How to Fix What Ails Us

[badlydrawnjeff.livejournal.com]

Intel's CEO, Paul Otellini, had some fairly harsh words for the folks in power this week:

Otellini singled out the political state of affairs in Democrat-dominated Washington, saying: "I think this group does not understand what it takes to create jobs. And I think they're flummoxed by their experiment in Keynesian economics not working."

Since an unusually sharp downturn accelerated in late 2008, the Obama administration and its allies in the U.S. Congress have enacted trillions in deficit spending they say will create an economic stimulus -- but have not extended the Bush tax cuts and have pushed to levy extensive new health care and carbon regulations on businesses.

...

As a result, he said, "every business in America has a list of more variables than I've ever seen in my career." If variables like capital gains taxes and the R&D tax credit are resolved correctly, jobs will stay here, but if politicians make decisions "the wrong way, people will not invest in the United States. They'll invest elsewhere."

Take factories. "I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States," Otellini said.
The rub: Ninety percent of that additional cost of a $4 billion factory is not labor but the cost to comply with taxes and regulations that other nations don't impose. (Cypress Semiconductor CEO T.J. Rodgers elaborated on this in an interview with CNET, saying the problem is not higher U.S. wages but anti-business laws: "The killer factor in California for a manufacturer to create, say, a thousand blue-collar jobs is a hostile government that doesn't want you there and demonstrates it in thousands of ways.")

"If our tax rate approached that of the rest of the world, corporations would have an incentive to invest here," Otellini said. But instead, it's the second highest in the industrialized world, making the United States a less attractive place to invest--and create jobs--than places in Europe and Asia that are "clamoring" for Intel's business.

This is similar, as CNet reports, to what Carly Fiorina had to say on the matter, with the difference being that Otenelli isn't running for office. But clearly the business class is less concerned about speaking up right now.

We do need to think ahead to what's going to fix the problems, though. "Unexpectedly," unemployment claims are increasing again, home sales are in decline, and the stimulus, which was supposed to save us all, has "done exactly as we expected it to", which is to mean not performed as intended at all.

So let's see - we have a failed stimulus, a looming tax hike, new costs associated with health care and financial reforms, and businesses are not spending money in anticipation of this uncertainty. What's the way out? How do we fix this problem? Where do we go from here?

Comments

[dwer.livejournal.com]

anti-business laws like, oh, labor laws, environmental laws, etc. Yeah, ok. What does it profit me to have a big factory in my town that gives me a job but destroys my environment?

The stimulus wasn't big enough, nor long enough. Cutting taxes is what got us into this mess, and it's certainly not going to get us out of it.

[badlydrawnjeff.livejournal.com]

anti-business laws like, oh, labor laws, environmental laws, etc. Yeah, ok. What does it profit me to have a big factory in my town that gives me a job but destroys my environment?

A job. Money. The ability to actually give a crap about those things you care about, because you're not worried about making rent or feeding your family.

You know, the stuff the rest of the world has to care about but you and I can take for granted.

The stimulus wasn't big enough, nor long enough.

The definition of insanity is doing the same thing over and over and expecting different results. Tell us - when has Keynesian stimulus ever worked? If this wasn't "enough," why didn't we see minor positive results from this one? All indications at this point are that the spending made things worse.

Cutting taxes is what got us into this mess, and it's certainly not going to get us out of it.

So, cutting taxes created a housing bubble? Cutting taxes cause the unemployment rate to double? You're going to hang your hat on that? Based on what, exactly?

Cutting taxes alone won't get us out of it, no. But it'll do a hell of a lot more than spending more and more money every time and hoping that this time it will work.

[mrbogey.livejournal.com]

Don't you love how when you talk about anti-job regulations everyone runs to the most extreme examples and act as if that's the sole issue at hand. They don't look at unemployment insurance, mandatory benefits, business taxes and fees.

[dwer.livejournal.com]

The definition of insanity is doing the same thing over and over and expecting different results.

It's funny, because you NEVER STOP SCREAMING ABOUT CUTTING TAXES.

when has Keynesian stimulus ever worked?

The last time it was really tried -- during the great depression. Almost worked, too, till Roosevelt was forced to institute "austerity measures" due to the screaming of ideologues like you.

We've been doing the cutting taxes, trickle down, help the rich bullshit for an entire fucking CENTURY. IT DOES NOT WORK.

[telemann.livejournal.com]

Otellini:

In 2006, he oversaw the largest round of layoffs in Intel history when 10,500 (or 10% of the corporate workforce) employees were laid-off. Job cuts in manufacturing, product design, and other redundancies, were made in an effort to save $3 billion/year in cost by 2008. Of the 10,500 jobs, 1,000 layoffs were at the management level.[3]

In 2007, Otellini announced plans to build a $3 billion dollar semiconductor manufacturing plant in the port city of Dalian, China. According to a filing with the US Securities and Exchange Commission he saw his salary go up by a whopping 17 percent. Apparently, this was a reward for guiding the company out of the recession and removing a pay freeze for all employees. Otellini got total compensation, including cash and equity awards, of $14.12 million in fiscal 2009, compared to a package of around $12.1 million in fiscal 2008. His base salary was the same as last year, just a million dollars. However, his cash compensation jumped 28 percent to $6.25 million. There were also equity benefits totalling $7.87 million which were tied to company performance.

[rasilio.livejournal.com]

Where have we ever cut taxes in any significant percentage?

http://www.deptofnumbers.com/blog/2010/08/tax-revenue-as-a-fraction-of-gdp/

Tax revenue, as in the actual taxes collected by the federal government has been essentially constant between 15% and 20% of GDP since 1960

So, you're saying minor fiddling with the marginal tax rates that shift the actual taxes paid by no more than 2.5% of GDP in either direction caused an economic collapse?

Note changes to the marginal tax rates are essentially meaningless to this discussion, what matters is how much money the government is collecting in taxes, and what percentage of all economic activity in the country does it account for.

[badlydrawnjeff.livejournal.com]

Oregon is infamous for chasing industries away and a good reason that we've always struggled financially as a state, especially since we've lost our timber and fishing industries. A lot of good tech companies who used to be here have pulled up and left and many new ones are too frustrated by our politics, consider us and quickly move on.

Massachusetts has New Hampshire directly north of us, which means no sales tax, lower taxes across the board. It's no wonder Massachusetts is lagging so far behind.

You'd think politicians would learn from things like this. Massachusetts can't compete with New Hampshire for obvious reasons, but somehow competition between nations isn't enough to really worry about? Really? Look how well Texas is doing - we can't do more to emulate that?

Regarding your last paragraph, I have absolutely no idea what the answers are but I scared for my future and that of my young adult children.

In the short term, I'm hoping this is just one of those minor bouts of insanity this nation goes through from time to time. I mean, the government response to this economic situation has been a massive failure in almost every way, so it's getting past the gatekeepers of that information and making sure people know it.

Long term, well, it's going to depend on how we respond today, is it not?

[eracerhead.livejournal.com]

You know if the Republicans in the senate would get out of the way and stop blocking every single bill, we might have made some progress.

[badlydrawnjeff.livejournal.com]

Maybe if the Democrats didn't fight with themselves so much when they had a filibuster-proof majority, you might have a point.

There's not a single piece of major Democratic legislation that the Democrats needed Republican help on save the financial bill that the Democrats essentially got everything they wanted on. They won the stimulus (and we lost as a result), they won health care reform (and we lost as a result), they won financial reform (and we lost as a result).

Maybe the Democrats should consider moving their agenda closer to the mainstream so they don't have to do so much infighting, and then pass bills that will actually help people.

[devil-ad-vocate.livejournal.com]

I've never seen any individual, or group of people, make progress with anything - when all they can say is no. no. and no.

[badlydrawnjeff.livejournal.com]

You assume that progress only comes from doing something other than saying no. No is often an option when the alternative is terrible.

[merig00.livejournal.com]

just say no!

[weswilson]

The CBO disagrees...

Their latest study found that the stimulus:

• Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent
• Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points
• Increased the number of people employed by between 1.4 million and 3.3 million
• Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 4.8 million compared with what those amounts would have been otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)

I respect their assessments of macro economic ventures more than yours... or hers.

[weswilson]

http://cboblog.cbo.gov/?p=1326

[dwer.livejournal.com]

now he'll just say that these improvements weren't "worth the investment."

[badlydrawnjeff.livejournal.com]

The CBO only goes by what is spent and uses the multipliers provided to them (http://reason.com/blog/2010/03/26/heckuva-job-creation-estimate). The CBO does not do any sort of actual counting of stimulus successes.

Per the CBO head (http://www.c-span.org/Watch/Media/2010/03/08/HP/A/30436/CBO+Director+Elmendorf+on+Stimulus+Law+and+the+Economy.aspx), the CBO is merely "repeating the same exercises we [aleady] did rather than an independent check on it." To quote from the link above:

Following up, the questioner asks for clarification: "If the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis, right?" Elmendorf's response? "That's right. That's right."

[meus-ovatio.livejournal.com]

Let's can the bullshit and realize that "extra costs" have nothing to do with whether or not a company puts their factory in another country.

[badlydrawnjeff.livejournal.com]

Of course it does. It's a major part of where multinationals decide to headquarter.

[thies.livejournal.com]

taxes and regulations that other nations don't impose

what he really wanted to say: fuck the environment, fuck public schools in the ass, only shareholder value matters.

[oportet.livejournal.com]

A stimulus is smart short term, stupid long term.

Not doing shit is stupid short term, smart long term.

Politician's jobs are on 2 or 4 year cycles. They need your vote
to stay in power. Which strategy do you think they'll lean toward?

[mahnmut.livejournal.com]

True that. I say let's make their terms for life. You win twice: they don't have to worry about being re-elected AND they'll have enough time to follow as long-term policies as they deem appropriate.

Oh wait...

[404.livejournal.com]

dictators are great, as long as I am doing the dictating.

[reality-hammer.livejournal.com]

Roll it all back and start over.