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Taxes kill jobs. They don't create them.

December 4, 2009 | By Amanda Reinecker

Yesterday, the White House hosted a "Forum on Jobs and Economic Growth" to address the soaring unemployment rate and to discuss new ways and policies to promote job growth. This is not the first time President Obama has attempted to address the nation's job crisis, and there are real doubts whether he'll be more successful this time around.

When President Obama took office in January, the unemployment rate was 7.6 percent. He quickly called for action and in March he signed into law a $787 billion "stimulus" package that would allegedly create 3.3 million net jobs and "save" millions more.

"Since then," Heritage's Conn Carroll writes, "3.4 million more net jobs have been lost, pushing the unemployment rate above 10 percent."

In short, the president's "stimulus" package, which was supposed to cap unemployment at eight percent, failed horribly. This is because "every dollar Congress 'injects' into the economy must first be taxed or borrowed out of the economy," explains Carroll. Therefore, the more the government spends, the more taxes Americans will have to fork over to Washington. This is exactly what we're seeing now.

Since taking office, President Obama has proposed massive new taxes on our ailing economy, explains Heritage tax policy analyst J.D. Foster. These taxes may come in many different forms but each of them will eventually affect every American:

  • Energy Tax: Cap-and-tax climate change legislation would cause energy prices to "necessarily skyrocket," as even President Obama admitted. This would cost the average American family an additional $3,000 each year.
  • Health Care Tax: Funding a Washington takeover of the health care industry, which represents one-sixth of our economy, will require massive new taxes from individuals, families, small business and employers.
  • More Deficits and More Debt: The President's ever-expanding budget will likely produce $13 trillion in deficit spending over the next 10 years, which is a debt Americans will have to pay.

These massive taxes create a poor environment for economic growth. But there are alternatives, like lowering tax rates to encourage investment. As Foster explains, "If the President wants the economy to create more employees today, then he has to stop threatening the employers with taxes, red tape, and a bleak future."

The administration and its Congressional allies have been presented with numerous opportunities to cut tax rates -- such as the highly unpopular death tax -- and thereby permit greater economic prosperity.  Nonetheless, the House voted 225 to 200 to "kill job creation again" by making the current estate tax rate permanent rather than completely abolishing it in 2010, as was planned.

A better jobs plan

Speaking at The Heritage Foundation on Wednesday, House Minority Whip Eric Cantor (R-VA) presented an alternative vision for a jobs bill -- one that would actually create and save more jobs without raising taxes and redistributing wealth.

Cantor's alternative includes reforms that Heritage experts have long-supported:

  • Resist unaffordable expansions of government and energy subsidies;
  • Take back unspent bailout and "stimulus" money;
  • Limit annual spending increases and enact firm sending caps that will force lawmakers to prioritize truly worthwhile programs;
  • Embrace pending agreements to expand free exchange with other countries; and
  • Create a Bipartisan Entitlement Commission to oversee reforms of government programs like Social Security and Medicare that threaten to bankrupt our nation.

The economy will likely recover on its own, but these policies are a sure way to speed up the mending process without causing further damage.

If the President is truly concerned about jobs, both he and the Congress should abandon their reckless policies and instead consider alternatives like Cantor's. Unfortunately, as Foster points out, "the best we can hope from government is that it keeps to a minimum the jobs it prevents and the income and wealth it destroys."

Other Heritage work of note

  • There's a lot at stake for American sovereignty at the United Nations' upcoming Copenhagen Climate Change Conference this month. Conferees are gathering to construct a new "Kyoto II" treaty, which would create an international regulatory body to which America will be subject. Heritage expert Steven Groves asks a good question: "Why exactly should the U.S. submit to major intrusions into its domestic energy policy that will threaten its economic well-being?" This is precisely the reason Americans rejected the first Kyoto treaty: because it was not in our best interest and would transfer authority away from the American people and into the hands of a new international bureaucracy.  
  • Earlier this week, President Obama announced his plan for future action in Afghanistan. "Thankfully," writes Heritage expert Mackenzie Eaglen, "he spoke of the fact that this war is not optional, that our efforts there are in America's vital national interests, and that the strategic goals and objectives of the U.S. are largely unchanged from March." However, absent from the President's speech was a declaration that victory in Afghanistan is not optional. We need a serious, concrete plan to achieve victory, not an arbitrary withdrawal date. 
  • Both the Senate and House health care bills are counting on massive savings -- $42 billion and $57 billion, respectively -- from home health care costs to help offset the cost of a Washington takeover. But home health care is not very wasteful, so these savings projections aren't reasonable. "Congress and the White House are great at assuming savings to justify new spending," writes Heritage Vice President Stuart Butler. "It's just not good at getting those savings."

In other news

  • The jobless rate fell slightly to ten percent and job losses declined last month.
  • A national study conducted by the American Revolution Center finds that 83 percent of Americans fail a basic test on knowledge of the American Revolution and the principles of the Founding. This finding demonstrates that Heritage's First Principles initiative is more important now than ever.
  • On Thursday, the New York State Senate defeated a bill to allow gay couples to wed by a vote of 38-24. The New York Times reports that the vote "signaled that political momentum, at least right now, had shifted against same-sex marriage, even in heavily Democratic New York."
  • Three uniformed Secret Service officers were put on leaver after they failed to stop the couple who famously crashed the White House state dinner two weeks ago. President Obama said his confidence in the agency remains unshaken.
  • A British university has agreed to probe the integrity of climate data released by its Climate Research Unit. This is the first acknowledgment that the research itself, as opposed to the researchers, would be investigated.  

Coming up at Heritage

To attend these or any other events at Heritage please RSVP at Heritage's website. Or you can view these events live online. All times are Eastern.

  • On Monday, December 7 at 12:00 noon Heritage Distinguished Fellow Lee Edwards will host a discussion with author George H. Nash on his new book, Reappraising the Right: The Past and Future of American Conservatism.

 Amanda Reinecker is a writer for MyHeritage.org-- a website for members and supporters of The Heritage Foundation. Nathaniel Ward, the Editor of MyHeritage.org, contributed to this report.