Tag Archives: Job Creation

Trump signs executive order to eliminate job-killing regulations on small businesses

Trump signs good executive action = GOOD TRUMP
Trump signs good executive action = GOOD TRUMP

It’s Tuesday, so I guess it’s time for another executive order. Is it “Good Trump” or “Bad Trump” this time?

Yesterday, the Daily Signal reported this:

President Donald Trump signed an executive order Monday aimed at slashing regulations on American small businesses.

The order will expand regulatory review with the goal of dramatically peeling back federal regulations. The order is the Trump administration’s first step in repealing two regulations for every new regulation put forth, CNBC reports.

The measure also sets a $0 budget for new regulations in 2017, and a cap on the cost of any new regulations going forward. Once in effect, it will require federal agencies to propose any new regulatory rules to the White House for official review.

[…]By signing the order, Trump is following through on his campaign promise to put a moratorium on any new regulations when he takes office. Trump also promised to end “all unnecessary regulations” imposed on the energy industry and to “dismantle” the 2,300-page Dodd-Frank Wall Street Reform and Consumer Protection Act.

It’s good Trump!

Last week, there was another executive order designed to halt pending regulations.

The Washington Free Beacon reports that so far, Trump has halted $181 Billion (with a B) in regulatory costs:

In one of his first acts as president, Donald Trump effectively halted nearly $200 billion worth of regulations, according to a new analysis.

President Trump has taken aggressive action to curb regulations in his first week, promising to cut 75 percent or “maybe more,” and signing an executive order Monday to cut two regulations from the books when every new rule is introduced.

The first move came in the form of a memo to all federal agencies from Chief of Staff Reince Priebus, freezing all recently finalized and pending regulations. The American Action Forum, a center-right policy institute, found the action resulted in stopping rules that would cost the economy $181 billion.

Getting rid of regulations is important, because it frees up small businesses to put more resources on expanding and job creation. Most jobs are created by small businesses, and they are definitely complaining more lately about being overregulated.

Small businesses and regulations
Small businesses and regulations

The American Enterprise Institute explains:

Startups have been on the decline for 30 years, and I have written frequently on some of the possible reasons. One big open question: To what extent is government regulation playing a role in that decline? A blog post by Scott Shane, professor of Entrepreneurial Studies at Case Western Reserve University, offers a few data points that suggest rules and red tape could be hindering business formation. He notes, for instance, small business owners are complaining more about regulation than they have in the past — twice as much as in the 1980s, for instance. And this:

Over the past three-and-a-half decades, federal regulation has been rising, while new business creation has been falling, as the chart above indicates. Researchers at the Ewing Marion Kauffman Foundation, the Hudson Institute, the Hoover Institution and the Heritage Foundation believe the pattern is more than a coincidence. The per capita rate of new employer business creation and number of rules pages in the Federal Register — a common measure of the scope of federal regulation — correlate -0.67 over the 1977 to 2012 period. Similarly, the per capita rate of business creation and the number of pages in the Code of Federal Regulation — another frequently used estimate of government rulemaking — correlate -0.78 over the same period. (A correlation of 1.00 means that two numbers move in perfect concert.)

Correlation may not prove correlation, but it can provide a helpful lead on where to look for the problem.

Trump’s focus seems to be to get job creation started again by lifting the tax and regulatory burdens on those who create jobs. That’s a very different focus than his predecessor.

If socialism is so great, why are people moving from blue California to red Texas?

Migration from California to other states
Migration from California to other states – top 3 states are conservative states

A lot of young people seem to be really excited about socialism, and they want the United States to give it a try. They don’t know where socialism has been tried, and they don’t know what happens with it is tried. It just sounds nice to them.

Well, if you were going to pick one of the most socialist states in the United States, no one would fault you for picking California, where Democrats are running everything, and have been for a long time.

The Washington Free Beacon explains what happened next:

The number of Californians leaving the state and moving to Texas is at its highest level in nearly a decade, according to data from the Internal Revenue Service.

According to IRS migration data, which uses individual income tax returns to record year-to-year address changes, over 250,000 California residents moved out of the state between 2013 and 2014, the latest period for which data was available. The tax returns reported more than $21 billion in adjusted gross income to the IRS.

Of the returns, 33,626 reported address changes from California to Texas, which has been the top destination for individuals leaving California since 2007. Californians who moved to Texas between 2013 and 2014 reported $2.19 billion in adjusted gross income.

[…]“California’s taxes and regulations are crushing businesses, and there are more opportunities in Texas for people to start new companies, get good jobs, and create better lives for their families,” said Nathan Nascimento, the director of state initiatives at Freedom Partners. “When tax and regulatory climates are bad, people will move to better economic environments—this phenomenon isn’t a mystery, it’s how marketplaces work. Not only should other state governments take note of this, but so should the federal government.”

According to Tom Gray of the Manhattan Institute, people may be leaving California for the employment opportunities, tax breaks, or less crowded living arrangements that other states offer.

“States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average,” Gray wrote. “Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs.”

“Most of the destination states favored by Californians have lower taxes,” Gray wrote. “States that have gained the most at California’s expense are rated as having better business climates. The data suggest that may cost drivers—taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs—are prompting businesses to locate outside California, thus helping to drive the exodus.”

Just recently, I heard some of my Democrat co-workers laughing to each other about “trickle-down economics”, which is the “ridiculous” idea that if you allow businesses and workers to keep what they earn, then you’ll get more economic growth than if the government takes the money to study the drug use patterns of sex workers in the far East. Actually, we’ve been trying socialism-lite in this country for the past 7 years. How has it worked? Well, Obama has averaged 1.2% GDP growth through his presidency, far below average. And in order to get even that little growth, Obama will double the debt from 10 to 20 trillion in just 8 years.

Debt increase under Barack Obama
Debt increase under Barack Obama

But what about tax cuts? Do tax cuts create economic growth?

The conservative Heritage Foundation think tank describes the effects of the Bush tax cuts.

Excerpt:

President Bush signed the first wave of tax cuts in 2001, cutting rates and providing tax relief for families by, for example, doubling of the child tax credit to $1,000.

At Congress’ insistence, the tax relief was initially phased in over many years, so the economy continued to lose jobs. In 2003, realizing its error, Congress made the earlier tax relief effective immediately. Congress also lowered tax rates on capital gains and dividends to encourage business investment, which had been lagging.

It was the then that the economy turned around. Within months of enactment, job growth shot up, eventually creating 8.1 million jobs through 2007. Tax revenues also increased after the Bush tax cuts, due to economic growth.

[…]The CBO incorrectly calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion. Revenues for 2006 came in $47 billion above the pre-tax cut baseline.

Here’s what else happened after the 2003 tax cuts lowered the rates on income, capital gains and dividend taxes:

  • GDP grew at an annual rate of just 1.7% in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1%.
  • The S&P 500 dropped 18% in the six quarters before the 2003 tax cuts but increased by 32% over the next six quarters.
  • The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.

The timing of the lower tax rates coincides almost exactly with the stark acceleration in the economy. Nor was this experience unique. The famous Clinton economic boom began when Congress passed legislation cutting spending and cutting the capital gains tax rate.

Regarding the “Clinton economic boom”, that was caused by supply-sider Newt Gingrich passing tax cuts through the House and Senate. Bill Clinton merely signed the bills into law.

Very important to compare times and places where socialism has been tried to times and places where free enterprise and limited government have been tried. We know what works. It may not be what makes us feel smug, but we know what works.

Eight years of socialism: more debt, more regulation, fewer Americans working:

Has the economy been doing well lately? When I ask Democrats that question, they often point me to the stock market. I know that the stock market has done very well in the last 8 years. But I really question which Democrat policies have been responsible for this winfall.

Certainly, policies like Obamacare, Dodd-Frank, green energy subsidies, blocking Keystone XL, creating a student loan bubble, and even loosening mortgage lending again to create another housing bubble, cannot cause any economics growth. My personal opinion is that all the growth came from adding over $10 trillion dollars to the debt – a process that started with the election of Nancy Pelosi and Harry Reid to the House and Senate majorities, respectively, in 2007.

Look at the national debt:

Gross public debt, Democrats control spending in 2007
Gross public debt, Democrats control spending starting in 2007

If you add $10 trillion to the national debt in 8 years then OF COURSE the stock prices will go up. You would look richer too if you took your credit card balance from $8,500 to $18,500. But what is behind all this consumer spending and government spending? Just trillions of dollars of new debt.

I think a better measure of how the economy is doing is to ask job creators how it is doing. For example, we can ask small businesses, since they are responsible for so much of the job creation in this economy.

Here’s an article from the Daily Signal about that.

It says:

More than five years after the end of the “Great Recession,” only 21 percent of small businesses* say they have fully recovered. During the recession, lack of sales ranked as the top problem small business faced. Taxes placed second, and “government regulations and red tape” placed third. And since 2012, at least one in five small business owners identify government regulations as their most important problem.

The reason for this is simple—small business owners directly feel the impact of federal regulation in the daily life of their businesses. The small business owner is often the main person in a business who bears the burden of complying with regulations and paperwork requirements. According to a 2010 study, small businesses spend $10,585 per employee on regulation, which amounts to 36 percent more per employee than larger companies spend.

With that as a backdrop, it is easy to see how small business owners continue to wonder why Washington just does not get it when it comes to regulation. For decades, Congress has sought to solve societal problems through mandates on business. Too many Americans without health insurance? Congress tries to solve that by requiring businesses to provide health insurance to their employees (regardless of whether or not they can afford it) or pay hefty penalties. Too many Americans unable to care for a sick relative? Congress seeks to address that by mandating that a business keep a position open three months out of every year for qualified employees, using a cumbersome reporting system.

Always entrepreneurial, with a keen focus on the bottom line, the American small business owner looks for ways to minimize the time and money spent on things other than running his or her business. Since many of these regulations wisely exempt the smallest of small businesses, some employers purposefully do not increase hiring because they do not want to have to comply with the regulatory regimes that await businesses that expand to 10, 15, and 50 or more employees.

This might be why the labor force participation rate is at a 38-year low.

CNS News explains:

A record 94,031,000 Americans were not in the American labor force last month — 261,000 more than July — and the labor force participation rate stayed stuck at 62.6 percent, a 38-year low, for a third straight month in August, the Labor Department reported on Friday, as the nation heads into the Labor Day weekend.

[…]In August, according to BLS, the nation’s civilian noninstitutional population, consisting of all people 16 or older who were not in the military or an institution, reached 251,096,000. Of those, 157,065,000 participated in the labor force by either holding a job or actively seeking one.

The 157,065,000 who participated in the labor force equaled only 62.6 percent of the 251,096,000 civilian noninstitutional population — the same as it was in July and June. Not since October 1977, when the participation rate dropped to 62.4, has the percentage been this low.

So… do you still think that the economy is in good shape? Any economy is going to look better if you take an $8.5 trillion debt and run it up to $18.5 trillion. But if you look a little closer, you see that small businesses are hard-pressed, and it’s affected the real unemployment rate.

New study: federal control of land hurts job growth in oil and gas industry

The Daily Signal reports on a new study from the Heritage Foundation.

They write:

Current government regulations imposed by the Bureau of Land Management are harming energy production and holding back the U.S. economy, a new study reveals.

“While federally owned lands are also full of energy potential, a bureaucratic regulatory regime has mismanaged land use for decades,” write The Heritage Foundation’s Katie Tubb and Nicolas Loris.

The report focuses on the Federal Lands Freedom Act, introduced by Rep. Diane Black, R-Tenn., and Sen. James Inhofe, R-Okla. It is designed to empower states to regain control of their lands from the federal government in order to pursue their own energy goals. That is a challenge in an oil-rich state like Colorado.

“We need to streamline the process as there are very real consequences to poor [or nonexistent] management,” Tubb, a Heritage research associate, told The Daily Signal.

“Empowering the states is the best solution. The people who benefit have a say and can share in the benefits. If there are consequences, they can address them locally with state and local governments that are much more responsive to elections and budgets than the federal government.”

Emphasizing the need to streamline the process, Tubb pointed to the findings in the new report.

“The Bureau of Land Management estimates that it took an average of 227 days simply to complete a drill application,” Tubb said.

That’s more than the average of 154 days in 2005 and more than seven times the state average of 30 days, according to the report.

The report blames this increase in the application process on the drop in drilling on federal lands.

“Since 2009,” Tubb and Loris write, “oil production on federal lands has fallen by nine percent, even as production on state and private lands has increased by 61 percent over the same period.”

Despite almost “43 percent of crude oil coming from federal lands,” government-owned lands have seen a 13-point drop in oil production, from 36 percent to 23 percent.

So, if we were interested in more job creation (and lower gas prices) then what we would be doing is letting oil and gas companies hire more people and extract more oil. Streamlining the process for new new drilling permits would help a lot. Right now, we still have a very low level of labor force participation. If we want companies to hire more people, we need to make it easier for them to do it. That means a less anti-business climate.

New study: EPA carbon emission regulations eliminate 586,000 manufacturing jobs

Why don’t we build anything in America any more?

Well, we do build many things, but if the question is changed to “why aren’t we building more?” then the answer is that the costs of building things in America are much higher than building them elsewhere. One reason is that we have the highest corporate tax rate in the world. Another reason is that we pass regulations that make it expensive to make anything here.

Here is a report from the Daily Signal about a new study by the Heritage Foundation.

They write:

A new study predicts that more than a half million manufacturing jobs will be eliminated from the U.S. economy as a result of the Obama administration’s proposed regulations to curb carbon dioxide emissions.

“Every state would experience overwhelming negative impacts as a result of these regulations, but especially those with higher-than-average employment in manufacturing and mining,” said Nick Loris, a co-author of study, which was completed by energy experts at The Heritage Foundation—the parent organization of The Daily Signal.

The researchers projected how many manufacturing jobs would be eliminated in each state and congressional district as a consequence of the carbon plan, which is the centerpiece of President Obama’s effort to combat climate change.

The results show that 34 states would lose three to four percent of manufacturing jobs by 2023, and nine other states would lose more.

In Ohio alone, 31,747 jobs would be lost.

The study predicts that the Midwest would be hit the hardest, with Illinois, Indiana, Michigan, Ohio and Wisconsin losing more than 20,000 jobs each.

[…]The analysis comes just months before the Environmental Protection Agency is set to finalize its carbon regulations covering new, existing and modified/reconstructed power plants by mid summer of 2015.

Heritage’s study looked at the totality of the Obama administration’s efforts to limit carbon dioxide emissions—from motor vehicles and power plants, both new and existing.

The EPA’s plan forces states to cut power-industry emissions by 30 percent in 2030 from 2005 levels.

We have to save the planet!!!1!!

Meanwhile, in Boston:

It's global warming! The EPA must save us!
It’s global warming! The EPA must save us!

So, the next time anyone asks you why we don’t build anything anymore, tell them it’s because they voted for Democrats, and how this resulted in higher taxes and more burdensome regulations. Higher taxes and more regulation causes companies to close down here at home and move elsewhere, or they just scale back here and expand elsewhere. Democrats cause American jobs to go overseas, raising the unemployment rate. That’s why our labor force participation hasn’t been this low for decades. It’s basic economics.