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OpEdNews Op Eds    H3'ed 9/8/11

Getting Those Republican Attacks Right

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At this point, Republican politicians are beginning to sound almost like wind-up toys when they complain about job-killing taxes and regulations that keep businesses from hiring. The media should at least do the Republicans and the public the courtesy of attempting to discern if these complaints make any sense. (McClatchy gets high marks for this effort.)

If the charges are true, then there are logical implications that can be explored. The media should be taking the time to see whether the evidence is consistent with Republican claims.

The tax side of the story is pretty simple. The Republicans are making things up.

We still have the Bush-era tax rates in effect. The wealthy are paying a smaller share of their income in taxes than at any point since the Great Depression. The tax rate on corporate profits is also hovering near a post-Depression low.

Some of the more inventive Republicans may claim that it is fear of higher taxes in the future that discourages hiring, but this doesn't fly either. There is a huge amount of turnover in the labor market, especially in sectors like health care, retail and restaurants.

Even if employers were convinced that higher tax rates in 2013 and beyond would make it unprofitable to have more workers; that would hardly be a reason not to hire workers today. It's a safe bet that ordinary turnover would allow them to reduce their workforce to the desired level long before the tax rates returned to their Clinton-era levels.

Of course we created 3 million jobs a year from 1996-2000. This makes it difficult to claim the Clinton-era tax rates would destroy jobs.

The regulation part of the story isn't much stronger. It is not easy to find the flood of onerous regulations coming from the Obama Administration. The health care bill is the one Republicans most often mention. This will put additional restrictions on insurers and also require firms with more than 50 workers to either provide insurance directly or to pay a fee to contribute to their employees' health care costs.

This one suffers from the same problem as the fear of taxes story. Suppose employers fear that the higher burden imposed by the bill will be a big cost when they first take effect in 2014. Why would this matter for hiring in 2011?

Furthermore, most large firms already meet the law's requirement since they provide insurance to their workers now, and most small businesses are not close to the 50-person cutoff where the regulation takes effect. Why would these firms be constrained in their hiring by the ACA?

If anything, the ACA promises substantial cost-saving to many large firms, since Republican economists have been maintaining that companies will dump their employees on the exchanges created under the ACA. If they believe this employee dumping story, then this means companies will be looking forward to big savings when the law kicks in. Obamacare should then be leading to a big surge in hiring.

At the very least, if ACA is the big bad job-killing regulation that is scaring employers then we should see its biggest impact on the employers most directly affected. This would be either large firms that do not currently provide insurance or alternatively firms that are near the 50-employee cutoff that would be subject to the law's requirements if they crossed the 50-worker threshold. Is there any evidence that these firms have curtailed investment and hiring? If the Republicans believed their "job killing" claims then they should have mountains of it.

It is also worth remembering that if firms would otherwise be hiring, but are prevented from doing so because of fears of taxes and regulation, then we should expect them to be hiring more temps and to increase the hours of their existing workforce. If this is happening, it sure isn't showing up in the data. Average weekly hours worked actually declined in the August data, and they are still below the pre-recession level.

The same is true of temp employment. Job growth in this sector has been stagnant for months and is nowhere near its pre-recession level.

These are the sorts of things that reporters should be looking at in assessing the claims of job-killing taxes and regulation. This is not a he said/she said. These are claims about the economy that can be verified.

Tens of millions of people are suffering from this downturn. It's not fun and games. Reporters have a job here. The reporters that just copy down outlandish claims by politicians without making any effort to verify them should switch places with one of the unemployed who would like to work for a living.
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Dr. Dean Baker is a macroeconomist and Co-Director of the Center for Economic and Policy Research in Washington, D.C. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. (more...)
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