Jackson Free Press

Republican and former House Speaker Newt Gingrich appeared at a local "jobs summit" yesterday, blasting Washington politicians for being clueless about how to spur job growth. Gingrich—and his message—hasn't changed much over the last decade when his party rode an anti-Democratic sentiment into House and Senate dominance. The continued strength of his party later allowed the GOP to dominate all three branches of government, including the White House, with the election of George W. Bush at the turn of the century.

His solution to fixing American's lingering job shortfall, similar to his call in the 1990s, was all about tax cuts.

Gingrich proposed five "major bold tax cuts" that he described as sure to jumpstart American industry. He wants to allow workers and employers a two-year, 50 percent reduction of the payroll tax, financed by unspent money from the Troubled Asset Relief Program and stimulus money, which he said would "free up" cash for people to hire and invest. He also calls for the government to allow small businesses (businesses with less than 100 employees) to recoup 100 percent of costs for the purchase of new equipment to help them invest in new technology.

Gingrich also called for a reduction of the business tax rate, even though a considerable portion of taxes collected federally is not provided through personal tax, and could represent a significant drop in federal revenue. He wants to abolish taxes on capital gains (China, he says, does not use the tax) and put a permanent end to the estate tax. The audience met his call to abolish the estate tax with huge applause, even though fewer than 100 Mississippi families even qualify to benefit from it, given that the current exemption from estate taxes is $3.5 million through 2010.

The speaker wasted no time ridiculing the leaders in Washington. He compared President Barack Obama's attempts to improve the economy and create jobs to the government's ability to grow corn—a job that should instead be left to farmers.

Meanwhile, the Obama administration hosted a high-profile jobs summit at the White House Thursday, containing business leaders and economists. Gingrich said Harvard graduates are ill-suited to discuss the economy, even if they specialize in the economy.

"Entrepreneurs and private industry create real jobs, not the government," Gingrich said. He also attacked the nation's current social welfare system, arguing that it teaches children to "lack energy, lack pride and lack vision," and he praised the nation's decision to pass welfare reform in the 1990's.

Gingrich took questions after his initial monologue. The audience threw few curveballs at the speaker, though Gingrich revealed through some answers that he understood why some companies outsourced jobs to other countries. Gingrich said the country needed to create a more effective business environment to retain businesses.

"Show me who wants to have a business that's heavily regulated, heavily unionized, heavily litigated, taxed heavy and not outsource?" Gingrich said. "If you can't make your product less expensive here, you're not going to make it on the world market. I want to make it less expensive through modernization, entrepreneurship and less taxation."

Oddly, the audience only gave Gingrich one question that pertained directly to improving employment at his "jobs summit." One woman asked for advice on how to handle lingering joblessness.

"Be very, very persistent," Gingrich said, and urged the unemployed to lower their standards and take "almost any job available," if not strictly for the sake of networking opportunities provided.

"You can begin the process of talking to people about a new job. It's an enormous step in the right direction," Gingrich said, without commenting upon the limited networking opportunities available at local fast-food joints, or a single mother's inability to settle for an evening job without evening child care.

Many of the Millsaps students in attendance approved of the speaker's presentation.

"We don't have many conservatives here on campus," said Millsaps political science major Bethan Pierson. "So this was a way for conservative students to hear similar viewpoints from politicians who believe in what we believe in."

Previous Commentsshow

Some of these ideas are astonishingly bad. Eliminating the estate tax would do absolutely nothing to generate jobs. It's hard to even make up an unconvincing argument for how it could do so. Also, cutting capital gains is not going to create jobs, certainly not in the immediate future and probably not ever. Small businesses create most jobs, and capital gains have no bearing on those businesses. The Republicans haul out the same ideas for every problem. Need to create jobs? Cut taxes for the rich! Need to reduce our trade deficit? Cut taxes for the rich! Finally, conservatives are such hypocrites on budget deficits. They always blather on about the debt we're leaving our children, but most of their political program amounts to cutting taxes. If Bush had not cut taxes on the wealthy in 2001, we would not have doubled our national debt during his administration. We can't cut taxes on the wealthy if we want to balance the budget. Gingrich offers only empty rhetoric, not practical plans for job creation.

Brian C Johnson

Dec 4 2009

Even Obama is talking about tax incentives for job creation so even his side of the aisle must understand that the tax burden on business has an effect on the decision to expand operations and hire more people. The article on this site about the new ranking Jackson has for the bang you get for your buck here lists reasonable taxes as one of the criterion for selection. I think that the reason the estate tax remarks Gingrich made got the response they did even though most people wouldn't benefit from it's abolition is that it's seen as an unfair tax on dying. People work hard all their lives and save and when they die the government steps in and takes a big portion of what they wanted to leave behind for their family. And why? Simply because they died. The estate had already subject to all of the income, capital gains, property and every other kind of tax out there and then they die and the tax man is back for more. Something doesn't have to be unfair to me in particular to be unfair in general. I do agree that tax cuts with unchecked spending, especially plans for war was a monumentally stupid idea by Bush. But that doesn't mean that cutting taxes didn't help business and the economy. Unfortunately that's not all he did. Capital gains are the rewards from investment, if your investment grows. The surest way to have less of something is to tax it heavily. It's one of the main reasons the anti-smoking lobby pushes for high tobacco taxes. Do we really want less investment of capital? Or do we want more people to invest and risk their capital with the hope of making capital gains? It's simple, in a recession we want more investment and capital in the market. Should taxes be zero percent? No, of course not. And I don't believe you want a 100% tax on anything either. There has to be a middle ground here that doesn't break the government or the backs of business and still allows us to fund the services we need.

WMartin

Dec 4 2009

There's a big difference between providing short-term incentives for actually making new hires (which is what Obama is talking about) and permanently cutting business taxes in the hope that businesses will use the money they save to hire (which is trickle-down economics). The former might actually work, while the latter has had (at best) mixed results. The estate tax is a form of income tax to the person who inherits, pure and simple. Why should inherited income not be be taxable like other kinds of income? Casino winnings are taxed, salary bonuses are taxed, even non-cash awards and prizes are taxed at their fair value. Why shouldn't income derived from an inheritance? Right now, if you inherit less than $3.5 million, the entire inheritance is exempt from the estate tax, anyway, so who, exactly, benefits from eliminating the tax? 0.1 percent of the population? The estate tax conversation is rhetoric of the rich who would rather keep everything they have. I don't blame the rich for wanting to keep their money, but "unfair" is a subjective term. There are also a whole smorgasbord of ways to avoid paying inheritance taxes; eliminating them altogether just makes it that much easier. People applauded Gingrich because they've been misled to believe estate taxes will affect them. It's the same reasoning that leads people to vote against their best interest: they've bought into the rhetoric. Same thing regarding capital gains. You only pay capital gains when you sell an asset, and in some cases (such as selling a home) you only pay if you don't reinvest it. You don't pay capital gains simply because an asset's value increased. Again, it's taxing income. Make a lot on an asset you've held for a short time, and you pay more tax; make a little on a long-held asset and you pay little to nothing. You can also deduct net losses, btw, although there is a limit on how much. Income is taxable; even the .01 percent interest on a savings account is taxable income. Cash out your 401K early and see what happens to its value. That, to me is more injurious to most Americans than a tax on income inherited in excess of $3.5 million. Inheritance and capital gains is a rich person's game. All the rhetoric surrounding the issue would have you believe that it isn't, but when you take the rhetoric away, we're really talking about shielding income for the wealthy, plain and simple. The wealthy will still invest, I assure you. What else are they going to do with all that money? Put in under the mattress?

Ronni_Mott

Dec 5 2009

I mostly defer to Ronni's lucid, impressive response. As she said, the estate tax is not a tax on dying. It's a tax on income, as is the capital gains tax. Note that the capital gains tax was much higher than its current rate during the sustained economic growth of the '50s and '60s. It remains much higher in most other industrialized countries. It is grim comedy to watch Republicans argue for cutting it further, especially considering that the increasing shift of compensation to stock options for the wealthy means that these taxes have become a de facto income tax. Does it make any sense to tax Warren Buffett's income at 15 percent? As he has said, he pays less in taxes, as a percentage of income, than his secretary does. That makes no sense. Conservatives have done an excellent job of convincing the American public that our deficits are caused by spending, that we cannot afford universal health care or investment in education. The truth is that by slashing taxes on the wealthy, the Reagan revolution committed us to debt. All I ask is that we return to the wise tax policies of Richard Nixon. Income for all Americans grew through the Eisenhower, Kennedy, Johnson, and Nixon administrations, when the top tax rate was between 70 and 90 percent. The government had only trivial amounts of debt during this period, and the unemployment rate was low. Since the 1980s, only the wealthy have reaped the rewards of our sustained economic growth. We demand a return to responsible government. We demand nothing less than the Full Nixon.

Brian C Johnson

Dec 5 2009

WMartin, I agree with Brian and Ronni. The so called death (inheritance) tax is just another form of the Federal gift tax. In addition our founding fathers(see the Federalist Papers) ,in their wisdom, saw how inherited wealth (in the form of the nobility in their day), was a bane on the common man. In endowed un-earned and disproportionate power to a minority, power which the minority used to subjugate the majority. The exact opposite of democracy.

FrankMickens

Dec 5 2009

Sure, I understand how the "death tax" is just another tax on income. The equivalent tax in the United Kingdom has always been referred to as "death duties." I think everyone understands that, it is just regarded as unfair. Also, the $3.5 million exemption is only in effect this year, the tax is repealed next year and then reappears in 2011 with a $1 million exemption. The point about what that has to do with jobs though is well taken because I don't see where it has anything to do with jobs or their creation. Conservatives have done an excellent job of convincing the American public that our deficits are caused by spending That's because it's true. If you budget yourself to spend more money than you have in income, you get a budget deficit. I thought everyone knew that. Here are some charts to make the point that while we tend to roughly keep the same level of tax receipts as income to the government as a percentage of GDP, spending has risen and continues to rise with no end in sight. This is the exact opposite of sanity to me, given that we just learned what happens when you overreach on easy credit terms. http://www.project.org/info.php?recordID=151 http://www.usgovernmentspending.com/us_20th_century_chart.html How much should the government be spending of GDP? What would be sustainable in you all's opinion? It's really strange how the 1950's and 1960's keep being brought up as if those days are somehow comparable to now. I wish you guys much luck with selling that.

WMartin

Dec 7 2009

Look at how receipts plunged first under Reagan and then under Bush II. We would not have doubled the debt over the last eight years were it not for Bush's tax cuts, which mostly benefited the wealthy. The problem was not that government spending increased but that receipts declined precipitously. The promise has always been that cutting taxes for the wealthy would accelerate growth, making it a good deal for everyone, but it's hard to see how anyone can take this notion seriously after the last few years. I wish your charts cited a data source. If you look at this chart, which is based on government sources, you can see that government spending as a percentage of GDP has not trended upward over the last 30 years. It's also useful because it includes receipts in the same chart. Obviously, it does not include our most recent troubles. The reason why I mention the '50s and '60s is that they expose the lie that you cannot have a vital, growing economy if you impose high taxes on the wealthy. If you dispute that claim, please do so.

Brian C Johnson

Dec 7 2009

The receipts chart Source: U.S.White House, Office of Management and Budget. It lists it on the web page but the way I had to post it didn't pick up the source. The links for their respective web site are listed under each chart. We would not have doubled the debt over the last eight years were it not for Bush's tax cuts, which mostly benefited the wealthy. Well, you could also say that deficits wouldn't have exploded if spending for the wars and everything else (stimulus give aways, medicare prescription programs, etc...) hadn't increased as well. Even under Reagan's years you can see the steady slope up of federal spending. So, there are two sides to balance on that scale and nothing happens in a vacuum. There are those in congress who advocate a tax and spending freeze at present levels in the hopes that the economy will grow it's way out of debt. I agree that any government program shouldn't have only one group benefiting. Most programs should have the general welfare of the people at their core. And I will reiterate that I believe the tax rate cuts were ill timed with the outset of the war. Both of the charts you and I provided show increased revenues into federal coffers during WWII to pay for the increased spending needed to wage war. I don't necessarily dispute that you can have a growing economy with high income taxes on the very wealthiest citizens. But that's a pretty broad statement. And in the 1950's and 1960's we certainly had a very different economy. What I do know is that it's a very difficult business climate right now. And I really don't need more taxes, regulations, fees, penalties or politicians who blather on about how many jobs they created when they've never really created any real world private sector jobs.

WMartin

Dec 7 2009

Well, you could also say that deficits wouldn't have exploded if spending for the wars and everything else (stimulus give aways, medicare prescription programs, etc...) hadn't increased as well. Right, WMartin. Bush's tax cuts for the wealthy seriously undercut his extravagant spending. Seems to me you and Brian are saying the same thing, i.e.: You can't increase spending exponentially and decrease revenue at the same time. Any person with a paycheck and bills can tell you that. Whatever the source of that revenue, we have to increase it (while lowering spending) to get the balance right. But lowering spending doesn't necessarily mean cutting programs, and raising revenues doesn't necessarily mean raising taxes. Both of those solutions are overly simplistic and one-track thinking. And freezing everything where it is sounds like sticking our collective heads in the sand on the hope that the mess will magically disappear. Just a couple of thoughts worth examining: A 2008 GAO study found that between 1995 and 2005, 38,000 foreign corporations (68%) and 1.2 million domestic corporations (75%) paid no taxes on their combined $2.5 trillion in sales. And while some may argue that about half of U.S. "S" corps pay taxes through individual returns, that still leaves $1.25 trillion ($1,250,000,000,000) in income (at least) on which no federal taxes (and, I'm guessing, state taxes) were paid. About a quarter of those U.S. companies had more than $250 million in assets and $50 million in annual receipts. A lot of that is accomplished through creative bookkeeping and legal loopholes (like off-shore banking). Closing those loopholes might be one starting point for raising revenues. Another obvious waste of money is the privatization of our armed forces and prisons. Contracts are a lot harder to get out of and a lot easier to just pay that to examine for inefficiencies.

Ronni_Mott

Dec 7 2009

Oh, and I love your comment about inheritance taxes ("it is just regarded as unfair"). It's a great example of passive voice. Who regards it as unfair? Those who have to pay taxes on huge inheritances. Who wants those who will never be affected by it to "believe" it's unfair? Newt Gingrich, for one.

Ronni_Mott

Dec 7 2009

WMartin, part of the lie of Reaganism and Bushism is that tax cuts would be matched by cuts in government spending, but those cuts in spending never materialized under either president. It's very difficult politically to cut government spending, but Bush actually grew discretionary spending faster than LBJ! At least LBJ raised taxes to pay for his wars and social programs. I grant that our country had a very different economy in the '50s and '60s. For one thing, middle-class Americans actually saw benefits from increased productivity. The central swindle of the last 30 years is that productivity has grown at an ever faster rate than it did in an earlier age. Yet, median wages have hardly risen at all. To me, that is theft. The American people are working smarter and harder than they ever have, but most of the benefits are going to people who are already wealthy. Our tax policy explains at least a part of this outrage. I get the sense that you are pragmatic about these matters. Part of why we got into the debt disaster of the last few years is that many Americans could only buy a house if they lied about their income, or could pay no money down, or could start off with artificially low payments. In other words, part of the problem was deregulation, but another part was income inequality. The cost of housing, education, and health care have all gone up tremendously, while wages have stagnated. If we don't do something to create sustained increases in the income of middle-class Americans--well, we won't have a middle class anymore. But in the face of these dire, systemic problems, all the Republicans can talk about is cutting taxes, mostly for the wealthy. I find that completely outrageous.

Brian C Johnson

Dec 8 2009