3M. Sure 3M could kill the department take the excess cash and write a fat dividend check to it’s investors, and a foolish man might think that 3M is doing fantastic in such a case; but the wise investor would realize that they’re killing all hopes for future growth in the years to come and would sell the stock.

It comes down to the Republican mindset of cutting programs to the bone resulting in very short gains that will balloon into massive costs down the road. If a program isn’t going to bear fruit in terms of increased net longterm prosperity, sure kill it, but any fiscal conservative will tell you that the wiser strategy is to make smart investments.

Response moderated (Personal Attack)
Qingu's avatar

@Jaxk, I don’t know any liberals who are proposing more taxes and regulation to solve our current recession problem. In fact many liberals support extending the payroll tax. I don’t think regulation interacts with the unemployment problem. Spending can indeed help unemployment (by directly employing people), so it seems quite rational to be proposing it as a solution.

As for the EPA, that’s fair enough; I could argue that under Obama the EPA is actually doing its job (unlike under Bush) and thus doesn’t constitute “new regulations,” but I can see how those regulations would cost you extra money. Though I am confused as to what specific regulations cost you the extra money, and why. I’m also curious as to how much pollution your operation was/is actually responsible for.

I’m also confused as to why you have two less employees if your sales have remained the same. It sounds like you spent between one and two years’ worth of worker salary upgrading your air filter and paying extra fees. The bulk of this was not a permanent increase so you could treat it as an investment. Certainly not nearly as expensive as keeping two employees on full-time for a number of years. Can you walk me through the math regarding your decision to fire two people? And if the demand for your service has remained the same, why haven’t you rehired anyone?

And just to be perfectly clear, @Jaxk; are you saying that if you had to pay less money in fees and in regulation, you would hire two additional employees?

Beyond that, I agree with everything gorillapaws said. Regulation is not necessarily a drag on the economy. It may be a drag on your business in particular. It’s not a drag on communities who are spared pollution because of regulation and thus increase their property values. It also saves your workers extra costs in medical treatment.

Qingu's avatar

One more thing: I’m not really a fan of Dodd-Frank, and I’ll even concede that it might have a chilling effect on banks lending (though I think the elephant in the room is that banks don’t want to lend because we’re in a terrible economy that makes it unlikely that investments will be worth the risk).

But the total void of regulation, particular for credit default swaps that played a huge role in sparking the financial crisis and remain a ticking time bomb. It also helps small businesses plagued by unreasonable credit card company fees. And if the Republicans ever stop being obstructionist, the consumer protection agency will help us avoid what has become a “buyer beware” market. Buyer beware markets are, as you are probably aware, generally bad for business in general.

And frankly the idea that after the second-worst financial disaster in history no regulation would be put in place to make things better, and we should just continue on our merry way, is absurd. I would have liked a stronger, clearer bill that isn’t still in the process of being written, but until you actually quantify this “uncertainty” that is preventing banks from making rational business decisions and causing corporations to hold on to their cash, I’m going to say it’s worth it. Especially since there is an elephant-in-the-room explanation for both tight lending and cash-hoarding corps right now—low, sputtering consumer demand (to be pedantic, consumer discretionary demand).

Jaxk's avatar

@gorillapaws

I don’t see much point in arguing Global warming with you, we will not agree. I will say however that you cannot quantify your assertion of costs. The seas aren’t rising nor is the globe warming.

Your assertion about Health care however, is not speculative, it’s simply wrong. Health Care in Massachusetts was touted the exact same way. Cover everyone and Emergency visits will decline. It didn’t happen. They increased instead.

As for social programs that make people [productive, which ones? Some work some don’t. get rid of the ones that don’t work. And let go of the idea that a handout is the same thing as an investment in the country. You may also want to let go of the idea that if I don’t give you money, you’ll turn to crime. And all companies invest what they can in research or product development. It needs to show a return. No return and the project gets cut.

Finally, it’s hard to take you comment about cutting to the bone, seriously. Especially since all efforts to date have not really cut anything and are concentrated on not adding more fat. We’re obese already, let’s at least stop gaining weight.

Jaxk's avatar

@Qingu

I’m not really willing to go through my finances with you even if I thought you would understand them. Suffice it to say that regulation has start up costs and ongoing costs. both are significant. You’ve already either ignored or didn’t understand the numbers I gave you and they are only the tip of the iceberg. Hell I even gave you the pollution numbers and you still don’t get it. Suffice it to say, you put more gas vapor in the air when you take off the gas cap, than I do from my entire operation (that may be an overstatement but it’s not far off).

You obviously don’t understand the cost of regulation, nor are you willing separate the good from the bad. I’m not sure how much more I can tell you.

Qingu's avatar

@Jaxk,

I’d like to say I believe you, but I don’t. But I’m not going to insist you go through your finances, so I’ll leave it at that. If it is actually the expense of regulation that is actively preventing you from hiring workers (and not just weak demand), I would agree with you, at least insofar as those regulations should be delayed or offset by (for example) guaranteed credit for investments that would help comply.

Also, you didn’t give me any “pollution numbers.” Unless you are referring to a link written by a climate-change denier. Based on your statement you seem to confuse “gas vapor” with “carbon dioxide,” which is about as good an indication as any that you don’t know what you’re talking about on this matter.

FYI, (regarding “separating good from bad”) I would certainly be willing to not regulate carbon emissions for the next few years, or to offset costs of compliance with tax credits. Global warming is a long-term problem; the recession is the immediate problem. I am not an ideologue about the environment.

Jaxk's avatar

@Qingu

Again with the test. I’m not sure if your trying to sound more intelligent by throwing out these terms but you need to know a bit more before you say I don’t know what I’m talking about. I don’t burn anything nor create any carbon dioxide or monoxide or any other oxide. Fuel vapors are what I am measured on.

I will probably lose sleep because you don’t believe me. My life is ruined.

Qingu's avatar

You said “emissions,” not “fuel vapor.” And then you said you had “given me the numbers” when you had merely linked to a blog post that was about… carbon emissions.

Where are these unfiltered fuel vapors being released, exactly? And what Obama-era EPA ruling governs their regulation?

gorillapaws's avatar

@Jaxk I’m not sure if you read the article you linked, but the ER visits increased because of an imbalance in the supply of primary care facilities. This is likely a temporary issue that will resolve itself as the supply/demand curves balance over time. Comparing ER visits in a country that has an effective Universal Heathcare program for many decades to the US would be a much better metric.

As far as global warming how do you explain that Greenland’s ice sheet melted at a record level last year? Is it a liberal conspiracy with scientists sneaking out at night with hairdryers to promote their hippy agenda?

I think we agree about cutting things that aren’t beneficial to the longterm economic health of the country. Programs such as abstinence only sex ed, that increase teen pregnancy rates, creating children that will likely have fewer opportunities to succeed and mothers who will have a harder time getting an education that would allow her to improve the economy through higher wages. Or some of the ridiculous defense expenditures? Or the Republican Medicare part D prescription drug plan that’s costing us a fortune because we’re paying full price instead of negotiating a bulk rate like other plans do (such as the VA)?

You can shrug off the idea that people without opportunities are more likely to turn to crime, or downplay the massive expense of crime to the country in terms of real and opportunity costs, but when you have the mentality that investing in the welfare of the people is a “handout” I fear that you’re too short sighted to appreciate the real value it produces in the economy.

In case you didn’t get the memo, trickle-down economics doesn’t work. Much of it trickles out, as in leaves the country via purchases of foreign goods/services and investments in foreign stocks/currencies—all of which incidentally hurts the US economy because it reduces the demand for US dollars, decreasing it’s market value.

Jaxk's avatar

@Qingu

I didn’t start this so that I could explain to you how a gas station works. When I said emissions they were vapor into the air. The system is a closed system which doesn’t let anything escape into the air (or very little). when I said the system improved the capture from 95% to 97% that was all gaseous emission. The little accordion rubber thing on the gas nozzle, that is to capture fumes from the tank as you fill up and pump them back into my storage tanks. So that when the tank fills up the vapors displaced aren’t sent back into the atmosphere. The storage tanks allow air in so that they don’t create a vacuum when the gas is pumped out but don’t let any air (vapors) out. The upgrade was to the nozzles, hoses, and vent to improve their efficiency (ever so slightly), as well as upgrades to the electronic monitoring (pressure, temperature, volume, etc.). And if I did the upgrade two years ago, I’ll let you figure out if it was an Obama regulation.

At this point, I’ve told you about as much as I intend to. If you want to know how a gas station works, or any business for that matter, start up a new thread.

Qingu's avatar

I didn’t know you operated a gas station. That would have been helpful information.

So I just googled for “obama epa gas station regulations.” I didn’t find anything about new regulations. I did find this though:

http://yosemite.epa.gov/opa/admpress.nsf/1e5ab1124055f3b28525781f0042ed40/795f471dfe4b993a852578ca00645d6c!OpenDocument

http://yosemite.epa.gov/opa/admpress.nsf/0/795F471DFE4B993A852578CA00645D6C

Sounds like Obama’s EPA is in agreement with you. And unless you are talking about a different system, the rules for vapor recovery have been in place since 1994. (Though it’s entirely possible that the rules were never enforced until now, since Bush essentially gutted the EPA).

And why don’t we take a step back and consider what we are actually arguing about at this point. Neither one of us wants burdensome or pointless regulations. We might disagree on what constitutes burdensome or pointless. But I just said that if regulations are what is directly preventing you from hiring or keeping on workers, those regulations should be delayed or offset with tax breaks or government-financed credit.

I couldn’t find anything on storage tanks, though I didn’t look long.

So here are the actual points of contention:
1. Are the regulations actually new, under Obama? Or is the EPA simply enforcing old rules?

2. Is the extra money you have to pay for these regulations actively preventing you from hiring workers? Or to put it another way: if you didn’t have to abide by these regulations, would you use the extra income to hire workers, or would you do something else with it (i.e. invest).

Like I said, I’m not an ideologue on these points. If I’m wrong, I’ll admit I’m wrong, at least in the case of your particular business. I’d just like to see some evidence that I’m wrong.

cockswain's avatar

I think it would be a wonderful coincidence if you fill up your car at Jaxk’s gas station on a regular basis, cheerfully bidding him a good day as he pauses from his Fluther rebuttal to you.

Qingu's avatar

Well, I don’t have a car. I’m a damn citydwelling hippie after all.

cockswain's avatar

doubtlessly getting around in sandals made from hemp

maybe jaxk has frowned upon you as you purchased rolling papers

Jaxk's avatar

@cockswain

Unlikely. We have 14 democrats in my community and we know who they are :)

Jaxk's avatar

@Qingu

I see absolutely no agreement in our positions. My arguments about regulation are restricted to my business. I used it as an example. Personal experience can sometimes shed light on a larger problem but not if you focus on the specific regulation. Regulation is an enormous burden and unless we deal with the problem it will continue to degrade the economy. Don’t bother to send me a response that says we can’t get rid of all regulation, that’s not my point.

According to the Office of the Federal Register, in 1998, the Code of Federal Regulations (CFR), the official listing of all regulations in effect, contained a total of 134,723 pages in 201 volumes that claimed 19 feet of shelf space. In 1970, the CFR totaled only 54,834 pages. In 2008, the CFR weighed in at 157,974 pages. I know the standard talking point is that Bush deregulated everything but like most talking points there isn’t even a grain of truth in it. You may not like the regulation they created or lament the regulation they didnot create, but they did create a lot of regulation.

The problem is there are more than 50 different regulatory agencies. Regulation does not pass through congress nor do they even read them (hell, they don’t even read their own legislation). Some regulation goes directly to the industry and some goes to the states for compliance. The states then impose regulation to comply with the federal rules. Without a representative in Washington it becomes difficult to determine if the regulation is a state rule, federal rule or an enhanced federal rule. And it doesn’t matter because the regulation has the effect of law in any case.

The first year of the Obama administration we created a record level of regulation. At the worst period in our recent economic history. Obama can’t figure out that regulation costs money and wonders why the economy can’t grow in this environment. It’s like he can’t connect the dots and he’s not alone. To make matters worse we have massive legislation that will create thousands of pages of regulations for health care and financial reform. All bogging down the economy at a time when we should be trying to streamline system.

Frankly I don’t care whether you believe any of this. It’s obvious that Obama doesn’t. So he’ll continue to throw roadblocks in front of the economy and wonder why it not growing. Maybe another tax increase will solve that. Maybe Jeffery Immelt will provide some insight on how to create jobs in China. They certainly don’t know how to create jobs here.

Qingu's avatar

We are in agreement about having too many and too complicated regulations.

And you didn’t answer a single one of my direct questions to you. So… keep on blaming Obama and repeating mantras, I guess?

Jaxk's avatar

@Qingu

That was intentional.

Qingu's avatar

Yep, I had a feeling it would go down this way.

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cockswain's avatar

Why were the Libertarian links removed? I intended to read them when I got home, which is now. Can someone provide me an explanation?

cletrans2col's avatar

@cockswain probably considered it spam

cockswain's avatar

@Jaxk I get your argument that all regulation costs money to enforce. Yet one can argue that improper regulation of the shadowy derivatives market is likely a fine example of when lack of regulation cost us far more than the regulation would have. I say “likely” only because I’m not being rigorous in my research at the moment, but I think it’s a reasonable assertion.

I don’t know much about what the Dodd-Frank laws will impose in the way of regulation. It seems to me the spirit of the law is aimed to reduce the likelihood of such a financial disaster occurring again.

Given your conservative outlook, what do you think would be/would have been a proper way to have regulated the financial markets? Also, what do you see as the negative and (if any) positive aspects of Dodd-Frank?

On a side note, while you seem to generally do a fine job researching the reasoning behind your point of view, I’m disappointed you would claim the globe is not warming. There is extremely little doubt it is in fact warming. The debate at this point is primarily about whether or not it is man-made.

Jaxk's avatar

@cockswain

All good points. The Problem with Doddd-Frank is that it doesn’t really address the problems we had, but rather creates a ton of financial regulation. We really don’t know what will shake out since the regulation is being created in the SEC or other regulatory agencies. Dodd-Frank is huge bill that was created in response to a crisis much the same way that Sarbames-Oxley was. The result was a huge regulatory burden with little or no benefit. I see nothing in Dodd-Frank that has improved much but lots of danger and it is crippling the financial institutions. They are standing still like a deer in the headlights, waiting to find out how much damage it will do.

Most of the issue here is based on a belief that financial institutions are evil. That if given a chance they will destroy the economy. The truth is they got caught just like everybody else in believing that the housing market was a safe investment. Housing had been stable and growing for 80 years, the credit rating agencies labeled these derivatives AAA. Now we look back and say they knew it was a bad investment so we have to jumble together some massive legislation to make them stop. They’ve already stopped. They’ve been hurt as bad as everyone else and those derivatives will never again see a AAA rating. Here is a brief summary of Dodd-Frank. As the authors say ‘A Very Brief Summary’.

The only part we’ve seen implemented so far is the consumer credit and what it does, is to reduce the penalty for bad behavior. If you’re late or missing your payments the penalties are reduced and more difficult to collect. Overall, we create many new agencies to oversee the financial institutions and they will create thousands of pages of regulations to do that. Maybe this is what we should be doing during this recession but I don’t think so. I think it was a populous reaction, poorly thought out, and passed without having been read. If there are areas where legislation is required, it should be done in much smaller and understandable pieces. It is too much too fast and crippling the very institutions we need to recover. As you may have guessed, I don’t like it.

On your side note, you are right and I should have clarified my point. There is no ‘Man Made’ global warming. We emerged from the ‘Little Ice Age’ about 150 years ago. Of course it’s warmer or we still be in the ‘Little Ice Age’. Anyway, I don’t want to get into another ‘Global Warming’, or ‘Climate Change’ or ‘Severe Weather Event’ or whatever we are calling it these days, argument. Just want to acknowledge your point as accurate.

Qingu's avatar

“All good points. The Problem with Doddd-Frank is that it doesn’t really address the problems we had, but rather creates a ton of financial regulation. We really don’t know what will shake out since the regulation is being created in the SEC or other regulatory agencies. Dodd-Frank is huge bill that was created in response to a crisis much the same way that Sarbames-Oxley was. The result was a huge regulatory burden with little or no benefit. I see nothing in Dodd-Frank that has improved much but lots of danger and it is crippling the financial institutions. They are standing still like a deer in the headlights, waiting to find out how much damage it will do.”

There is nothing substantive in this paragraph, @Jaxk. You just repeat over and over again, in different words, that “regulation is bad.” You’ve done this throughout this entire question. I’ve repeatedly asked you to explain how regulation is bad, and to identify what specific regulations you are talking about. You never do. At this point it’s clear that you never will, because you have nothing to say.

I certainly don’t see any answer about what sort of regulation you think we should have, if any. It sounds like you don’t think we should have regulation.

And no, financial firms have not been hurt as bad as everyone else. Thanks to, among other things, TARP on an institutional level and, on a personal level, the vast wealth people who work at those firms have managed to “earn” over the years.

And no, the regulation is not based on the idea that “financial firms are evil.” It’s based on several ideas, among the most important (which you failed to mention) being that the completely unregulated credit default swap market was the ticking time bomb that led to this crisis. If that market was regulated, if we knew the actual risks in the assets being traded, the financial crisis would very likely not have happened.

Now, I would actually get behind regulation based on the idea that financial firms are evil, because financial firms contribute essentially nothing to our economy, to our nation’s industry, or to our society’s well-being and stability and are essentially a cancer that drains resources (money and intelligent workers) that could be of better use in other sectors. Which is part of the reason why I’m so disappointed in Dodd-Frank. It doesn’t go nearly far enough. If only it were the caricature that you are making of it.

Jaxk's avatar

@Qingu

You say I said nothing yet you found a lot to complain about. Frankly I think all new regulation should be put on hold right now. Of course in you estimation that will mean we don’t have any regulation because you can’t seem to grasp the idea that there is already 150,000 pages of regulation covering 19 feet of shelf space. But frankly I don’t care what you believe since your arguments are so nonsensical to begin with.

I especially like the argument that we don’t need any financial institutions. No banks, no brokerage houses, no insurance industry. Yes, you are a genius in you understanding of the economy.

Qingu's avatar

More vague pablums against regulation as opposed to anything specific. So no, you don’t have anything to say.

And I didn’t say we don’t need any financial institutions. I simply think the financial sector should form a much smaller slice of our GDP, commensurate with its actual value (for reference, 41% of corporate profits are in finance, up from 16% in the 70’s and early 80’s). Most of that sector’s value is self-inflated. Or do you think that investment bankers who are paid to essentially gamble with other people’s money (without facing the risk of losses associated with gambling) deserve to make millions of dollars, and that that money is optimally spent.

Jaxk's avatar

@Qingu

Your grasp of these issues continues to mystify me. Put all new regulation on hold. Do you really see that as vague? Let me put it another way. Put all new regulation on hold. How’s that any more clear?

If you read the article behind those numbers, there is a stark difference in what Simon Johnson is saying and Dodd-Frank. Realistically I can’t get behind Simon’s solution but he makes a lot of good points. Right now we have major problems across industries and we’re trying to implement Financial regulation, Health Care regulation, Global Warming regulation, and a variety of regulations across the board. It is unlikely (at best) that any of these are going to help our current recession and very likely that they will hurt it. Populous knee-jerk reactions to create massive regulatory burdens are never good, but in this environment they can be disastrous.

I say again, Put a hold on ALL new regulation.

Qingu's avatar

Why should we put all new regulation on hold?

Earlier I asked you to identify which regulations were leading to extra fees for your business. You didn’t.* I also asked you to show how the loss in income from these regulations directly caused you to lay off workers. You didn’t. I asked you to quantify how the supposed “uncertainty” of the regulatory climate is leading to the credit freeze or businesses failing to invest or hire (as opposed to the elephant in the room—lack of demand). You didn’t.

I asked you how you would regulate the market in credit default swaps that largely led to this crisis. You apparently don’t want to. That shows you have no understanding of what caused this crisis and the dangers that remain in our financial system.

And when haven’t you (and Republicans in general) proscribed this policy? You can always tell a snake oil salesmen when he sells the same product for any and every ailment.

* In fact one of the regulations you mentioned (gas vapor filters) appears to have been in effect since the 90’s… and the Obama administration wants to put it on hold.

Qingu's avatar

Also, I didn’t intend to cite that article (which I’ve read) in support of Dodd-Frank. In fact I said the exact opposite: I don’t think Dodd-Frank goes far enough.

I cited that article to support my claim that the financial industry today is largely pointless and acts as a parasite on our nation’s financial and intellectual capital… which you took issue with (largely via a strawman). But that’s a tangent.

Jaxk's avatar

@Qingu

I’ve told you what happened and you told me you don’t believe me. OK. You seemly won’t rest until you’ve seen my financial statements to prove to you that I’ve spent the money and can’t afford to rehire the lost employees. OK, I’ve put all my financial statements on line for you to peruse. Let me know if you see any way I can improve my business based on your obviously extensive knowledge in business. You can get my financial reports at the link below.

www.eatshit.net

cockswain's avatar

I guess the question with regard to this point is if the Obama administration took steps to enforce an old regulation that affected @Jaxk, or if the EPA finally got around to him after all these years and it’s just a coincidence.

Truth be told, the notion that Obama is a raging liberal is so far from what his record dictates that I’m not clear why his policies seem to draw such right-wing ire. He is really moderate and centrist on most counts.

btw, something’s wrong with that link

Qingu's avatar

Let me be clear.

I do believe that you spent significant money upgrading your filtration system and paying fees for underground storage.

I am certainly willing to believe that new EPA regulations are responsible for the extra charges.

However: it does not appear to be the case, with the largest charge you cited (see my previous posts). So it makes no sense for you to blame this charge on Obama or “regulation” that has existed since the 90’s, and that Obama wants to get rid of.

More importantly, your basic argument here is that regulation is what has directly caused you to lay off workers and not rehire them. My argument is that, at least with the vast majority of businesses, a lack of demand is the main culprit, and not regulation. You cited some charges that, while expensive, don’t really seem to compare to the costs of maintaining two full-time employees, at least not on a long-term basis.

Considering you run a gas station and both gas consumption and car ownership in general have dropped significantly since 2007,* I would be very interested to compare the extra cost of regulation to your relative loss of revenue during that period.

And, um, the link’s a joke, @cockswain.

*Whoops, not car ownership, just driving in general:
http://jaredbernsteinblog.com/miles-to-go-before-we-sleep/

cockswain's avatar

um, @Qingu I’m not a dumbass

Qingu's avatar

I suspected as much. Sarcasm on the Internet is awesome :)

cockswain's avatar

I suspect if the link is valid (which I won’t be clicking on at work), it is video clips of people wiping out skateboarding and such

Jaxk's avatar

@Qingu

If you knew anything, and I do mean anything, about regulation, you would know that if I installed equipment two years ago, it could not have been regulation passed during the Obama administration. I also said many times, that my experience was an EXAMPLE of how regulation impacts business. I would also add that if you knew anything, and I do mean anything about regulation, you would know that it takes considerable time to both understand the costs and requirements of implementing that regulation. I spent the best part of a year trying to get permits and approvals from every conceivable government agency just to get the installation started. Most of the delay was because the government had to handle these same permit requests from every gas station in the state and they couldn’t handle the volume. Don’t bother to tell me you don’t believe me because I don’t care. I only post this to give you some idea of how little you know. I have no intention of sharing anymore of my personal business with you, it is fruitless. The point of my entire discussion was to point out the volume of regulation coming down the road from this administration and give an idea of how it costs business. You have made every attempt to shift that point with your nickle and dime discussion of what I have or haven’t done.

And I might add, that I never said I laid anyone off. I merely did not replace them when they left. Another example of how you read things into the discussion that aren’t there.

Qingu's avatar

I have to go now, but I have to say…. what the hell, man? Seriously. Throughout this entire discussion you didn’t mean to give the impression that you were complaining about Obama’s regulation?

I’ll respond more later.

Jaxk's avatar

@Qingu

I swore I wouldn’t do this but you’ve so completely missed the point, I’ll try one more time. Three years ago, I had to up grade my Point of Sale system (PoS) because the credit card vendors had to encrypt credit card information with triple des encryption. That was a $25K upgrade. I don’t know nor do I care, what legislation passed that forced them to do it, I only know, if I wanted to accept credit cards I had to upgrade, the vendors required it so that they could comply. I have been dealing with these upgrades for a while now and when I see the volume of regulation more than double, I know it will bite me in the ass. Obama has more than doubled the volume of regulation. Yes this entire thread I have been complaining about Obama regulation because of the volume and how I expect it to hit me. Even if it doesn’t hit me directly it will have this same crippling effect on other businesses. You simply can’t double the regulation and expect it won’t slow down business. We are in a recession and we can’t afford that slowdown. Really, the concept is not that hard to grasp. Yet you continue to try and identify specifically which regulation will affect me. I have no idea because if you knew anything about regulation you would know it takes time to drain down to the little guy.

And that really is the last piece of personal information I will give you. If you haven’t gotten the point by now, I give up.

Jaxk's avatar

@cockswain

Just a bit of information about EPA regulations. They are updated every couple of years and invariably those requirements are tighten. A regulation passed in 1994 has probably been updated many times and the new emission levels tightened requiring new equipment. In fact if you follow the thread from @Qingu ‘s link you’ll see the the latest change was in 2008 “Strengthened National Standards for Ground-Level Ozone
March 12, 2008

So saying it was old legislation that hadn’t been enforced, isn’t even remotely correct.

Jaxk's avatar

@Qingu

I suppose I shouldn’t do this but I a little aggravated by your constant attacks so let me give you a test. You said

“Considering you run a gas station and both gas consumption and car ownership in general have dropped significantly since 2007,* I would be very interested to compare the extra cost of regulation to your relative loss of revenue during that period.”

Now assume I was selling 1,000 gallons at $2/gallon and my volume decreased by 10% over the past three years (more than it actually did but let’s use round numbers). But now I’m selling it a $4/gallon. What do you suppose happened to my revenue.

The answer will be revealed in a later post.

cockswain's avatar

@Jaxk I really don’t know much about regulation and was just guessing before. I actually found your posts very informative.

Regarding your test, I don’t get your point. Obviously your revenue went up, but assuming your profit margin stayed the same, your profit would have decreased 10%. But I’m not sure what your getting at.

Jaxk's avatar

@cockswain

You need to read @Qingu ‘s question a little closer. His assumption is the opposite of your conclusion.

Jaxk's avatar

Some interesting facts about regulation

•The U.S. ranks 49th in regulatory competitiveness, well behind China and other competitors.
•The federal government issued 3,573 final rules in 2010 alone. These rules totaled nearly 25,000 pages, up 20% from 2009.
•Regulations cost the U.S. economy more than $1.75 trillion in 2008, equivalent to $15,500 per household. Regulatory costs per employee are 36 percent higher for small businesses than for large firms.
•Regulation costs the economy nearly twice as much as Americans paid in 2010 individual income taxes.
•Regulatory costs represent almost 12% of U.S. Gross Domestic Product.
•The federal government spent $52 billion in 2010 to administer and enforce regulations and that number is rising every year. Over the last decade, regulatory spending rose 70% more (adjusted for inflation). Regulatory spending is expected to reach nearly $55 billion by the end of this year.
•In 2006, Sarbanes-Oxley cost public companies $6 billion, enough to hire 128,000 workers

cockswain's avatar

The objection I have to that site is that they state “The Alliance will provide fact and research support to spokespeople as needed or on request.”

So they wish I’ll take their facts with equal credibility as a site that simply provides links to their studies. And they claim they are non-partisan yet are comprised of CEOs and entrepreneurs. Hmmm, I wonder what their political leanings and biases might be.

But I’m certainly not going to argue that there is certainly a cost to our society from ineffective, inefficient, or flat out useless regulation. The assertion the site seems to make is that “regulation gets in the way of making money.” While true to an extent, making money for businesses is not the only and most important component to our society as a whole. Both of us know that with no regulation by government, there would be disaster. You wouldn’t own your gas station, you’d work for the company that owns all gas stations and be fortunate if they treated and paid you well.

As @gorillapaws mentioned above, correcting externalities is an important, if not one of the most important, functions gov’t performs. How many of those regulations cited in the $1.75 trillion or 12% of GDP are, say, regulations that “cost” builders from using cheaper mixes of concrete that cause a bridge to fail? Or even for a deck to rot out 5 years after being built on a residence? I’m sure they are including fire codes, like regulating use of copper vs. aluminum wiring. Codes that say your underground tanks need to be of a certain quality as to not leak into the groundwater supply. Regulations that stop a mining company from effectively obliterating a small nearby town. Fire protection regulations.

Sure I could go on, but it really comes down to which specific regulations are the problem. You can’t just blindly assert “the EPA is worthless” or something like that since they also perform vital functions despite having grown too large and inefficient to the point that in many ways they hamper businesses.

I look at regulation as the cost of doing business for the US. Their overhead. Can they trim their overhead? Sure can, and they’d better. We all, liberals and conservatives alike wish to see that. Not on the fringes, but most people.

But returning to your credit card example, which is a good one, was it the gov’t imposing that $25k charge, or the credit card company? I’m curious how much beyond their R&D costs the company added to their profits from the upgrade.

Hmm, I’ve got more to say but my post has gotten too long.

gorillapaws's avatar

@Jaxk I think the credit card example is a good one. The original DES key cyphers were becoming vulnerable to brute force attacks, and potentially all credit card transactions could be decoded by 12-year-old kids running cracker software. What do you think the effect on the economy would be if credit card theft reached pandemic levels because the encryption process was so vulnerable (despite the availability of better methods). I can assure you that your $25k investment in modernizing your outdated and very vulnerable computer equipment is money well spent according to the (thousands?) of customers who didn’t have their credit cards pilfered by someone hacking your vendor’s system. Again, we return to the notion of externalizing costs.

My job involves running the administration of a small surgical practice. We have about 2x the number of employees, and (most likely) as-many or more regulations than you have. I agree that some are asinine, but most make a lot of sense when you think about it from the perspective of who they’re supposed to protect (i.e. our employees and patients). These regulations also create a sense of trust between customers and businesses so they feel confident in making business transactions with companies. Would you want to have a surgical procedure done in a country that ranked #1 on the “regulatory competitiveness” you linked to? So, by having safety equipment on-hand, expensive data security protections on patients’ electronic medical records, expensive procedures for removing bio-waste, or the cross-shreading of old paper-charts, all add up to patient confidence in our practice and a likelihood that they will return to us and recommend us to their friends/family. It’s ultimately good for the bottom line to operate in an environment like this, and complying with expensive regulations are business investments just as buying furniture and art that makes the waiting-room welcoming and inviting is an investment in making patients feel safe.

gorillapaws's avatar

I should add, who is the #1 country in regulatory competitiveness? I couldn’t find any info by searching Google. I suspect it has to be Somalia or some other 3rd-world shithole with basically no central government. Is that what we should be striving towards? I’d really like to see the full list, or see a chart that cross references regulatory competitiveness with GDP per capita. I have a strong suspicion that maximizing “regulatory competitiveness” isn’t at all a good thing when looking at the stats?

CWOTUS's avatar

@gorillapaws

You’d have found it eventually, the same way I did. Google “49th in regulatory competitiveness” and you’d get to: Job Creators Alliance, which contains that phrasing, and from there to the full report, where you’d see in the “United States” details that the “49th” refers to “Burden of Government Regulation”.

Singapore was in first place, which is understandable and acceptable, I think.

Jaxk's avatar

@cockswain

There is a study that estimates the cost of regulation in California. It is a fairly long report but was sanctioned by the state. The numbers are truly staggering. This study includes both state and federal regulation and show that regulation doubles the cost of everything you buy. The cost to California works out to $492 Billion/yr and 3.8 million jobs.

The argument that no regulation would be worse is common and valid. The problem is it keeps us from looking at what’s really going on. I’ve used this example before but I’ll use it again. In the 70s there was a push for 5mph bumpers. The automakers were against it as it added considerable cost and weight to every vehicle. Weight is the enemy of mileage so it also cost gas mileage. The automakers recommended a different solution. If all cars had a standard bumper height damage would be reduced more than the 5mph bumper. Just pass a regulation to standardize the bumper height. That would add no additional cost or weight. They lost and the 5mph bumper became law. And it changes every few years.

There is a statement in the latest Air quality regulation that encapsulates some of my concerns.

“The requirement that primary standards provide an adequate margin of safety was intended to address uncertainties associated with inconclusive scientific and technical information available at the time of standard setting. It was also intended to provide a reasonable degree of protection against hazards that research has not yet identified.”

Now I understand we want adequate protections. But we are regulating things (and the associated costs) that have inconclusive scientific or technical information. To make it worse we are protecting against hazards that science has not yet identified. Doesn’t that feel like maybe we’re overreaching here?

Now I’m all for reasonable regulation and I understand there is a cost but we’ve let the system get out of control. There is absolutely no oversight of these regulatory agencies and they pass what ever they like. Sure you could sue to have it over turned but I put your odds of winning at ‘zip point shit’ (I’m estimating).

I’m not asking to have all regulation overturned (although a good review would be in order). Just let me catch my breath. Let me comply with everything currently on the books but give me a year with nothing new.

WestRiverrat's avatar

The EPA has written regulations that would require farmers to eliminate dust when they are plowing, planting or harvesting. This would virtually shut down the food production in this country, as no one knows how to eliminate dust when farming. The regulations would also make them eliminate all odors from livestock in feedlots and pastures.

http://www.news9.com/story/12899662/epa-to-crack-down-on-farm-dust?redirected=true

Qingu's avatar

@Jaxk,

Several points.

• I know what the difference between revenue and profit is; there is no need to be condescending. Gas prices have fluctuated quite a bit since 2007; I am also not sure what the demand elasticity is like in your area. I also don’t know what other factors there are in your operating cost beyond those directly related to demand. Hence I suggested we look at revenue. I know it wouldn’t be the whole story so there’s no need to be snippy.

• My point in asking the above is to determine what is a greater cost to your operation: increased regulation costs, or lower sales. I strongly suspect it is lower sales. You have certainly done nothing to bolster your argument that it’s regulation.

• Let’s look at the broader picture. You have spent most of this question blaming Obama for increasing regulations and harming your business’s ability to hire workers. I’ve asked you repeatedly for evidence of such. You didn’t give any. You cited regulation that I was well aware (remember how I specifically said it dated from the 90’s?) predates Obama, refusing to acknowledge that it did. After several days of dodging questions and repeating mantras you’ve finally now come around to admitting that Obama’s regulatory climate has not directly harmed your business at all. Great. Now let’s move on.

1. You said that Obama has “doubled the regulatory volume.” Please support this assertion.

2. You mentioned an expensive air filtration upgrade regulation. I cited Obama’s desire to put this regulation on hold. Are you going to give Obama credit for trying to put this regulation on hold?

3. You’ve repeatedly said that regulation costs are what’s causing you not to hire. Please quantify these costs in relation to your total operating costs. Please tell us what your revenue picture has been like for the last several years. Then we’ll be able to see how much regulation is costing your business in relation to other factors. (And yes, I realize that both your revenue and operating costs have doubtless fluctuated with gas prices)

4. You’ve repeatedly said that you would hire more people if you didn’t have to deal with much regulation. If you did not have to pay for regulation, please tell us explicitly what you would do with the added profit. Would you invest? Would you pocket it? Or would you hire more people?

I would very much appreciate direct answers to my bolded questions. You’ve spent most of this question dancing around them.

Qingu's avatar

Also, citing the “Job Creators Alliance” is like citing the AFL-CIO. If you’re going to argue numbers, please use independent and authoritative sources.

WestRiverrat's avatar

@Qingu Point 2. All Obama has to do is issue an executive order to put the regulation on hold.

Qingu's avatar

@WestRiverrat, read the link.

http://yosemite.epa.gov/opa/admpress.nsf/0/795F471DFE4B993A852578CA00645D6C

The EPA, acting on Obama’s orders, has proposed waiving the regaulation. It sounds like after a 60 day comment period, states would then have the option of ignoring the regulation starting in 2013.

If you are saying he should immediately do away with the regulation instead of phasing it out slowly and through established methods, fine. But at least he is doing away with the regulation, yes?

(By the way, Obama never acts decisively or quickly. That is his MO. He studies things and tries to use established legal processes to change policy. For better or worse. Plenty of liberals would say “worse” too, including me. But this is criticizing his methods of implementing policies, not his actual policies.)

gorillapaws's avatar

@WestRiverrat apparently the source for the data in that chart is from an “Executive Opinion Survey” at the World Economic Forum. That hardly rises to the level of a formal international analysis of government regulations’ impact on business. And the list didn’t include Somalia at all (presumably they were too busy enjoying their Libertarian lifestyles to attend the conference), but does include #3 Rwanda, #4 Georgia, #5 The Gambia, #8 Oman, #9 Mauritania. Do you really think we should take inspiration from how these countries are run?

gorillapaws's avatar

The above response was intended to be directed at @CWOTUS. Thanks for the link btw.

It’s interesting how manipulative and misleading @Jaxk‘s source was though. The implication is the US is behind China in this metric therefore we need to improve it, well when you really analyze it you realize that the metric itself is obtained via a fairly dubious methodology, and even if you did find it a reasonable approximation of what it was intended to measure, the results are at all indicative of economic success.

The conservative spin-doctors however are deliberately being conniving and manipulative with that data to trick people into thinking government regulation = bad. @Jaxk Maybe you should choose where you get your information more wisely.

Jaxk's avatar

@Qingu

Here are the answers to your direct questions. Most have been answered but I’ll do it again.

1. I posted this above but here it is again. Bush added 16,693 pages to the Code of Federal Regulations (CFR) in 8 years. in 2009 we added 5359 pages. I’d call that double.

2. No. Here’s the problem. I spent $40,000 upgrading to system which now you’re going to tell me isn’t needed. That merely amplifies my point. If the system9which only had very small benefit to begin with) is only temporary, why the hell did I have to put it in to begin with. And I sure as hell don’t want to replace everything again to take it out. You seem fixated on this idea that I blame Obama for all past and present regulation. I don’t. He is the guy in charge right now and he has the ability to help get us back to growth by reducing the regulatory burden during this recession. Instead he’s increasing it. That’s what I blame for.

3. No. My finances are none of your business. I’m not sure why you think they are but I’ve told you every way I can. My financial picture is NONE OF YOUR DAMNED BUSINESS. Post your own P&L and give us all a laugh.

4. “You’ve repeatedly said that you would hire more people if you didn’t have to deal with much regulation.” I guess my answer would be Change the ‘you’ and ‘you’ve’, to ‘I’ and ‘I’ve’ and you have my answer. See that wasn’t so tough.

@gorillapaws & @Qingu

The recession is dragging on. We are on the verge of a double dip. Unemployment is not rebounding but stagnant at best, and the debt is building by $1.5 trillion/yr. Between regulatory costs and the cost of oil we are draining so much money out of the economy we have no chance of recovering. Your only answer seems to be, ‘Keep doing what we’re doing’. Maybe you believe all this added regulation is required, I don’t know. It is however, neither free nor cheap. But whatever we do let’s not fix the problem, let’s fix the blame. It’s Bush’s fault, It’s the evil corporations, it’s the radical tea parties, it’s the inflexible Republicans, it’s the Tsunami, it’s the Arab Spring, it’s the failing banks in Europe. And that’s only the highlights. Whatever we do let’s not even consider that we may want to do something different than what we’re doing. Because as we all know, the Democratic ideology will solve these problems given enough time. I wonder if I’ll live long enough to see it.

Qingu's avatar

1. There is no universe where that math works out as “doubling.”

2. He’s decreasing the very (apparently) pointless regulation you are complaining about. Do you think all regulation is equally pointless and harmful to growth?

3–4. Fine. You don’t have to post your personal finances. Just don’t expect to use your own business as an example of your point if you unwilling to contrast the losses from lack of demand to the cost of regulation.

4. I don’t understand what you mean. Are you saying you would hire more people with the extra profits? Or are you saying that you’ve never said such a thing and I’m putting words into your mouth? This is important, so I’ll ask again: would you hire more workers if you didn’t have to pay the costs of regulation?

“Maybe you believe all this added regulation is required, I don’t know. It is however, neither free nor cheap.”

So let’s see if it’s what’s actually preventing you from hiring more workers, or if the root cause is lack of demand for your gas station’s services.

I look forward to a direct and honest answer. I also look forward to some ballpark explanation for what costs you have actually incurred due to regulation vs. the drop in profits (sans regulation costs) since the recession started.

I can’t stress how important this is. Your entire argument is based on the following assumption: if businesses had more money, they would use it to hire more workers. This assumption is flatly contradicted by macroeconomic reality—corps are sitting on records amounts of cash, but not hiring. And I think we would all like to see if it is contradicted by your own business management as well.

Jaxk's avatar

@Qingu

I made a mistake and made a false assumption. I assumed any moron could do the math and see that 16,693/8yrs = 2086 per year. Apparently I was wrong in that assumption. So let me be more clear. 5359 is more than double 2086. Of course you could have just looked at the bar chart of major regulatory changes and gotten a feel for the scope. Naturally, that is asking too much of you.

Quite frankly you shown, you are completely incapable of understanding even the simplest concepts. You have absolutely no understanding of either small business or regulation. Yet you continue to make misguided or erroneous comments. You have absolutely no knowledge of my industry yet presume to know whether my revenues and or profits are up or down. In fact, it is not clear that you even know the difference. And you have the audacity to ask for my financial records.

I’ve given you enough information that any high school student could asses the impact of regulation. Even in our degraded public schools. Print out this thread and ask your teacher if she can figure it out for you.

Qingu's avatar

You said “doubled the volume of regulation.” Not “doubled the rate of adding new regulation from Bush’s average per year.”

“I have been dealing with these upgrades for a while now and when I see the volume of regulation more than double, I know it will bite me in the ass. Obama has more than doubled the volume of regulation.”

You were either mistaken or deliberately lying to make Obama look more regulation-happy than he actually is.

You’ve shown, as always, a propensity to dodge, weave, and lash out when people ask you to support your claims and call you on your BS. Time to put up or shut up.

Jaxk's avatar

@Qingu

My use of volume is neither obscure nor deceptive.

volume

4.
a. Amount; quantity: a low volume of business; a considerable volume of lumber.

Qingu's avatar

How is that supposed to help your case? He didn’t double the amount or quantity of regulation, @Jaxk.

If I have a book that’s 100 pages long, and I write five new pages in 2010, and you write 10 new pages in 2011, you are not doubling the amount of pages in my book.

What really bothers me is that I think you know perfectly well that you are mistaken.

gorillapaws's avatar

@Qingu I fear @Jaxk may be suffering from the Dunning–Kruger effect.

cockswain's avatar

I think the point @Jaxk is trying to make is that he is concerned there is a lot of new regulation coming at him, and while he doesn’t know the exact specifics of what it all is, he knows from experience that it will cost him money. Because he’s uncertain if it will cost a lot or a little, he’s being conservative in how he runs his business.

If I’m correct in understanding him, there are likely other business owners who are responding similarly. If true, then it doesn’t seem like a bad short-term economic idea to
declare a moratorium on new regulations so, as he said, owners can catch their breath.

Regulatory and tax reform are ways we can save money that I’d wager the average person, regardless of political leanings, can get behind. Helping get the economy rolling again by assuring business owners they won’t have the uncertainty of maybe there will be some unknown amount that would be wise to save to respond to some possible regulations doesn’t seem dumb.

@Jaxk You linked The Heritage Foundation. They are conservatively biased. If seeking the most impartial, objective information is a goal for you as it is for me, you should be aware of that.

Jaxk's avatar

@cockswain

I am aware of the Heritage foundations leanings. Unfortunately when your searching for information, it is not always available on the liberal web sites. I try to stay away from using thier opinions but the data from Heritage is quite solid. Try finding a liberal web site that will provide the quantity of regulation currently being passed. If you can find one, I’d be happy to use it.

The problem these days is that information is omitted as a result of political leanings. A liberal web site will provide facts and figures to support their political view, while a conservative site will use different facts to support theirs. Neither site is lying about the facts but neither site is supplying all the data either. You need to shop around to get all the information. That’s what I do. Just as a side note, I find it amusing that you can enter a search for a piece of data and you will get a list of nothing but conservative sites. Look for a different piece of data and you will get nothing but liberal sites.

Criticizing the source of data seems to be a great past time for many. If you can discredit the source, you don’t need to address the issue. I try very hard not to do that. I would much rather address the issue.

Just for fun, here is the Code of Federal Regulations. See if you can tell which regulations will affect you or me.

Qingu's avatar

@cockswain, Jaxk has not actually told us how he is changing his business operation in response to “uncertainty” about future regulation. He hasn’t said he would hire workers if he knew he wouldn’t have to pay additional regulatory costs.

So I don’t think it’s all clear that cutting back regulation would greatly help reduce unemployment. Most businesses would not hire if they had additional income right now.

And this is really the crux of the issue. The conservative argument is:

1. Regulation is costing businesses money!
2. If businesses had more money, they would hire more workers.
3. Therefore, cutting regulation will decrease unemployment.

But #2 is demonstrably not true in today’s economic climate—businesses have more money than ever, but are not hiring. Having income is a necessary, but not sufficient, condition for hiring workers.

Also, Obama is rolling back the very regulation that @Jaxk complained about.

Qingu's avatar

Just saw this: Obama plans to end or scale back hundreds of regulations.

Wall Street Journal (mostly behind a paywall I think…)
Another source

Can’t wait t hear @Jaxk express his enthusiastic support for Obama’s action.

cockswain's avatar

Thanks for keeping the discussion going. I’ve been meaning to chime back in, but have been too busy to write something worthy. In addition to those links, I just heard a report on NPR that 80% of some council of economists think the current regulatory environment is positive. I’ll try and find the source later. All fertile ground for discussion indeed.

Jaxk's avatar

Let’s see $ 10 billion over 5 years. Sounds like $2 billion/yr. In 2009 the total for major regulatory changes was $10.4 billion. We haven’t yet gotten the totals for 2010 & 2011. Still it sounds like he has at least heard the cry and has given some lip service to it. The key will be if he actually does something. It would be good to hear he is going to scrap the asinine rule about 1099s. He’s already said he would fix that but I haven’t heard him actually do it.

You’ll forgive me if I don’t applaud until I’ve seen what he’s actually proposing. Still it sounds like he’s acknowledging there’s a problem.

missingbite's avatar

Edited by me. Sorry.

cockswain's avatar

Here it is, a report from the National Association for Business Economics. I linked the page where it mentions the bit about regulations I referenced before, but I also recommend checking out the other parts of the survey as well.

What say you about the fact that 80% of economists think the regulatory environment is good for business?

Regarding use of biased sources, I can’t say I agree with your general position on that. To state that information isn’t always available on liberal websites implies that I am of the opinion that I will more readily accept biased sources over the least biased possible. That is absolutely not my position, and my general goal is to always find the least biased sources whenever possible. Unless one is a fan of Fox News, most people will agree that media outlets such as NPR, BBC, and PBS genuinely have the goal of presenting unbiased news. I will agree the sources I’ve mentioned do have a slight left-lean, but they are not intentionally trying to mislead and bias the viewer.

So I’m not saying “find me a liberal website or I won’t accept your source.” I’m saying “please use the least biased source possible so I don’t have to be as skeptical of the assertion.” Surely you can agree with that. I notice you do frequently link government websites to show your stats, which is commendable. When I see something from The Heritage Foundation or The Cato Institute, I can’t just accept the data without doing a bunch of fact checking. Such fact checking is indeed everyone’s responsibility, but I think for the purposes of a forum such as this one, it is easier to not have to do that with a source of known and obvious bias. They may have their facts correct, but I certainly have far more suspicion about it.

To your point of wishing to discuss the issue rather than discredit the source, I hope my previous statements have made it clear that that is my desire. If something isn’t true or is heavily distorted, it becomes unworthy of discussion.

Jaxk's avatar

@cockswain

Let me see if your being as honest as you think you are. First, let me know if any of the statistics I use or in fact are used by the Cato Institute or the Heritage foundation have been false. Or do you simply assume they are slanted because you lean left. In general I find that even liberal sites don’t use falsified numbers but rather are selective in what numbers they use. When you say you have to check the facts, what facts have you found to be in error?\

As for the NABE, what you gave me was thier opinion based on something, I know not what. It is funny that when I posted the list of interesting facts about regulation, the liberals went crazy. Out of the seven facts cited, they concentrated on one that was a survey even though all seven are verifiable. And frankly the one they concentrate on was the least important of the lot. Yet after I post multiple references regarding the cost of regulation, and the increased volume of regulation, and the fact that small business carries a disproportionate burden from regulation, you respond with a survey from (not business or even small business) economists saying the regulatory environment is fine. Nothing verifiable there nor even a way to figure out what they mean. Yet you use it to counter all my statistics.

The truth is, if you want to believe that the Small Business Administration is biased when the say “The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008” or when they say “Small businesses, defined as firms employing fewer than 20 employees, bear the largest burden of federal regulations.”, Then you can easily accept the survey from NABE. If you want to believe that the Heritage Foundation just made up the numbers for regulations in 2009 and beyond, then you can easily believe NABE. If you believe the Survey sanctioned by the State of California on the cost of Regulation is biased when they say “The study finds that the total cost of regulation to
the State of California is $492.994 billion which is almost five times the State’s general
fund budget, and almost a third of the State’s gross product.” or when they say “the regulatory cost is borne almost completely by small business.” Then it should be easy to believe the survey from NABE. If you think Obama was lying when he said ”“Under my plan of a cap-and-trade system,” then-Democratic presidential candidate Obama told the San Francisco Chronicle in January 2008, “electricity rates would necessarily skyrocket.” Then by all means continue to believe NABE.

If your willing to offset all the obvious facts in favor of Nabe survey, then by all means do so. But let’s not kid each other and make believe it is due to some bias in the facts.

gorillapaws's avatar

@Jaxk how much did the inferiority of regulation cost the people and businesses of the gulf of mexico during the BP spill, and continue to cost for a long time? Some regulations may cost money to implement, but have the potential to save billions (trillions?) if they didn’t exist or aren’t effective enough. The point is, regulations can be both good and bad, and simply looking at the volume of regulation (or the cost to implement/enforce), is a very inadequate metric for determining the impact on the economy. It may be that we have a severe lack of regulation in certain important areas, and an excess of asinine regulation in other areas. These things need to be evaluated on an individual basis.

The reason I focused on that one very misleading stat, is because it was the first on the list and I didn’t have the energy to sift through the rest of the filth on that site. Pointing out something as egregious as I did makes the rest of the article suspect, as no intellectually honest writer would do such a thing.

Jaxk's avatar

@gorillapaws

I’m not sure what inferior regulation you think caused the Gulf oil spill. Nor am I sure where you think I’ve declared all regulation bad. It is the type strawman that usually permeates these discussions. And I would assert that a good cost/benefit analysis should be required for any regulation. Whether major or minor.

As for facts, they are neither good nor bad, just facts. You make of them what you will. You correctly pointed out that ranking 59th may actually be a good thing rather than a bad thing. Afterall, both Great Britain and France fell much further down the list while Sweden and Finland fared much better. The list I provided merely categorized it as a fact. Ignoring facts doesn’t solve any problems. They can be viewed in a number of ways and the best answers come from using all the facts, not throwing out the ones you don’t like.

gorillapaws's avatar

@Jaxk you were the one making the volume argument against regulation, so my point wasn’t a strawman. Moreover, you believe there should be a ban on any new regulation, which may prevent necessary measures as new problems arise and could prove very costly to the economy if left unregulated. I think we both are in agreement that regulations should be judged on a cost/benefit basis.

As far as the regulation that could have prevented the gulf spill this piece of testimony I found particularly enlightening:

“Some of the toughest questions came from Coast Guard Capt. Hung Nguyen, co-chair of the investigating board. He raised the 2004 study that found that blowout preventers did not have the power to cut ultra-strong pipe joints.

Nguyem also asked Saucier how the MMS ensures that blowout preventers function. Saucier said for that, the government relies heavily on industry designs and oil company tests.

“Manufactured by industry, installed by industry, with no government witnessing oversight of the installation or the construction, is that correct?” Nguyen asked.

“That would be correct,” Saucier said.” (source)

Facts are facts, this is true, but when they’re presented in a manner that deliberately manipulates people’s opinions, leading them to conclusions that don’t at all follow from the facts themselves, then you’ve ventured into intellectual dishonesty territory. If you polled 1000 people on the street and told them:

“The U.S. ranks 49th in regulatory competitiveness, well behind China and other competitors.”

I’d bet 90%+ of them would think this is a terrible thing, but if you presented them with the full set of information explaining that some of the world’s most destitute countries top the list, and that there seems to be no correlation between a high ranking and a successful economy, and further explained to them that the data was collected by polling executives at a conference, I’d be willing to bet that most people would feel deceived and betrayed by the way the information was initially presented. It’s lying by omission, deceptive, and the tactic of people who distort facts to mislead people.

Jaxk's avatar

@gorillapaws

A little more recent update on the Blowout preventer after they’ve removed and examined it.

I’m struggling a bit with your argument about the ranking. There have been many arguments here and in the press about losing jobs to China. The fact that the regulatory environment is much easier there seems to be a particularly relevant argument. You can make all the arguments you have made, that we don’t want the lax regulatory environment but it goes directly to the point of why we are losing jobs to them. And frankly, the NABE is exactly the same type of poll with much less detail. I’m sorry if you feel deceived but it is relevant and only one piece of the puzzle. There were six other supporting points.

crimsonangie83's avatar

I believe the rich aren’t taxed enough, but I still do believe that if you overdo it, there will be repercussions.

Also I think “taxing the rich” argument causes us to forget more important, underlying problems that should be addressed. Such as special government favors and regulations that allow inefficient corporations to exist while squashing competition for smaller businesses. Bad government policies that allowed the housing bubble to happen (artificially lowered interest rates).

I think these problems are hard to solve, and as a result, more convenient to ignore. Taxing the rich is a step in the right direction, but taxing the rich alone wont solve our problems.

Qingu's avatar

@Jaxk, just wondering if you’ve ever considered the monetary benefits of regulation. Like, for example, medical expenses saved by regulating air pollution.

For example, the Clean Air Act is estimated to have saved $22 trillion over 20 years, in the form of preventing death and diseases, property values, lessening sick days, etc.

Also, a limited number of US industries (something like 30%, iirc) can be outsourced. I’ve noticed you’ve also neglected to do a cost-benefit analysis of the effects of lowering our wage and regulatory climate to attract labor for such industries.

Jaxk's avatar

@Qingu

A pretty self-serving report by the EPA. It does however demonstrate the way they go about cost benefit analysis. Minimize the cost by including only direct cost. Ignore the loss of industry moved over seas or never started, not to mention the higher cost of goods. Create an unlikely straw-man scenario to argue against. Hell California began regulating air quality in 1959 and auto emissions in 1961. I can’t wait for the report on thier costs of not regulating Green house gas emissions. They’ll be able to use the fact we have not been attacked by aliens to substantiate untold costs savings.

I think we all agree that regulation can be very beneficial, somewhat helpful, or actually detrimental. We should also be able to agree that regulation can be very expensive. I think it is fairly obvious that the number of new regulations has escalated quite dramatically over the past couple of years. Some due to programs put in place under Bush and some from Obama. New regulations as a result of some massive legislation such as Health Care and Dodd-Frank are creating a flood of new regulations. The EPA has decided that it needs to regulate CO2 which will have a massive impact on both industry and the economy.

We are currently in a massive recession. We have lost most of the tools we use to fight a recession. Things like tax cuts or massive spending programs won’t work with the debt we’ve amassed. Interest rates are already as low as we can get them. Unemployment is hanging around 10% and the CBO doesn’t expect much improvement for the next three years. We can accept that verdict or we can try to do some things to encourage growth. No one is suggesting we lower the regulatory burden but rather that we don’t increase it quite so fast. Much like the spending cuts which are not really cuts but rather a slowing of the spending growth.

We know that some of the new regulation will be a heavy burden. Things like the EPA regulating dust from farms. Things like forcing businesses to create 1099s for any vendor supplying over $600 in goods or services. Not putting these new regulations into effect does not lower the existing regulatory burden but merely keeps from making it worse. At a time when small businesses are dropping like flies, doesn’t it make sense to increase the failure rate? At a time when the hurdle to start a new business is higher than it has ever been, does it make sense to raise the bar?

New energy efficient windows may be a wonderful idea. But if you’ve lost your job and are struggling to make your payments, this may not be a good time to spend the money to upgrade. Let’s get back on our feet before increasing the burden. A few $billion in new regulation may not be a problem when the economy is growing like a weed but when it is grinding to a halt, it may be more than we can stand. The economy is not recovering. We may want to do some things differently.

gorillapaws's avatar

@Jaxk I actually agree with pretty much everything you said there. Especially with regard to small businesses. I think there needs to be more exceptions for them (especially in their first 5-or-so years when they’re trying to get things off the ground).

I do disagree about the energy-efficient windows however. Promoting energy-efficiency is exactly the right approach to improving the economy. It saves money in the long-run; stimulates demand for energy-efficient products/services at home; reduces demands on the power grid (particularly at peak hours) which means we can delay costly upgrades to the power-grid, have less to oversee and regulate (and protect from terrorists); reduces the dependency on foreign oil which is being used to fund our enemies and costs us money in terms of lives lost and the wounded and the ongoing costs associated with that; not to mention the environmental benefits. It’s like a win-win-win-win-win scenario.

I just used the tax credits to reduce the cost to replace an old A/C unit and oil furnace with an in-ground oil tank to a natural gas furnace, and efficient heat pump. I injected money into the US economy (because you can’t outsource these types of projects, which makes them particularly excellent for stimulating the economy), and have been enjoying heating/cooling bills since.

Qingu's avatar

@Jaxk, I think it’s funny that you call the EPA’s report “self-serving” but not the small business administration’s.

And then you go about repeating the same thing you’ve been repeating since, I reckon, the 1980’s.

Please support your assertion that the extra income businesses would get from lax regulation would cause them to hire more workers in a depressed economy.

I don’t know how many times you think you can get away with ignoring this basic question.

Jaxk's avatar

@gorillapaws

Yes, I may not have stated my point very well on the energy efficient windows. It was simply that if you have the money to upgrade the benefits can be substantial. But if you are already having trouble making your payments, spending money for a long range payback may not work. It merely makes you go bankrupt faster and before you are able to realize the savings. In other words, if you have the money to invest, it can be a very good investment. If not, it can be a substantial drain on your immediate income (or lack thereof).

Jaxk's avatar

@Qingu The difference between the reports is quite substantial. The SBA is not trying to evaluate or justify thier own work. And they are evaluating the costs of things that have actually happened, rather than costs that might have occurred in some imaginary parallel universe. Plus thier finding are substantiated by the independent report sanctioned by the State of California.

The Office Of Advocacy is a government agency created by Congress to provide Government agencies (specifically the EPA) with input on the impact of regulation on small businesses. Their report dated April 2011, is titled “Regulatory Impediments to Job Creation: Assessing the Impact of GHG Regulations on Small Business” and gives some insight into the lack of analysis used by the EPA in their most recent regulation. They say “EPA has not evaluated the economic effects that its initial endangerment finding and mobile source emissions standards have had on small businesses.” and “EPA’s own estimates indicated that the number of facilities that would have to obtain GHG PSD permits because of construction or modifications could increase from about 280 a year to almost 41,000 per year.(12) For Title V operating permits, EPA estimated that “more than six million facilities . . . would become newly subject to Title V requirements ”.

The impact of these regulations is quite significant. If you believe that small businesses having less cash to use for upgrades or employment will have no impact jobs, then I’d simply disagree. If you believe that the added costs of these regulations will play no part in small business failures, then I’d simply disagree. If you believe the added burden will have no impact on whether entrepreneurs will be able to start a new business, then again, I’d simply disagree.

I know you are convinced that business will not expand to acquire more customers but only after they have more customers. That business will not upgrade plant or equipment to cut their costs but only to accommodate more production. That businesses will not lay people off due to increased expenses but only for reduced revenues. Fortunately that’s a mindset I don’t share. I continue to give you the same answer because you continue to ask the same question. I obviously will never get you to understand the point and with your belief structure, it is not surprising that we disagree.

Qingu's avatar

EPA has evaluated costs of things that have actually happened. I don’t think you actually read my link.

And “you simply disagree”? So you have no answer to my question, you’re just making assumptions.

I’m not surprised.

Let me explain for the fourth or fifth time. Businesses having income is a necessary, but not sufficient, condition for hiring labor. In some circumstances, businesses with extra income will use it to hire workers. In other circumstances they will use it to invest, or to pay investors, or simply hoard it as cash. Those circumstances are largely dependent on the demand for the businesses’ products. After all, a business is not going to hire workers if there is no demand for those workers’ services.

What I just described—near-universal depressed demand for business output—is the reality of our economy today.

It also explains why businesses today are sitting on record amounts of cash, but not hiring workers.

Your solution—throw even more money at businesses and they’ll start hiring workers—is nonsensical from a business standpoint and is flatly contradicted by reality today. That’s why I disagree with you. Now maybe you could provide some evidence or argument for why you disagree with me instead of repeating over and over again “regulation is bad because it robs businesses of income.”

mattbrowne's avatar

The US simply has no choice but to raise taxes. Cutting spending does have limitations. Or do we want to fire all policemen and women? And then have frightened people rehire them as freelance employees? A new kind of tax which is then called an expense for services rendered? Of course NRA families will work out do it yourself schemes. Son, you’ll have the 10pm to 2am shift, I’ll do 2am to 6am and Mom will take over at 6am. And don’t forget to clean your guns after every use.

missingbite's avatar

@mattbrowne Before we just raise taxes why don’t we look into the real problem.

“By the way, if you go to the US Government Printing Office ( www.gpo.gov ), you can order a complete set of Title 26 of the US Code of Federal Regulations (that’s the part written by the IRS), all twenty volumes of it, at the bargain price of $974, shipping included.

According to the US Government Printing Office, it’s 13,458 pages in total. The full text of Title 26 of the United States Code (the part written by Congress—available for an additional $179) is a mere 3,387 printed pages, bringing the adjusted gross page count to 16,845.”

Lets reorganize our completely messed up system and see what we need to do in order of raising or lowering taxes. Contrary to popular belief, just raising taxes is not always the answer. This doesn’t even take into account the fraud and waste in our system.

We may very well need to raise taxes but I don’t think it is a great idea until we look for other solutions.

Jaxk's avatar

@Qingu

You seem to want me to prove to you how business works. Unfortunately, You have neither an open mind nor a good grasp on business in general. There are some basic concepts that should not be hard to understand. When business is making money, they replace that old computer. When their not they make do with the one they’ve got. When business is making money, they Replace that broken freezer. When they’re not they fix it. When business is making money they add that extra cashier. When they’re not, they just let the lines get longer during busy periods. When business is making money they keep the hold times for customer service to a minimum. When they’re not they leave you on hold for longer periods. When business is making money, they replace the person that quits. When their not, they just make everyone work a little harder or put in some overtime. It’s just the way it works. I know you can’t conceive of these practices but it is they way it works. When times are hard businesses will do more work with less people. And it all boils down to the bottom line.

Now a couple of points you’ve continued to ignore. According to the SBA the cost of regulation has risen by $1.75 trillion. Also according to the SBA, 95% of that cost is borne by small business. This is collaborated by the California study on Regulation which says, “the regulatory cost is borne almost, completely by small business.” I know you continue to use the $trillions that are being kept on the sidelines by international corporations but that has little or nothing to do with small businesses. It’s not small business that has $trillions sitting on the sidelines.

Just for information, Dun and Bradstreet has reported that small business failures have increased by 40% since 2007. Most of us could guess that simply by looking at the local shops that have closed. If you could connect the dots, you would know that making it more costly to do business, can only make that number worse. Regulation (as I think I have shown conclusively) makes doing business more expensive. Connecting the dots once again would tell you that if businesses fail we lose jobs. If it becomes more expensive to start a business, we don’t create any jobs. If it becomes impossible to get financing we don’t create any jobs.

Frankly I’m not interested in whether you believe any of this and it is not for your benefit that I’ve responded. There may be others reading this thread, that have the ability grasp the point. Then again there may not. Doesn’t matter, I’ve provided all the information anyone could want, to understand the issue. If you still don’t get it, I done all I could.

ETpro's avatar

@missingbite You and I have found a rare moment of agreement.

mattbrowne's avatar

@missingbite -

What I meant was that the US (and Germany too) needs to raise taxes and I agree that it isn’t a great idea, but all other solutions (mainly cutting spending where possible) isn’t enough. I’m not a tax fan. If they can be avoided they should. But the problem is huuuuuuuuuge, so we don’t have a choice. I don’t like medication either. But sometimes it makes sense to take some to prevent greater harm.

missingbite's avatar

@ETpro Glad to hear it! I’m sure there are other areas we can agree on!

ETpro's avatar

@missingbite I’m sure we do, For instance, I think the corporate income tax rate should be substantially lower do the US corporations can compete on an even playing filed with offshore trading partners that have low rates. But to do that, we should eliminate the huge number of loopholes not available to the small businesses that create most new jobs in America today, but only there for the big boys. Two thirds of US corporations pay no income taxes at all in recent years. That’s unfair to small business owners like me. I can’t afford any of the targeted loopholes written into our ridiculously complex tax code by lobbyists.

missingbite's avatar

@ETpro 100% agreement! If we can get all of our tax loopholes closed and a simplified tax code, I believe hiring would go through the roof. Especially if regulations would let US companies compete on a global scale. I would even be open to tax increases IF all else fails.

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