By Michael Tanner
Wednesday, February 25, 2016
You can’t love employees but hate employers, as Senator
Angus King of Maine once said.
This fact has been obscured by the circus that has become
the Republican nominating process, but on the Democratic side, Hillary Clinton
and Bernie Sanders have been running one of the most anti-business election
campaigns of any major party in modern history. In fact, hardly a day goes by
without the Democratic candidates offering another idea that seems almost
perversely designed to kill jobs.
Start with a simple economic fact. Businesses cannot — at
least for long — operate at a loss. That means, among other things, as Greg
Mankiw, chairman of the economics department at Harvard, points out, that “the
wage a worker earns, measured in units of output, equals the amount of output
the worker can produce.” In non-economist speak, you can’t pay more for a worker
than the value that worker provides. Pay, in this case, means the full cost of
employing that worker: wages, insurance, training, retirement benefits, and so
on.
But both Clinton and Sanders seem determined to order
businesses to do exactly that. For instance, Clinton has called for raising the
federal minimum wage to $12 an hour — a hike of more than 60 percent over the
current federal level — while supporting state and local efforts to go even
further. Recently, she came out in support of efforts in Los Angeles and New
York State to raise the minimum wage to $15 an hour. Of course, that’s not
enough for Sanders. He wants the federal government to impose a $15-an-hour
minimum across the board.
And it doesn’t stop there. Sanders would also require
businesses to provide twelve weeks of paid family leave, two weeks minimum of
vacation, and at least five days of paid sick leave per year. Clinton has also
called for paid sick leave and some type of paid family leave. Both candidates
also back the Obama administration’s push to expand the number of workers who
would qualify for overtime pay. And both would even have the federal government
involve itself in how businesses schedule work hours, demanding fixed schedules
and limiting the ability of employers to change shifts or reschedule employees.
Maybe all this is a secret plan to support the robot
industry. After all, even President Obama’s Council of Economic Advisers
recently reported that the jobs most susceptible to being replaced by
automation are concentrated at the low end of the wage scale — precisely those
jobs that would be adversely affected by a mandated increase in labor costs.
Remember “card check,” the union organizing gimmick that
the administration unsuccessfully pushed during Obama’s first term? Both
Clinton and Sanders were, unsurprisingly, co-sponsors of the legislation in
Congress, and both still back it today. Both have also said they would take
other steps to increase the clout of organized labor.
In case any businesses manage to survive this onslaught
of new mandates, both Sanders and Clinton want to hit them with new taxes.
Clinton, who once said, “Don’t let anyone tell you that businesses create
jobs,” has been vague about exactly what business taxes she would impose,
though she continually calls for businesses and the wealthy to pay their “fair
share.” She supports legislation to tax U.S. corporations on their foreign
earnings and impose an “exit tax” on businesses that shift operations overseas.
She would also limit deductions for retirement accounts and impose a 4 percent
surtax on high incomes in a way that might fall on many limited partnerships
and Subchapter S corporations.
That’s small change, of course, for Sanders. As part of
his health-care plan, for instance, he would impose a 6.2 percent payroll tax
on employers, which would cost them at least $630 billion per year. Yes, that
is per year. Sanders also wants a 0.2
percent employer payroll tax (matched by employees) to fund a family- and
medical-leave trust fund. This is on top of his call to subject earnings above
$250,000 to Social Security payroll taxes. Hiring workers under a Sanders
administration would be really, really expensive.
Beyond payroll taxes, Sanders would eliminate several tax
breaks for oil, gas, and coal companies, among others. He would also end the
deferral of income from foreign subsidiaries and would change several tax rules
to curb corporate inversions (the relocating of a corporation’s legal domicile
to a lower-tax country), while limiting use of the foreign tax credit.
And none of this counts the tax increases that both
Bernie and Hillary want to impose on the high earners who manage or invest in
businesses. And it doesn’t consider how the trade barriers favored by both the
Democratic candidates (and Donald Trump) would drive up the cost of parts and
materials that American businesses rely on.
Big business, small business, or medium-sized business,
the Democrats just plain don’t like you. Unless, of course, you are a business
that is important to a key voting constituency, in which case they have a
subsidy for you.
According to the nonpartisan Tax Foundation, Hillary’s
plans would lower GDP by 1 percent — at a time when we have been stuck in slow
growth for years — reduce wages by nearly 1 percent, and lead to roughly
300,000 fewer full-time-equivalent jobs. And that’s the good news. Bernie’s
plans would reduce GDP by a whopping 9.5 percent, reduce wages by 4.3 percent,
and result in nearly 6 million fewer jobs. That’s Venezuelan territory.
According to a new AP poll released this week, an
astounding 81 percent of voters put jobs at the top of their list of
priorities. The Democrats’ anti-job agenda presents a tremendous opportunity
for whoever the eventual Republican nominee turns out to be. But taking
advantage of this opportunity will require the GOP to get serious, stop the
gratuitous name-calling, scapegoating of ethnic groups, and other juvenile
antics, and begin talking about real issues.
If it does not, we may look back at our current moribund economy
as the good old days.
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