Job Creation In America
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Mr. THOMPSON of Pennsylvania. I thank my good friend for yielding and for also taking the leadership on this very important debate. I think of all the things that are going on across this Nation--and there are no shortage of issues--the issue that cuts directly to the heart, the economic well-being of our citizens, are jobs. We know that we are in dire straits with jobs in this country, the first time in decades the unemployment rate has gone over double digits, at 10.2 percent.
Now looking back, I see my good friend has a chart there that talks about the stimulus and talks about the percentage of unemployed. I remember vividly sitting in this Chamber where we were talking about--and it was a mandate that we had to do something because unemployment was at 8 percent, and if we did nothing, perhaps it would go over 8.5 percent. What was done and what the Democratic Party did was to just spend, and I think misspend.
I believed in my heart back then that it was not the right thing to do, that, frankly, it would make matters worse, that it would drive up unemployment, because as people would lose confidence, those entrepreneurs, those people that are small business people, those folks who were willing to take that risk and work long days--sometimes without taking a salary themselves to create prosperity--weren't going to have the confidence to be able to do that.
Usually I like being right. But unfortunately, I'm sad to say that we were correct, that I was correct, when unemployment went to 10.2 percent.
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Mr. THOMPSON of Pennsylvania. I would, and I appreciate that opportunity. The government cannot create jobs. Unemployment is now 10.2 percent. I would admit that I'm sure within that, even despite the bad unemployment, there are jobs that are temporarily subsidized by the Federal Government, even some of the projects that I originally thought would be good stimulus infrastructure projects. Well, those are not sustainable jobs. Those jobs are only there as long as the government is subsidizing them. As soon as that subsidy goes away, as soon as the stimulus money is spent, those folks are laid off.
A job, as I define it, is a good family-sustaining job that is there, that grows, that not only grows but that is working in a business, mostly small businesses is my experience, that is creating other new jobs. So this really has been fiscally irresponsible in terms of the spending that has gone on. It hasn't gone on for the right reasons. I think you and I are both supporters of a better plan. Now this is going back to when we were debating the stimulus originally, and the Republican alternative we had recognized that the true economic engine of this country is small businesses.
Mr. AKIN. Right.
Mr. THOMPSON of Pennsylvania. And we had proposals that were put on the table to ask for a vote that would provide tax deductions of up to 20 percent for small businesses, benefits that went to businesses with 500 employees or less, which effectively employ a large majority of Americans throughout this Nation. They are
economic engines that create prosperity, create new jobs and not jobs that will go away when government subsidies stop. These are jobs that are sustainable because they are based on real economics. They are employing people that are hardworking Americans, and most of these are small businesses owned by individuals who are willing to make the sacrifices, take the risks to go after that.
Now as I travel around my district right now, I've talked with a number of people that I consider my heroes in terms of small businessmen and -women, people who have started with nothing, but they're willing to work hard to take that risk, and they had that American dream.
Mr. AKIN. Put everything on the line.
Mr. THOMPSON of Pennsylvania. Absolutely. And year after year, these folks have been the ones that have gone out, and they've created new jobs every year by taking what they've invested, the return on their investment, and put it back into their small business. They reinvest there.
And you know what, I can't believe how many of them I'm talking with right now that are sitting on the sidelines because they're afraid of what's been going on in this country since January. They're afraid of the deficit spending they've seen. They're afraid of the regulations we've seen. These are small businessmen that--most of them pay their taxes as a limited liability corporation or an S corporation. So they pay their taxes on their businesses through their personal income tax. These are the folks that my friends on the Democratic side of the aisle have been piling on in terms of new taxes, more taxes, claiming these are the rich, and they can afford to pay more taxes. Well, actually what these are are the job creators, and when we pile on them, it forces them to sit on the sidelines.
Mr. AKIN. Just reclaiming my time, what you're talking about is the old proverb of killing the goose that lays a golden egg. Here is the thing that's a little bit tricky, because if you think about it, the government goes to hire somebody to build a highway. You say, Well, that's a good job. Somebody is building a highway. Well, it's true that for some period of time--and you put the emphasis on temporary--that job is there as long as we are taxing somebody to get the money in order to hire that guy. The way that economics works is that for every job, by taking taxpayers' money and creating a job with the government, what we do is we kill 2.2 jobs in the private sector.
So effectively, what you're doing is a very inefficient means of bleeding part of the sector that creates the real jobs and creating temporarily a government job. My son is in Afghanistan. We have places where the Federal Government hires people. They're legitimate jobs that need to be done, but all of those things are balanced on the back of the private sector. If you get too greedy and you start to squeeze the private sector enough, not only do you make it sick, you can kill it. And that's what was done during the Great Depression. They started taxing those small businesses so much and put so many regulations on them that they killed them, and they went out of business.
And that's what's starting to happen, and that's what frightens me terribly about the approach that we've got here. As I started this evening, I talked about what are the things that destroy jobs, and you just intuitively--you are talking about the people of Pennsylvania and about the businesspeople, you know, those courageous, quiet souls that go out and take the risks, not knowing whether they're going to end up sleeping under a park bench if their business goes out. They've put their whole life into it. They've invested in a new piece of equipment. And in the process, they create wealth and create jobs and stuff, those people.
Well, what do we do if you really want to hurt them? Well, what we do is everything we've been doing for the last year. First of all, it's this out-of-control Federal spending on all kinds of wasteful things. For instance, that stimulus bill had billions of dollars for community organizers like ACORN. We had money in that bill to produce that Web site that created congressional districts that don't even exist, claiming the jobs were created. That's a waste of money. The next thing, as you properly pointed out, is that you start taxing people, not only for the stimulus bill, but you tax them on energy.
So now this guy that's got a business, perhaps he uses a fair amount of energy, thinks, uh-oh, I'm going to have taxes on energy now. Then the issue that you properly pointed out is that you start creating this sense of fear and uncertainty. So now you've got red tape and more taxes and more taxes. The guy thinks, How in the world am I going to make a living with that? That's what's being done not just in Missouri and Pennsylvania, but it's being done to our economy because we're doing the wrong things. And it's not so complicated because other Presidents have shown the right way to go.
Let's just take a look at what we're doing, just hammering them fiscally. You started to list them off. First of all, there's the death tax, and there's dividends and capital gains. Those are taxes that were cut by Bush back in 2001 and '03 in order to get those small businessmen up and going. So those have been cut temporarily, and now that's going to expire, and what have the Democrats told us? I yield.
Mr. THOMPSON of Pennsylvania. I think this week, tomorrow we're going to be voting on the estate tax here.
Mr. AKIN. You mean the death tax.
Mr. THOMPSON of Pennsylvania. The death tax.
Mr. AKIN. Death is a taxable event, is the way they want it to be.
Mr. THOMPSON of Pennsylvania. It's not only a taxable event, but it's double taxation because all the money the government will be taxing has already been taxed at one time or another.
Mr. AKIN. So we'll get them coming and get them going. If they're dead, they don't complain as much.
Mr. THOMPSON of Pennsylvania. I think that's an excellent point, but that still doesn't make it right, and it's just absolutely wrong. I think the rate that we're looking at was 45 percent.
Mr. AKIN. Okay. So let's just run this logic. How logical is this if you want a decent economy? A guy is a farmer. Let's say he's got 200 acres of ground, maybe it's 2,000 acres of ground, and some tractors, and he dies. Now his son wanted to run the farm. So now when he dies, what does the son have to do?
Mr. THOMPSON of Pennsylvania. He's got to sell part of the farm because there is certainly no large fortune in farming sitting back there in liquid assets to be able to pay the death tax.
Mr. AKIN. So he has got to pay 45 percent of the value of the farm. If he's got 2,000 acres and a couple of tractors or whatever it is, he will have to sell almost half of that. Then it will get to the point where the farm is no longer selling half of what it makes it so that it doesn't really work. So what happens then?
Mr. THOMPSON of Pennsylvania. Well, I can't imagine. And today farming is such a challenge. We just had a hearing earlier today with one of the Agriculture subcommittees on the impact of the climate change on farmers. I was relating the plight of the average dairy farmer in my district. Dairy farming is a big industry. It's certainly an important industry to our Nation. Farms range in sizes, but the average size of a farm in my district is about 80 head of cow, 80 to 85. They tend to have enough acreage just to grow their own corn, to grow their own feed. Beyond that, that's the operation they run. And today on a dairy farm--and this is a Nationwide statistic--because of the problems we have with the pricing of milk, the fact that the Federal Government got involved in that decades ago, the average farmer loses $100 per cow per month.
Obviously, when, unfortunately, a dairy farmer passes away, there is no reserve sitting there to pay off the death tax. What are you going to sell from a dairy farm to pay that tax? Are you going to sell the cows? Well, you're not going to be a dairy farmer. Are you going to sell off the acreage? You're not going to be a dairy farmer. Are you going to sell the barn? You can't do that. You need the tractor. I think that just represents the plight of our farmers with that type of tax. There is nowhere to go.
Mr. AKIN. Reclaiming my time, it's interesting you mention that. I have a nephew that worked on a dairy farm in upper New York State. What you mentioned, 80 cow. The number I recall then was about 90 cows, 90 to 100 cows. It's kind of the standard lot size. It's about how much one man can kind of operate with his family.
So if you all of a sudden have to sell half of that, even if you could--say you could sell half the cows, half the farm, half the equipment, the problem is that half of it doesn't work. It no longer works. So if with every generation, you've got to cut the business in half, and give half to the Federal Government, how in the world are we going to have jobs and a strong economy? It's just nuts.
So, first off, we've got the death tax. We've got dividends capital gains. All of those are expiring and going back, which is going to have the exact opposite effect on the economy as what it had a couple years ago when we put it in place and it helped the economy get going.
Then on top of that, we've just spent $787 billion on that silly stimulus bill, $700 billion for the Wall Street bailout. And now we're talking about the biggest tax increase in the history of the country for global warming, an energy tax, along with tons of redtape that goes along with it, telling everybody in the country they've got to have an electrical outlet in their garage for their golf cart or whatever it is.
I mean, this is an awful lot of redtape, regulations, and taxes, all with the effect it's going to just kill those jobs. So there's a reason why that red line is going up, isn't there?
Mr. THOMPSON of Pennsylvania. If the gentleman would yield.
Mr. AKIN. I yield.
Mr. THOMPSON of Pennsylvania. Certainly, we cannot forget the taxes from the health care bill.
Mr. AKIN. Of course that's a couple of additional taxes on top of the small business men.
Mr. THOMPSON of Pennsylvania. Over $700 billion in taxes, much of that balanced on the backs of small businesses.
Mr. AKIN. So you're telling the small business man now we're going to tell you what kind of health insurance your employees need and you're going to have to pay for it, and if you don't do that, we're going to fine you and we're still going to tax you for it. And on top of that, that isn't quite enough to take out of your hide, we're also going to put an additional 5-something percent tax on top of any profits that you make in your business. So for sure you won't be able to invest that money back into your business because we're going to get that, too.
So on top of all of this, the redtape, the uncertainty, the lousy economy, tax after tax after tax, now we're going to hit them and tell them, by the way, any employee you've got, you're going to have to pay for their health care and we're going to tax you heavily for that. What's that going to make a small business man do?
Mr. THOMPSON of Pennsylvania. That's a great point.
There was a headline in The Wall Street Journal just yesterday that said "Job Cuts Loom as Stimulus Fades,'' and I think that speaks to the original point that we've made that the stimulus is unsuccessful. It has failed.
I know the President is having a jobs summit tomorrow. I'm hoping, actually praying, that when he does that, that better minds prevail and he hears from people attending that summit the types of things that we've been talking about. And we have been talking about this since January because we know we've had this issue. We have been talking about things such as cutting taxes for small businesses, of reducing the burdens that we put on those job creators. I mean, those are the types of things that we should be doing in terms of economic stimulus. And I know that our friends, the Democratic colleagues, are going to be looking at a stimulus two here, and my concern, my big fear is it's going to another special interest, big spending bill that really isn't about creating jobs, but it will be in the name of jobs.
Mr. AKIN. Reclaiming my time, I appreciated your optimism. The President has declared that he's going to have a meeting to get together and talk about the economy and everything, but I happen to know something about the invitation list. I don't know who was invited, but I have a pretty good idea.
I know who was not invited. The U.S. Chamber of Commerce. They represent businesses and small business. They weren't invited. The National Federation of Independent Business. These are all over. I assume you have them in Pennsylvania.
Mr. THOMPSON of Pennsylvania. Oh, yes.
Mr. AKIN. I have them in Missouri. These are coalitions of lots and lots of small businesses. You think they were invited? No, they're not invited. Who is invited? All the people who got money under the first stimulus bill.
So, first of all, the whole idea of the stimulus bill is wrong economics. You're not going to get the economy going by spending more money. If getting the economy going by spending money were how you did it, holy smokes, our economy would be red hot and on fire. We've been spending money like there's no tomorrow. And the economy is not doing so well. Look at that unemployment line. Spending money is not the solution. Yet the idea of more stimulus, more stimulus, it's just nuts.
Who was it, Einstein, that said if you keep doing the same thing and expect a different result, it's insanity? We're getting close.
Mr. THOMPSON of Pennsylvania. There's a two-part penalty to this. One is that we're spending all this money, but this is not even money that we have. This is deficit spending. This is spending that we have to reach out to creditors and to take out loans. And who is our number one creditor? Who's the number one entity that's lending us money? It's China. So it's not just spending; it's deficit spending.
The last time I remember a situation like this specifically was back at the tail end of the President Carter years, and my wife and I were young. We had just married. We were looking to purchase that first home. And we weren't making a whole lot of money, but it looked like, actually, as we looked around, that real estate wasn't particularly very expensive, and the reason for that was because of the inflation and stagflation that was going on at that point in time. So we actually applied for a first-time homeowner's loan from the State, and we thought we were in the money. We got that, and our interest rate was 14 percent.
Mr. AKIN. Fourteen percent.
Mr. THOMPSON of Pennsylvania. Fourteen percent. But that was a great interest rate, because at that point, the banks commercially were lending at 19 and 20 percent. But it was because of where we were in terms of high inflation and high unemployment, stagflation.
Mr. AKIN. Of course, the inflation is created by the Federal Government basically dumping more and more money into the money supply.
Mr. THOMPSON of Pennsylvania. Absolutely.
Mr. AKIN. I was just looking at a chart from 1960 up through this year, and you go along and it looks like a little saw tooth. It's running along. It's called M1, or the money supply, and last year we had a 10-times' increase in the government's release of that liquidity. Now, so far it hasn't turned into inflation yet, but every time that people have done that in the past, sooner or later it comes around to bite you as inflation.
We were just talking about spending. Here's kind of a chart of it. Here's the Wall Street bailout part two, and here's the stimulus bill, and then there's the SCHIP and then there's the appropriations bill. There's another bill. And then there are the other two that have not been passed yet, the cap-and-tax and the health care. To estimate that as a trillion is being generous.
I think it's helpful to compare a couple of things that are similar. As you recall, the Democrats were
critical that Bush spent too much money. In fact, I was here some of those years. I voted against some things that the administration wanted because I thought it was too expensive. But let's take President Bush's biggest spending year. His biggest deficit was in 2008. That's when the Democrats ran the House here. That was about $450 billion or so, and that was 2008. If you took the $450 billion as a percent of our gross domestic product, that was about 3.3 percent.
This year they just calculated the numbers, and the spending is $1.4 trillion. That's three times more spending in the first year than President Bush's was in his worst year out of 8 years. Three times more. And it puts the level of debt that we have created not at 3.3 percent of GDP but at 9.9. So we've more than tripled that ratio. It's the highest it's been since World War II because of this, because we just can't seem to say no to spending. And that's not the formula to help with the jobs problem.
Mr. THOMPSON of Pennsylvania. It's almost like our Democratic colleagues look at it as a candy store and that there's no end to it. It's an endless supply. And I suspect that at some point where--I know that we're probably coming up on the debt ceiling in terms of the amount of debt that we're able and allowed by law, by statute, to accumulate as a country. And I don't know that exact total, but I believe it's somewhere around $14 trillion, and the fact is that we are fast approaching that just after this past year.
I came here in January. Frankly, I think both parties were fiscally irresponsible in years past. I would be the first to admit that in terms of my party. And that's one of the reasons I was motivated to come, because if we were running a household, we would not be fiscally irresponsible. We'd live within our means. And the Federal Government has not done that under the leadership of either party in years past and certainly this year with my Democratic colleagues in control.
The fact is that this is not a candy store, and in terms of raising that debt ceiling, I think that's just providing a license for more and more deficit spending going forward into the future. And I would encourage all of my colleagues that we need to be bringing that debt down. We need to be working towards being debt free. That is fiscal responsibility. That is running this House the way we run our houses at home, and that is something that we need to restore. We have not had that for a very long time in this country, but I think that is something that we need to be committed to.
Mr. AKIN. You're absolutely right.
The reason that we're getting off the wrong track here is just because of this whole liberal Democrat concept of economics. They're trying to make two plus two equal five. They're trying to basically repeal the law of economics.
If you and I in our household, if we thought, oh, we're getting tight on money, we're starting to have economic hard times in our family, so let's go out and just run up a huge credit card bill and that will somehow make it better, people would lock us up. They'd put us in little white suits and lock us away somewhere and say these people are crazy.
Mr. THOMPSON of Pennsylvania. And we did that. Unfortunately, that does happen in our Nation, and what happens is people experience bankruptcy. They ruin their lives by doing that.
Mr. AKIN. Right. Except in this case, when the Federal Government does it, we bankrupt the entire Nation.
Mr. THOMPSON of Pennsylvania. Correct.
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