Posts Tagged ‘ economic stimulus ’

More proof on how to grow an economy, not that ideologues will care

The President, the media, the CPUSA, the Democrats, and all their bleating followers do not seem to understand basic economics.  They don’t and they don’t want to.  Their own logic and emotional response trumps any facts one might present.  As one of my liberal friends once said, “It just makes sense, if the government needs money they must raise taxes, it defies logic that lower taxes could result in more government revenue.”

But of course he meant other people’s taxes needed to increase, not his.  All the facts in the world about how people are less productive, take fewer risks, hire fewer employees (who in turn would have paid taxes), hide their money, invest outside the high tax areas, or leave high tax areas, all of this was illogical or was simply dismissed as untrue.

Here is yet another case study.  High tax cities saw population reductions and slow growth.  Low tax cities saw population growth and the healthiest economic growth in the United States.  More growth, especially in personal income and increased employment mean more tax revenues for all levels of government.

Here is an excerpt from a paper you really should read.

Why Some Cities Are Growing and
Others Shrinking

by Dean Stansel
 

Over the last three decades, large cities like Pittsburgh, Detroit, Cleveland, Buffalo, and Toledo have seen their populations shrink, while areas like Houston, Atlanta, Dallas, Tampa, and Phoenix have seen their populations grow rapidly. Examining the policy differences between high-growth and low-growth areas can provide evidence that may help declining cities reverse their fortunes.

In 1980, Austin, Texas, and Syracuse, New York, were roughly the same size. The Austin metro area had a population of about 590,000, and the Syracuse metro area had about 643,000 residents. By 2007, Austin’s population had increased by more than 1 million while Syracuse’s population had been stagnant. That same disparity exists when one examines the growth of employment and real personal income. Another disparity between the two areas is the tax burden. State and local taxes accounted for nearly 13 percent of personal income in Syracuse but only about 9 percent in Austin.  Although there are numerous factors that can influence the growth of individual economies, one finds a consistent relationship between low taxes and high economic growth in metropolitan areas, in states, and in nations.

This article details that relationship between taxes and growth for the 100 largest U.S. metropolitan areas. In the 10 highest-tax metro areas, the state and local tax burden accounted for about 12.4 percent of personal income. In those same areas, population grew by 21.3 percent from 1980 to 2007, employment grew by 40.1 percent, and real personal income grew by 75.5 percent. In contrast, taxes were only 8.3 percent of personal income in the 10 lowest-tax areas.  The economic growth in those areas was much faster. Population grew by 64.4 percent, employment by 107.6 percent, and real personal income by 157.3 percent.

The contrasting experiences of Austin and Syracuse occurred in countless other areas as well. This article provides 14 additional examples of pairs of metro areas that had similar tax and growth patterns.1  The experiences of all 15 pairs of metropolitan areas provide valuable lessons for distressed areas everywhere. Keeping tax burdens low appears to be an important ingredient in the recipe for economic prosperity. If high-tax, low-growth metro areas like Detroit, Milwaukee, Buffalo, and Syracuse want to be more like high-growth areas such as Dallas, Tampa, San Antonio, and Austin, they should lower their onerous burden of taxation and bring spending under control.

For the entire article click here.

Democrats defy logic and the public

At least we see people are starting to get it.  Unfortunately, the administration looks at polls and dismisses them.  They are undounted.  Let’s review:  Health care that will raise a family’s health insurance cost while at the same time requiring that coverage under penalty of prison is not welcome by the American public.  The administration and the leadership in Congress flip America the bird and push harder.  Global warming is revealed to be a hoax complete with intentionally destroyed data and explicit written evidence of number tampering.  Does the Administration pause and investigate?  No they defiantly press harder, seeking an international treaty that would crush what’s left of American industry, impose a global tax on Americans, then pour salt on U.S. industry by announcing CO² a hazardous waste to be regulated. Stand-by for the breathing tax, trust me it’s coming. Meanwhile unemployment remains in the double digits.  Does any of this create jobs for Americans?  Not really.

I’ll give Obama kudos, he does not craft his agenda by following polls.  President Clinton seemed obsessed, chasing  polls, however Obama seems obsessed by ideological fervor.  I’ve heard him called an empty suit and while I have not come to any solid conclusion on that, I doubt it.  I do believe he is a front man for greater powers, but I think he is completely in line with those who sponsor him.  He has a clear agenda to socialize America.  He was raised and mentored by communists, by his own admission he chose to associate himself with radicals and communist professors while in college, why then should it surprise anyone when his administrative agenda is aggressively socialist?

I’ll answer that.  I believe it is due to two things.  Continue reading

AIG says, Let Them Eat Cake!

Marie Antoinette lost her head to excessive spending

Marie Antoinette lost her head to excessive spending

Legend has it that in the days leading to the French Revolution, upon hearing of peasant sufferings, Marie Antoinette, Queen of France, retorted, “Qu’ils mangent de la brioche,” or “Let them eat cake.”  Regardless of whether the Queen ever uttered these words she had a reputation for living and spending extravagantly while famine swept away the common folks who were paying for Royal extravagance.  (If you have ever toured Versailles you know what I am talking about.) The obvious point being that the French monarchy could not feel the sufferings of the peasants.  Today the management at AIG, a company living on the charity of the American people, feels detacted from the suffering of not only its stockholders but the American people as well.

The Best and the Brightest

This is not the first time I have written about AIG and I keep bringing up this poorly run company up because what is happening at AIG is an indicator of what is wrong in corporate America today.  (That and the fact that I am a stockholder in the company – two ways as a matter of fact, first there are the worthless shares I own personally and then there is my public ownership purchase with American tax money by our beloved government.) AIG, through its sale of CDS (Credit Default Swaps) has and continues to lose billions of dollars as businesses fail and investments tank, forcing huge payments.  In the face of poor management decisions that have resulted in the largest corporate losses in history ($62 billion in 2008 Q4 alone,) AIG insists on paying out $165 million in executive bonuses.  Why would a corporation reward poor performing managers?  According to AIG CEO Edward Liddy, “We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses, which are now being operated principally on behalf of the American taxpayers – if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”

Excuse me?  Do the best and brightest talents lose $62 billion in a single quarter?  However, this is beside the point, whether or not the losses are the result of managerial decisions, should anyone receive bonuses when the company loses money.  I had an inside connection at AIG and I know that in 2001, middle management bonuses were tied to corporate profits and non-managerial employees had their bonuses tied to their performance.  So why is it the norm that senior management receives their bonus based on a predetermined contract regardless of performance?  This is a leading indicator of what is wrong in corporate America.  The mindset seems to be that a company must retain senior managers regardless of performance and in a very irrational thought process; these managers are seen as “the best and brightest talent” even in the midst of extreme failure.

Why worry, it’s only a small portion of the losses

Last week a reader commented that Congressional Earmarks represented a meaningless 2% (he said 1% but his math was erroneous,) of the federal budget.  Logically, I would expect this person to draw the same conclusion about AIG bonuses.  After all, $165 million is only .3% of AIG’s 4th quarter losses and only .09% of the AIG bailout money.  So what is the big deal, right? The “deal” is, this is an indicator of how money is valued and how waste is viewed.  In response to AIG’s executive bonus plan, CNN reported that Treasury Secretary Timothy Geithner was “really upset.”  ABC’s This Week interviewed Obama’s economic adviser, Larry Summers where he expressed outrage at AIG.  Some members of Congress expressed similar anger.  Why? Where was this anger and outrage last week when Congress wasted nearly $8 billion in taxpayer money?

The hypocrisy oozed from Representative Barney Frank (D-MA) when he accused AIG of “abusing the system.”  Congress abuses the system every time it passes budget appropriation bills.  Frank used his position on the House Financial Services Committee to protect and profit from Freddie Mac. (Unknown to most voters, Frank’s long-time partner and lover was a Freddie Mac executive – a guaranteed scandal had Frank been a Republican.) Nevertheless, I digress.

Shareholders are not taxpayers — are they?

Summers explained that the Obama administration doesn’t care, “about the shareholders of AIG,” but is trying to safeguard the U.S. taxpayer.  (I’ll stifle the cough and eye rolling here.) Apparently, the administration is so buried in its own campaign rhetoric they have forgotten that stockholders ARE taxpayers and in fact AIG stockholders pay statistically more in taxes than most of the people Summers was trying to impress.  Regardless, the bonuses now being paid are the result of irresponsible executive contracts that did not hold management accountable for failure.  Now like any stockholder, the U.S. government must sit back and watch as the top brass get polished while it gets screwed, (and by it, I mean the rest of us.)

Do we have to take it?  The United States owns an 80% stake in AIG.  As a major stockholder, the federal government should vigorously pursue all means to pressure AIG to renegotiate executive contracts, tying bonuses to performance – no profit – no bonus – more profit – more bonus.  All corporations should operate this way but the government has no right to regulate such things unless it owns a significant number of shares, as is the case for AIG.  All stockholders should insist that top executive have an incentive to succeed and consequences for failure.

For now, I agree with Summers when he said, “We are a country of laws. There are contracts. The government cannot just abrogate contracts.”  Dictatorships and totalitarian regimes disregard contracts and private ownership; we do not.  However, as the company’s largest stockholder, the government can and should pressure the company to renegotiate those contracts in light of the current situation.  Boston University School of Law professor, Tamar Frankel, “Head you lose, tails I gain,” sums up the situation nicely.

UPDATE: Previously, in this blog I complained about lack of disclosure regarding AIG’s CDS counterparties.  After all, the bailout money was going to pay their losses.  Today, March 15, AIG released the list. It is interesting to note the companies (banks) cashing in CDS during the final quarter of last year.  My knee-jerk (and quite unresearched) reaction is that there might be a connection between government financial interests and the survival of these financial institutions.

America Pay Up

Most of us have been acutely aware that our wallets, bank accounts, and retirement funds are under siege from unseen forces.  Everyday increasing numbers of people are losing their jobs and the stock market feels more like skydiving than a roller-coaster ride.  Some are declaring this the second Great Depression while others say no.  Rohm Emmanuel told the WSJ, “You never want a serious crisis to go to waste.”  While we fret about our personal economic futures, there are people around the world working overtime trying to exploit this crisis.

Wednesday, British Prime Minister Gordon Brown addressed a joint session of the U.S. Congress.  Previous British PMs have focused on foreign policy issues but today’s political issues are quite different.  Brown barely made more than a passing mention of the Middle East or Iran, and mentioned no other international issues.  Instead, Brown chose to focus on the global economic downturn.  It’s not a surprising and even quite appropriate.

In this address Brown shied away from actually blaming America for the crisis.  Rather he only eludes to it, “we need to understand what went wrong in this crisis, that the very financial instruments that were designed to diversify risk across the banking system instead spread contagion across the globe. And today’s financial institutions are so interwoven that a bad bank anywhere is a threat to good banks everywhere.”  We know which banks led the charge.

Brown appealed to the Obama administration not to become protectionist but rather join Britain in leading a global economic stimulus.  “So should we succumb to a race to the bottom and a protectionism that history tells us that, in the end, protects no one? No, we should have the confidence that we can seize the opportunities ahead and make the future work for us.”  I know I am flying in the face of my economic education and the majority of Americans, however, it is my opinion that the abolition of import tariffs and excise fees are at the root of the global economic crisis.

What?  How could this be? Aren’t the housing bubble bust, subprime mortgages, bank deregulation, and the war in Iraq to blame?  Everyone seems to have come to this conclusion.  Rather than rehash the same rhetoric, I will summarize, free trade shifts government revenues from foreign imports to individual and corporate taxpayers.  Free trade makes first-world labor too expensive and third-world labor extremely attractive.  As manufacturing, textiles, mining, and oil production leave a nation it erodes the ability of the first world to produce things and this undermines the foundational economic strength.  Furthermore, when a nation no longer knows how things are manufactured, innovation is stifled.  Can an engineer design something to be efficiently manufactured if he or she has never seen a factory?  No, the engineer must be flown to plants halfway around the globe, an expensive process that must be repeated often.  Any smart company will eventually figure out that it would be cheaper to hire R&D engineers close to manufacturing, thus eventually the first-world loses that ability as well.  (I suspect someday this theory will be recognized but I will get no recognition for it.)

Thus, I don’t buy it when PM Brown says, “America and Britain will succeed and lead if we tap into the talents of our people, unleash the genius of our scientists and set free the drive of our entrepreneurs. We will win the race to the top if we can develop the new high-value products and services and the new green technologies that the rising numbers of hardworking families across our globe will want to buy.”  While I agree the U.S. and the U.K. still have the “genius” to develop new high value products and green technologies, I disagree with who profits.  These products will be manufactured in China or some other developing nation that employs virtual slave labor and the profits will benefit only the top brass of multinational corporations and their stockholders.  The U.S. certainty doesn’t benefit in job creation, since clearly no one here will be building anything.  A few service and sales jobs perhaps, but hardly three million.

But let us return to Brown.  When Brown said, “America knows from its history that its reach goes far beyond its geography. For a century you have carried upon your shoulders the greatest of responsibilities: to work with and for the rest of the world. And let me tell you that now more than ever the rest of the world wants to work with you,” he meant, you rebuilt the world after WWII and now we expect you’ll foot the bill again. Sure a few paragraphs later he claims, “America and a few countries cannot be expected to bear the burden of the fiscal and interest rate stimulus alone. We must share it globally.”  But how does the following line, delivered only a few seconds later fit in? “Let us … [help] the emerging markets rebuild their banks…”  I believe this would require a sizable injection of capital from some major nation, maybe a cash cow like the United States.

But wait, that’s not all, he wants the U.S. to finance the education of “every child in every country of the world.”  Did you catch the “do it for the children” appeal?  Brown understands how to play the American audience, suckers and idiots all.  Besides the sheer cost of such an undertaking, there are implications that far exceed the kind sentiment.  There are national sovereignty issues, religious, and cultural issues.  Some have gone so far as to suggest that Brown’s address laid the groundwork for a single world government proposal.  I hate treading on that ground but it could lead us into that discussion.

Read the full transcript along with British opinion at: http://www.guardian.co.uk/politics/2009/mar/05/martin-kettle-brown-speech-analysis

Who will pay?

The Obama administration and those idiots in Congress are on a spending spree like this nation has never seen before.  They are spending faster than a drunk in a liquor store.  The debt they are incurring will not likely be paid back even when in our great-grandchildren retire.  In fact, I fear, this spending spree may trigger a national default before sooner rather than later.  (Perhaps sooner than 2020.)  I have great difficulty understanding what the President might have been thinking when he said we had the responsibility “to ensure that we do not pass on to [our children] a debt that they cannot pay.”  The morons in Congress enthusiastically applauded but did they hear anything?  Hello?  What the hell are they doing if not exactly that. It isn’t getting better either.  President Obama is proposing a 2010 budget that is nearing the entire income of the wealthiest 2% – $3.5 TRILLION.  That’s before earmarks!  (If you, like most people, can’t even imagine what a trillion dollars really looks like, click here!)

Maybe I heard wrong.  Did the President say he did not want anymore earmarks?  I believe the quote was, “sacrifice some worthy priorities for which there are no dollars,” Did the House then pass a budget with 8600 earmarks ($7.7 Billion) the next day?  Did Obama threaten to veto it?  No, I cannot even find a story that quotes him as opposing it.  Perhaps the most outrageous claim I read in the Detroit Free Press story was when House Rules Committee Chairman Louise Slaughter, D-N.Y. said this budget has nothing to do with Obama but rather, “This has to do with President Bush’s budget.” I suppose this gives them a blank check since Bush will not be around to sign it, yet somehow in their warped logic it is his budget.  There is a term I’d apply to Ms. Slaughter, but I’ll stick to “idiot”, the meaning is the same.

nomoreearmarksI want to start a protest campaign.  We should all fax our senators a photo of an ear with the caption, “NO MORE EARMARKS!” These people are IDIOTS!  I am angry about this.  The trouble is getting worse NOT better.  Watching CNN yesterday I heard one interviewed Representative say earmarks were a necessary part of the stimulus package.  In the vernacular of the web, OMG!  Furthermore, the Justice Department is investigating likely connections between earmarks and campaign contributions.  I present as evidence that the House killed a proposal by Representative Jeff Flake, R-AZ, calling on the House ethics committee to investigate such connections, by a vote of 226 to 182.  I’m faxing an ear.  Moving on.

If you are one of those who thinks the rich will carry the burden of this stimulus and the coming health-care system you need to put down your crack pipe, pull off the rose-colored glasses, screw the cap back on the beer bottle, and wake up to reality.  Everyone wants free stuff.  Everyone expects someone else to pay.  There are always people out there who are overpaid and under-taxed but it is never us.  We are always under-paid and overtaxed and it’s about time someone else pays “their fair share.” Well guess what?  Right now, the wealthiest 1% of Americans pay 40% of all taxes paid yet they only earn 22% of all the money earned.  Even if we took their entire combined income there would not be enough money to cover this year’s budget.  So, if you just love Obama and can’t wait for the new national health-care system, hold on to your wallet.  You thought health insurance was expensive before?  Wait until you see your pay check.  The best part is you likely won’t be able to opt out.

There is a very good editorial in the Wall Street Journal that I want everyone to read.  I had begun to steam about this topic after I decided to see if there was enough money in the U.S. economy to fund this massive deficit and ensuing debt.  When I found this wonderful editorial I decided to stop right here and reproduce it here.

___________________________

The 2% Illusion

Take everything they earn, and it still won’t be enough.

President Obama has laid out the most ambitious and expensive domestic agenda since LBJ, and now all he has to do is figure out how to pay for it. On Tuesday, he left the impression that we need merely end “tax breaks for the wealthiest 2% of Americans,” and he promised that households earning less than $250,000 won’t see their taxes increased by “one single dime.”

[Review & Outlook]

This is going to be some trick. Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can’t possibly raise enough revenue to fund Mr. Obama’s new spending ambitions.

Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and “the wealthiest 2%.” Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That’s about 7% of all returns; the data aren’t broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% — about 1.65 million filers making above $388,806 — paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.

Note that federal income taxes are already “progressive” with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He’d also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won’t come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.

But let’s not stop at a 42% top rate; as a thought experiment, let’s go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That’s less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable “dime” of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.

Mr. Obama is of course counting on an economic recovery. And he’s also assuming along with the new liberal economic consensus that taxes don’t matter to growth or job creation. The truth, though, is that they do. Small- and medium-sized businesses are the nation’s primary employers, and lower individual tax rates have induced thousands of them to shift from filing under the corporate tax system to the individual system, often as limited liability companies or Subchapter S corporations. The Tax Foundation calculates that merely restoring the higher, Clinton-era tax rates on the top two brackets would hit 45% to 55% of small-business income, depending on how inclusively “small business” is defined. These owners will find a way to declare less taxable income.

The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can’t possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.

On that point, by the way, it’s unclear why Mr. Obama thinks his climate-change scheme won’t hit all Americans with higher taxes. Selling the right to emit greenhouse gases amounts to a steep new tax on most types of energy and, therefore, on all Americans who use energy. There’s a reason that Charlie Rangel’s Ways and Means panel, which writes tax law, is holding hearings this week on cap-and-trade regulation.

Mr. Obama is very good at portraying his agenda as nothing more than center-left pragmatism. But pragmatists don’t ignore the data. And the reality is that the only way to pay for Mr. Obama’s ambitions is to reach ever deeper into the pockets of the American middle class.  –wsj

The only thing we have to fear is…

Fear will kill you

If you have read my essays on Free Trade you will know that I believe the source of America’s economic weakness comes from outside the country.  Sure, the banking and housing crisis played roles but Free Trade policies are causing permanent damage.  As long as American companies employ Americans they are disadvantaged to those who don’t.   Not only do foreign companies not pay U.S. wages but they are exempt from U.S. corporate taxes.  Corporate taxes in the United States range from 35% to a top end of 41.6%.  The top end is greater than Japan’s 40% rate.  Do you understand why American businesses outsource?  They have to.

The Tax Foundation reported that the United States would need to reduce corporate taxes 20% just to rank in the middle of the international pack.  It would be an unrealistic expectation for this Democratically controlled government to cut corporate taxes like this.  It would be like asking a child to voluntarily give up candy – permanently.

No, we can expect them to fund the non-stimulus programs by increasing rather than decreasing corporate taxes.  After all, businesses are the bad guys.  They do nothing for this nation except abuse employees and charge actual money for their goods and services.  As a rule, they tend not to engage in social engineering, and rarely do they give away all their money (or borrow money to give) to unproductive or worthless employees.  They actually demand something in return for their money.  This simply is not fair and such evil entities should be punished, right?  Wrong, of coarse.

I do not understand which economic theory the current administration is following.  (I have studied economics too.)  Someone explain how giving money, through tax credits, rebates, or outright handouts, stimulates the economy?  I thought this spurious when Bush did it and we received no results.  So why are we doing it again and in a bigger way?  When people are losing their jobs, they won’t take this money and run out to Best Buy and buy a new iPhone.  If they did this still would have little lasting effect on the economy, iPhones are made in China.

If they were serious about stimulating the economy they would encourage, through tax breaks and other incentives, new business opportunities, the hiring of new employees, or create disincentives for businesses that cut jobs or outsource overseas.  What about a tax break for companies who expand and a new tax on American companies who employ non-American third party vendors?  How about reducing the corporate tax from 35% to 25% and then add a corresponding excise fee on non-essential goods.  Currently we punish businesses who call America home and reward them for moving jobs overseas where they can benefit from lower taxes and virtual slave-labor;  AND we give huge tax breaks to foreign companies who export to us.

youareallidiotsThere is no such thing as “bottom up stimulus.”  The bottom doesn’t create jobs they consume resources unless they are employed.  Businesses employ people.  Employment enables the economy to work because people are producing to meet demand.  The fact that they are producing allows them to create demand.  Business is at the top and when they employ people they are stimulating the economy and in turn are being stimulated by it.  Reagan called this “trickle-down,” a term abused by the left and successfully made to insinuate that the money stays mostly at the top.  Today’s conservatives need to rename this, perhaps “top-down job creation.”

The U.S. government is funded 95% through payroll, corporate, and income taxes.  Every time a business sheds an employee the government loses tax revenue both from the employee and the business, furthermore they incur additional entitlement payments.  When businesses shutter the impact is greater.  “Bottom up” simply adds  to the government burden and does nothing to address the underlying issue.

Last week I discovered an undated corporate memo on another blog that I want to reproduce here.  (I attempted to verify its authenticity, but the author refused to respond.  Therefore I cannot be certain the memo is real, so if you work for this company, let me know.) The memo boldly paints a picture of a situation I believe will become commonplace if Democrats increase taxes to fund their stimulus, ah, social engineering plan.  This memo clearly illustrates what we have to fear and from whom the threat comes.

To All My Valued Employees,

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges.  However, the good news is this: The economy doesn’t pose a threat to your job. What does threaten your job however, is the changing political landscape in this country. However, let me tell you some little tidbits of fact which might help you decide what is in your best interest.

First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story”. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You’ve seen my big home at last years Christmas party. I’m sure; all these flashy icons of luxury conjure up some idealized thoughts about my life. However, what you don’t see is the back story.

I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living
apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you. My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business — hard
work, discipline, and sacrifice. Meanwhile, my friends got jobs. They worked 40 hours a week and made a  modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer
clothes.  Instead of hitting the Nordstrom’s for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn’t look like it was birthed in the 70’s. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don’t. There is no “off” button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden — the nice house, the Mercedes, the vacations… You never realize the back story and the sacrifices I’ve made.

Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn’t. The people that overspent their pay checks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.

Yes, business ownership has its benefits but the price I’ve paid is steep and not without wounds. Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don’t pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes.  Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my “stimulus” check was? Zero. Nada. Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit and you wouldn’t work here. I mean, why should you? That’s nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.

Here is what many of you don’t understand … to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn’t need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it, now.

When you have a comatose man on the verge of death, you don’t defibrillate and shock his thumb, thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this? It’s quite simple. If any new taxes are levied on me, or my company, my reaction will be swift and simple.  I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child’s future. Frankly, it isn’t my problem any more. Then, I will close this company down, move to another country, and retire. You see, I’m done.  I’m done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

If you lose your job, it won’t be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about….

Regards,

Mark Harger

Superior Mechanical Contractors

What the nation needs now is …

Candidate Barack ObamaWhat the nation needs now is HOPE.  Senator Obama promised hope and spoken of it often while on the campaign trial last fall, but President Obama seems to be mired in depression and despair.  We hear him downplay hope and he continually lowers expectations,  who can recall him (recently) talking optimistically about the future or the economy?  Now, I know, when he signed the stimulus bill it was reported that he was “cautiously optimistic.”  But what the nation needs now it not a president that believes the sky is falling but one who will cheer us on and tell the economic sector there are better times coming.

This is what made President Reagan great and President Carter a failure.  Carter spoke of “economic malaise” and his words depressed and discouraged the nation, resulting in a  spiral into an ever worsening economic illness.  Contrast that to President Reagan who encouraged the people that better times were coming and that we were the shining city on a hill.

Jimmy CarterRonald Reagan

Because he was positive we all become positive.  Even though Carter’s economy continued during the first 2 years of Reagan’s administration, we the people, basically got back to work, knowing we would and could emerge at the other end.

Much has changed since then.  The government now relies nearly 100% on the taxpayers for its revenue, the government is the largest it has ever been, more people than ever rely on the federal government for their sustenance, manufacturing is all but eradicated in the United States, the national debt is nearing critical and will likely soon surpass our ability to pay.  Obama has many reasons to be panicked and to feel despair.  However, expressing his fears to the nation only makes matters worse.  Why is the stock market continuing its downward spiral with no bottom in sight?  You can’t blame the President entirely, but he is encouraging and intensifying the crash.  Phrases like, the economy “might not recover,” “economic catastrophe,” and “worse economy since the Great Depression” do little to inspire confidence in our chances for a bright future OR for that matter in his leadership.

HopeMr. President, if you are listening, which I doubt, hear this, now is not the time for cowardice.  Now is the time for real leadership.  True leaders do not lead the retreat but rather they inspire sacrifice, hard work, take daring action, and encourage their followers.  We have elected our first African-American President, who won the election on a message of hope.  Mr. President do not disappoint the nation and justify those bigots in our society in our hour of need.  The nation wants hope not despair.  You showed us that you enjoy the campaign when you recently held those townhall meetings.  However, the message this time was a far different one.  It is time for you to rediscover your own rhetoric.

I am not alone in this plea.  Even former President Clinton agrees. Clinton had this to say, “”[I] would like him to end by saying that he is hopeful and completely convinced we’re gonna come through this.”  Clinton, like me, believes it’s time for Obama to be “more optimistic about the economy to help the psychology of consumer confidence.”  Obama must choose whether to follow the example set by Jimmy Carter or the one set by Ronald Reagan.  I fear he may have already choosen.

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