Wednesday, August 17, 2011

Tax Cuts and Free Trade Do NOT create American Jobs

The only jobs the government can create are government jobs and ones funded by government programs, which requires greater government spending not cuts to government spending. The government cannot create private industry jobs; those are created by demand. Demand is created when people have jobs and money to spend. The reverse is also true: fewer jobs, less demand; less demand, fewer jobs. It becomes a vicious cycle.

The truth is we may be expecting too much of our government if we expect them to create jobs and decrease spending. Also, it needs to be said that tax cuts do not create jobs either. They merely increase profits for corporations and individuals and create greater government deficits. Companies don’t hire more people just because they have greater profits; they hire people when demand requires it. If tax cuts did create jobs, with as many years that have passed since the Bush tax cuts were enacted, we would be building bridges over the Rio Grande to get the workers needed to do the jobs instead of fences to keep them out.

That being said, although government cannot create demand without significantly increasing spending, it can influence where jobs are created. Our current tax policy encourages companies to close US plants and move overseas. Since the tax code was changed under President G. W. Bush in 2004, 58,000 factories have closed in the US; thereby, eliminating millions of good paying, middle-class jobs. We need tax policies that make it more advantageous for those companies to move their operations back home. If our current corporate tax rate is too high, then let’s make it 0% for any and all corporations that are headquartered in and do 100% of their manufacturing and/or service in the US, or move back home. At the same time we need to greatly increase taxes for companies that have moved all or part of their operations overseas. We need both the carrot and the stick.

Free trade does not create US jobs either. It simply makes it cheaper and easier for foreign companies to sell their goods in the US and put US workers out of work. We need trade policies that actually protect and encourage production in the US. It is not our responsibility to bolster the economy of China or India or Mexico. We should be putting the American worker first. We need “fair trade” policies that will actually increase the number of US exports thereby creating jobs, not “free trade” policies that merely exports jobs.

At the very least, our government should only be buying products made in America; especially military equipment. Why would we ever buy military supplies from a foreign manufacturer? In the event of a war, they could easily stop production and make it difficult for us to get necessary repair parts. In addition we are giving away many of our secrets when we allow foreign companies to manufacture weapons systems. This is not only un-American it is just plain foolish.

We all need to do our part and buy American, even if it costs us a little more. We need to boycott companies that have moved their manufacturing and service (call) centers overseas, and reward those which have stayed home. And we need to call our Senators and Representatives and encourage them to pass “By America First” legislation for all government expenditures. That will at least put some Americans back to work, which will then create greater demand. That demand will then create even more jobs, which with the proper tax and trade policies will be good paying American jobs.

The Rev. Dr. Jim Nelson writes and speaks frequently on Faith and Politics. He can be reached at