In Viewpoints [last] Sunday, our two candidates for Congress in the 17th District, Democrat U.S. Rep. Cheri Bustos, and Republican challenger Bobby Schilling, stated the action they would take to help create and retain jobs in the area.
What struck me in what each wrote was that both seemed clueless as to how jobs are created in America. Both seemed wedded to the notion that jobs are created by "government spending." The programs of both harkened back to the 1930's New Deal programs of FDR. Neither wrote of what they would do to facilitate the creation of private sector jobs.
Rep. Bustos spoke of Cheri on Shifts, the Make it in America initiative, her "one-on-one visits," and the new Goose Island Digital Manufacturing Lab which was funded by the U.S. Department of Defense (according to U.S. Sen Dick Durbin, D-Ill.).
She also talked about the opening of the Thomson prison facility, which is expected to create "1,100 good paying jobs," and upgrading "aging locks and dams along the Illinois and Mississippi rivers."
Mr. Schilling touted his efforts to keep the Rock Island Arsenal going strong, and his belief in the need to "invest in public infrastructure," such as "transportation networks," highways and the Interstate 74 bridge.
Do not misunderstand me. The jobs at Goose Island, at Thomson and at the Arsenal are important. But to create them, the government taxes all of us to raise the money needed to pay the salaries and their related fringe and retirement benefits.
The advantage of jobs created by the private sector is that you and I are not taxed and are not paying the salaries with their related fringe benefits and retirement benefits.
When John Q. Public opens a yoga studio in downtown Moline, he pays the salaries, fringe and retirement benefits allotted to himself and his employees.
To understand the significant difference, consider this:
If there were only 11 American taxpayers, and if all earned $110,000 per year, each would have to be taxed $10,000 per year to pay the salary of one government employee being paid $110,000 per year. If two of the 11 were government employees, all 11 would have to be taxed $20,000 per year. If all 11 were government employees, each would have to be taxed 100 percent of his 2014 salary to pay his 2015 salary of $110,000. And of course, the above figures take no account of fringe and retirement benefits!
There is no question but that we must have arsenals for our nation's defense and road and bridges. Similarly, there is no question that the people who work in our arsenals and who build our roads and bridges work at necessary jobs; good jobs.
But there is a limit to how many people can be on the government payroll before the system crashes. Putting it another way, there is a limit as to how much people working in the private sector can be taxed to support people working in the public sector. At some point in time, taxes on the private sector make it unprofitable for the private sector to remain in business and pay taxes. Neither candidate discusses that.
The key issue in job creation is not how to create public sector jobs; rather, it is how to create private sector jobs. Public sector jobs are funded by taxation. True private sector jobs are funded by ordinary people who go into business and the people who work in the businesses; not by the government.
Any candidate for Congress discussing "jobs" needs to address not only government stimulus and public works programs, but how to get the private sector going.
President Obama and the Democrats have had six years to get the economy going. Unemployment is decreasing only because people who don't have jobs and have quit looking for work are erased from the unemployment roles, and moved to the role for people who are no longer looking for work. It is a cruel shell game.
Some people believe our Internal Revenue Code is about raising money to finance government operations. Others believe it is about income redistribution.
In either case, the best way to increase revenues is to increase the labor force participation rate from 62.8 percent. It is not complicated. If 62 people pay $1 each in federal income taxes, the government gets $62. If 95 people pay $1 each, the government gets $95.
The question that these two candidates need to be discussing is, how do we increase job creation in the private sector? Small businesses create most of the jobs. Are they over-regulated? Are they being taxed out of existence? What needs to be done to encourage them to hire? The labor force participation rate, according to Mr. Schilling, is at a 36-year low.. If 62.8 percent is too low, what are you going to do, Mr. Schilling and Rep. Bustos, to make it easier for private businesses to succeed and hire?
Government stimulus is good; it can create jobs. But it is dependent on taxation. Tax too much and you depress the private sector. One-hundred percent of Americans can't work for the government.
Posted Online: Oct. 3, 2014, 11:00 pm - Quad-Cities Online
by John Donald O'Shea
Copyright 2014
John Donald O'Shea
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