Oct. 21 (Bloomberg) -- President Barack Obama has a jobs plan, in case anyone has been off the planet for the past month. House Republicans now have a jobs plan. Each of the presidential candidates has some kind of employment blueprint.
Members of Congress have a bipartisan jobs plan: to keep their seats. Even Washington lobbyists have one, which is to ensure that the grotesque, 72,536-page tax code doesn’t sacrifice a single line of print. After all, without it they might have to return to the dreary practice of law.
Everyone, it seems, has a jobs plan. So why not your humble correspondent? I’ve had plenty to say about Obama’s plan, so it’s only appropriate to offer some concrete ideas of my own.
1. What’s in a Name?
Plenty. By calling it a jobs plan, the president and Congress re-enforce the notion that they hold the closely guarded secret of job creation.
Most reasonable people understand that the president doesn’t create jobs, unless he’s in the market for a White House chef, a dog walker for Bo or a horticulturalist for the Rose Garden. And yet, the name implies just that.
Employment is the outcome of economic growth. Focus on creating an environment for the economy to flourish, and the jobs will come. That’s why I’m calling my initiative the Empower the Economy Plan of 2011.
2. The Long and the Short of It
Every time the economy stumbles, the call goes out for the federal government to enact a fiscal stimulus that is timely, targeted and temporary. The focus is short-term.
With a few exceptions, including benefits for the truly needy, those three words should be eliminated from the vocabulary. We have little to show for all the T-cubed stimulus administered to the economy since 2008. Three years have elapsed, the long term has arrived, yet Obama is still pushing short-run measures.
Politicians -- Republicans and Democrats alike -- should stop picking and choosing among tax breaks and who should get them. One-time small-business tax credits for hiring new workers; a tax holiday allowing businesses to repatriate overseas profits; temporary tax breaks for investing in clean energy or whatever the government happens to be pushing: If you get the long-term fiscal compass right, you can leave short-term cyclical management to the Federal Reserve, which has the more potent tool in its printing press.
Both parties agree that the 35 percent corporate tax rate makes the U.S. uncompetitive. Fine. Lower it, get rid of it, do something that has a lifespan of more than one year.
Someone once said, the best short-term policy is good long- term policy. It’s time lawmakers followed that advice.
3. Kill the Code
As far as I can tell, the only people who like the current tax code are members of Congress and large corporations with dedicated lobbyists looking after their interests. If the Occupy Wall Street protesters in Zuccotti Park are looking for a unifying theme, they might try “kill the code.” (The regressive payroll tax does not appear to be on their list of gripes.)
When the code goes, so will the loopholes, which cost the Treasury an estimated $1.1 trillion a year. That’s something the 99 percent can get behind -- and probably some of the 1 percent, too, on philosophical grounds.
Americans spend about 6.1 billion hours a year complying with filing requirements of the Internal Revenue Service Code, according to the IRS’s Taxpayer Advocacy Service.
“If tax compliance were an industry, it would be one of the largest in the United States,” requiring 3 million full- time workers, the advocacy service said in its 2010 annual report to Congress. The estimated cost of complying with individual and corporate tax requirements in 2008 was $163 billion, 11 percent of total tax receipts, according to TAS; some private estimates are higher.
And what does all this time and money produce? Nada.
If the U.S. abolished all federal income and payroll taxes and adopted a national retail sales tax, such as the one advocated by Americans for Fair Taxation (see www.FairTax.org for details), April 15 would be just another calendar day. Perhaps it would be declared a national holiday. Our time and money could, and would, be better spent elsewhere.
4. Fair or Flat, Not Both
Republican presidential hopeful Herman Cain is making waves with his 9-9-9 plan, calling for a 9 percent income tax, corporate tax and sales tax.
Cain used to be an advocate of the FairTax and “knows his 9-9-9 policy is a direct violation of FairTax policy,” said Tom Wright, former executive director of Americans for Fair Taxation. “The FairTax organization would fold its tent and go home before it sees a tax bill that leaves the income tax in place and adds the FairTax to the current tool of tyranny.” (Cain’s campaign organization did not return numerous phone calls and e-mails asking for comment.)
Once Congress gets its hands on an additional revenue stream via a national sales tax, today’s 9-9-9 could be tomorrow’s 18-18-18. That’s why flat + fair = dangerous.
5. Death by Natural Causes
People of all political persuasions detest money in politics, yet the Supreme Court has ruled that corporate campaign spending is a form of free speech protected under the First Amendment.
What if there was another way to get money out of politics? Call it death by natural causes.
When you consider that 55 percent of all lobbying is related to the tax code, kill the code and you starve the beast.
The other 45 percent, lobbying presumably for government subsidies or other preferential treatment, would have to be public. Meetings between members of Congress and donors, businesses or any outside group would be open to the public, televised on C-SPAN or streamed live on the lawmaker’s or committee’s website.
After all, lawmakers are supposed to represent their constituents: lobbyists’ requests should be part of the budget. “Convince your senator to write a check,” Wright said.
And convince us in the process. Lawmakers are supposed to represent their constituents: Our business is their business, and their business should be conducted in sunlight.
We want to know in real time how the person we elected is spending our tax dollars. Transparency should force those charged with dispensing tax revenue to think twice, which is what those of us dispensing votes will be doing.
My Empower the Economy Plan has not undergone independent analysis or scoring by the Congressional Budget Office. I don’t presume to know how many percentage points it would add to the growth of gross domestic product or how many jobs it would create.
What I do know is that a reorientation toward long-term thinking and the adoption of tax policy that stresses uniformity, eliminates loopholes and permanently gets Congress out of the tax-favor business, is worth all the short-term stimulus Washington can come up with.
All I ask is that you pass this bill now.
(Caroline Baum, author of “Just What I Said,” is a Bloomberg News columnist. The opinions expressed are her own.)
--Editors: Mary Duenwald, Stacey Shick
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