Robert Reich: Obama's Proposed Corporate Tax Cuts "will subsidize companies to cut even more jobs"

[Better Believe It]

Why Obama Is Proposing Whopping Corporate Tax Cuts, and Why He’s Wrong
By Robert Reich
September 7, 2010

One would expand and make permanent the research and experimentation tax credit, at a cost of about $100 billion over the next ten years. The other would allow companies to write off 100 percent of their new investments in plant and equipment between now and the end of 2011 at a cost next year of substantially more than $100 billion (but a ten-year cost of about $30 billion since those write-offs wouldn’t be taken over the longer-term).

The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.

Republicans and corporate lobbyists have been demanding tax cuts on corporate investments for one reason: Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable.

In sum, Obama’s proposed corporate tax cuts (1) won’t generate more jobs because they don’t put any cash in worker’s pockets (as would, for example, exempting the first $20,000 of income from the payroll tax and making up the difference by applying the payroll tax to incomes over $250,000); (2) will subsidize companies to cut even more jobs; and (3) will cost $130 billion — money that could better be spent helping states and locales avoid laying off thousands of teachers, fire fighters, and police.

Read the full article at:

http://robertreich.org/


-------------------------------------------

President Obama will actually propose 300 billion dollars in business tax cuts tomorrow according to MSNBC! BBI

Obama kicks off campaign with infrastructure plan
President proposes $50 billion initial investment, new business tax cuts
MSNBC
September 6, 2010

An administration official said Obama will propose on Wednesday in Cleveland that businesses be allowed to write off all their new investments in plant and equipment through 2011.

The plan would cut business taxes by some $200 billion over two years, the official said. The administration hope is that businesses worried about the sagging U.S. economy will nonetheless want to take advantage of the tax break by going ahead with plans for plant and equipment investments.

Obama will also announce on Wednesday a proposal for the U.S. Congress to increase and permanently extend a tax credit for business research and development. It would cost $100 billion over 10 years.

http://www.msnbc.msn.com/id/39023909/ns/politics-white_house/?GT1=43001

[DJ13]

1. Obama is still operating under the Summers/Rubin supplyside theory

If the problem is a lack of demand from consumers then where should the stimulus be targeted?

Summers and Rubin seem to think it should go to the producers, which is not only wrong, its f'in stupid.

[doc03]

2. Exactly, we are in a recession they don't need any production

capacity. So what do they do with the money they install newer machines that cut the workforce or move the plant to a area with cheaper wages. The infrastructure part won't make one single (job) it will make a very few very high paid construction workers happy for a short time and when the money runs out there will be no (jobs). When I heard this this morning I thought what is he doing trying to blow the election on purpose.

[Jim Sagle]

8. Why yes he IS trying to lose. And I think he even WANTS us to notice.

Although many on this board cover their eyes and say "La la la, I can't see you."

[Better Believe It]

10. I don't think so. He honestly agrees with corporate America's conservative economic agenda.

He will use militant anti-Wall Street rhetoric written by his speech writers when addressing unions and other progressive groups.

But it's his deeds, not words so much, that matter.

[Hell Hath No Fury]

17. The small business I work for --

doesn't need a fucking tax break it needs fucking CLIENTS. We have been struggling for several years and do not qualify for any Fed recovery program/funding, so we have no need for new employees or equipment. :crazy: The one thing that actually might have made a lick of difference for us is Single Payer Health Care -- the insurance premiums are killing us.

[doc03]

19. How about if they gave everyone making under $106,000

a payroll tax holiday the next six months would that give some clients the money to use your services?

[Hell Hath No Fury]

20. I think a payroll tax holiday would overall be great --

though I an not sure how it would effect us since we deal with primariily commercial clients.

[ProSense]

3. More on the R&D tax credits

Ezra Klein

Update: An administration source e-mailed to say that Atkinson and I misunderstood the proposal in this interview. Here's a more accurate description:

The President is proposing to increase the R&E credit, simplify it and make it permanent. Specifically, he proposes to raise the alternative credit rate from 14 to 17 percent, shifting more businesses to the simplified credit and raising the average value by 20 percent -- which would be the largest expansion in the credit's history. This takes the 10-year cost from the $85 billion for making it permanent as proposed in the President's budget up to about $100 billion.

[Better Believe It]

4. What a Second Stimulus Should - and Shouldn't - Look Like

What a Second Stimulus Should - and Shouldn't - Look Like
by David Sirota
September 7, 2010

From both liberal and conservative economists - as well as from history - we know that direct government spending on things like infrastructure and education investment is a good way to prime the economy in the short term and the long term. So is spending on stuff like unemployment benefits and food stamps, which puts money into the hands of those who will spend it immediately on necessities. And, of course, we know from polls that spending on such priorities is far more politically/electorally popular than devoting more money to corporate tax cuts or to deficit reduction.

Sure, it's great that the president today is talking about spending $50 billion on infrastructure. As evidenced by this very diary, I obviously support such new spending. But when the paltry sum of $50 billion is put up against double that amount in corporate tax cuts, it seems like the administration's priorities are all screwed up. If the job-creating weakness of the first stimulus bill was it's willingness to devote roughly 40 percent of its funds to less-effective tax cuts and just 60 percent to employment-boosting spending, then a similar weakness will even more amplified in new stimulus proposals that, by the administration's initial figures, may end up devoting double to tax cuts what it devotes to infrastructure spending.

After all, there are two fundamental problems with the tax cuts being proposed: 1) In general, tax cuts have not proven to be a very good short- or long-term job creator or economic engine and 2) In specific, as Citizens for Tax Justice has long reported, the R&D tax credit has become something of a corporate boondoggle, especially in light of the far more effective direct government spending on R&D. Even the conservative Wall Street Journal has lambasted this particular tax credit as blatant corporate welfare, noting that, according to the Government Accountability Office, 70 percent of it goes not to small businesses in need, but to already-wealthy multinational firms with receipts of $1 billion or more. Think big drug companies, as just one example.

But maybe that's the unfortunate point. Maybe this is yet another example of the administration looking first at how a policy can satisfy Big Money, and then at the (alleged) residual benefits to average American workers - rather than looking at it in the opposite way. If that's the case, it's tragic - because the success of the first stimulus's spending gives the administration strong ammunition to put forward a far more progressive proposal, one that would be far more politically popular for Democrats in advance of the 2010 election.

Read the full article at:

http://www.openleft.com/diary/20052/what-a-second-stimulus-should-and-shouldnt-look-like

[girl gone mad]

5. He just keeps getting it wrong..

but somehow his economic team is thrilled with the progress so far.

We're screwed. I've tried to avoid the economic nihilism, but wtf? He's like the anti-FDR. How much more do we have to take?

[inna]

7. Yep, we are screwed. nt

[indepat]

11. And blued and tattooed for good measure: so what else but newt?

:)

[area51]

30. In a Depression, we definitely need an FDR type president.

Obama keeps showing time and again that he's no FDR.

[BzaDem]

35. Has it occured to you that FDR had vastly greater majorities, and the current Congress would laugh

in the President's face if he proposed anything like what was necessary?

It seem like there is a direct correlation between people who oppose the President and people that have absolutely no understanding of the feasibility of different policy measures in the current Congress (or in general). They just think Obama can "light a fire under Congress" to get whatever he wants done. The "bully pulpit" and all of that.

It's pretty sad.

[girl gone mad]

40. We're in a crisis here.

Our government just created $1.3 TRILLION dollars out of thin air over the past year, and gifted it all to the banks. That's on top of some 12 Trillion in bailouts and backstops given in two short years.

Tell me again how the President is powerless to help working Americans and that his $50 Billion dollar infrastructure proposal is the best he can do.

The administration has made their priorities quite clear.

[Better Believe It]

48. So the 20 southern Democratic segregationist Senators (Dixiecrats) were progressive votes?

Really?

Well, that's new news!

[Chan790]

79. Then doing nothing at all is the better course of action than what he's doing.

He's going to keep doing stupid Hooveresque crap that deepens the crisis and you're going to keep covering his ass Bza.

Or he could just not do anything at all...which would ironically be better because it at-least won't deepen the crisis.

[Better Believe It]

6. Administration official says tax breaks will allow companies to have more cash on hand!

Well, that's certainly good to hear. Corporate America is only sitting on 1.8 trillion in cash right now that they refuse spend on job creation. Hell, give them another 200 billion dollars! They might want to use some of it to destroy more jobs via automation and robots. What's the problem with that? BBI


CBS News
WASHINGTON, Sept. 7, 2010
Obama to Call for Business Investment Tax Breaks
Proposal to Let Companies Write Off New Capital Spending More Quickly Aimed at Incentivizing Investment

(AP) President Barack Obama will call on Congress to pass new tax breaks that would allow businesses to write off 100 percent of their new capital investments through 2011, the latest in a series of proposals the White House is rolling out in hopes of jump-starting economic growth ahead of the November elections.

An administration official said the tax breaks would save businesses $200 billion over two years, allowing companies to have more cash on hand. The president will outline the proposal during a speech on the economy in Cleveland, Ohio, on Wednesday.

http://www.cbsnews.com/stories/2010/09/07/politics/main6841482.shtml

[Better Believe It]

9. Suddenly, a raft of tax-break proposals from Obama

Suddenly, a raft of tax-break proposals from Obama
By TOM RAUM, Associated Press Writer
September 7, 2010

WASHINGTON – President Barack Obama's proposed tax breaks for business sound like ideas that have enjoyed broad Republican backing in the past. But in today's toxic political atmosphere, he's unlikely to get much — if any — GOP help.

Rep. Dave Camp of Michigan, the senior Republican on the tax-writing House Ways and Means Committee, called Obama's business tax measures serious proposals worthy of consideration. But he said that "raising taxes to cut taxes is at best a zero sum game."

His proposal to let companies quickly write off 100 percent of their investments in new plants and equipment is similar to proposals advanced several times by President George W. Bush — with considerable GOP support at the time.

Chris Edwards, director of tax policy for the libertarian-leaning Cato Institute, said he favors both a permanent research tax credit and Obama's proposal for 100 percent expensing, calling both "very positive" steps and a sign that the administration is getting seriously worried about the economy.

Read the full article at:

http://news.yahoo.com/s/ap/20100907/ap_on_bi_ge/us_obama_tax_breaks_9

[unblock]

12. corporations are always touted as deserving tax breaks because they provide jobs.

and yet they so rarely seem to get tax breaks for ACTUALLY CREATING JOBS.
they always get tax breaks for doing something else, like defunding themselves via dividends to investors.

[Mimosa]

14. Tax policy ought to be used to help CREATE JOBS!

This is disappointing and infuriating. It's getting harder to defend President Obama.

[customerserviceguy]

23. There was a targeted jobs tax credit

about twenty-five years or so ago, maybe that's what's needed, instead of more write-offs for foreign purchased equipment.

[spanone]

13. well bob, i guess it's his opinion against your opinion.

[EFerrari]

16. He's not alone by any means. Robert Scheer this morning on Democracy Now.

Robert Scheer on The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street

We speak with veteran journalist and Truthdig editor, Robert Scheer, about his latest book, The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.

http://www.democracynow.org/2010/9/7/robert_scheer_on__the_great

[inna]

22. The difference between the Clinton establishment and the Obama establishment.

[blindpig]

15. What of the people....

guess they'll just have to wait for their golden shower.

[doc03]

18. They will still be in line a year from now waiting for

some stimulus project to be approved and put out for bid and then waiting for the money to be released. Then once it is ready to go how many of these people have a relative in the construction trades to get them in the Union so they can actually get a job?

[4_TN_TITANS]

47. That's my beef with indirect jobs tied to government money

By the time it filters thru the contractors, subcontractors, and sub-subcontractors, etc. two years have gone by and the money that actually makes it to the worker is peanuts once those at the top take their cut. That's why the WPA and CCC were so successful - they cut out the middle men and businesses were left to try and keep up with workers who suddenly had money to spend.

Why is this so freaking hard for the O administration to understand???? :banghead:

[Better Believe It]

50. President Obama needs to repeal President Reagan's executive order which prohibits WPA type programs

Hardly anyone ever mentions the need for a new executive order from President Obama that would allow direct government hiring in WPA and CCC type job programs.

[bvar22]

21. Only ONE thing "creates" jobs.

DEMAND
Put the $ in the hands of the people who will spend it.
Only an idiot hires someone when there is NO demand for the service or product.

[Better Believe It]

24. And that demand can be created by massive federal public works programs

Such as adoption of Congressman Oberstar's 500 billion dollar transportatton infrastructure plan which the administration has yet to support.

[BzaDem]

36. The chances of Congress passing a 500 billion bill are the same as passing a 500 trillion bill.

Which are in turn the same as the chances of passing a 500,000 trillion dollar bill.

Perhaps that has something to do with it? I know that involves facts and things, so I hope that doesn't discourage you too much.

[Hawkowl]

25. Obama really is clueless on economic policy

Tax breaks? Free trade agreements? TARP?

I new this was coming as soon as Geithner, Bernake, and Summers were nominated.

One term Obama. Get used to the idea so we can prepare a primary candidate.

[liberation]

26. I would not call him clueless... he is a center-right politician, and he is operating as such.

So it is no surprise he thinks "neo-liberal" economic approaches are what it is needed at this point in time (or any point for that matter).

As an actual liberal, I disagree strongly with his approaches/policies. But we need to come to terms, in an honest matter, with the actual ideological make up of this administration. And part of the blame resides on Mr. Obama himself who has milked the whole "pragmatist" label for all it was worth in order to stall/delay him disclosing exactly what ideology is going to be the imperative for his administration.

The debate needs to be honest, and some of the perennial center-right ideologies esp. in this board, need to at least be truthful about their actual ideological stand, and be honest as to why actual liberals may disagree with center-right proposals and policies.

[BzaDem]

37. I think that's bullshit.

He would clearly prefer a trillion dollar infrastructure spending program and aid to states. He knows that the chances of Congress passing such a program are no better than the chances of them passing a 500 trillion dollar program. Neither is going to happen.

So he is going from measures that might have a multiplier of 1.5-1.7 to measures that might have a multiplier of .3-.7. Why? Because that is ALL THAT CAN PASS two months before an election (if not at all in this Congress).

Your "center-right" stuff is crap. A center-right President would support the extension of the Bush tax cuts for the wealthy. Not oppose it, or rule out any compromise that leads to it. Why is he doing this but not proposing a trillion second stimulus? Because he can unilaterally veto any bill that extends the Bush tax cuts (whereas a second stimulus requires 60 votes in the Senate). It has everything to do with the power of the presidency, and nothing to do with a mythical "center-right" ideology.

[liberation]

38. Your use of expletives totally swayed me...

... you are right. I mean, you having the ability to read people's minds and figure out what Obama really wants even over what he does... it must mean I am dealing with a new prototype of super human cognitive capabilities, the likes of which I am not ready for yet... me being a normal-brained person, lacking the capacity to read minds and being stuck with having to trust my lying eyes.

I am not worthy... but I will thank the heavens today and forever that you had in your infinite grace to spend a few seconds bestowing your knowledge.

Or maybe you have no idea what you are talking about, given that very few of Obama's policies could even be remotely construed as coming from the left. You must be one of them moderate conservatives who thinks he is a liberal or something. Word of advice, do not check the political programme of an actual left party from Europe, it may not be good for your health given the shock.

[BzaDem]

41. That's funny. Last time I checked, 80+% of liberal Democrats approved of Obama and Healthcare.

Perhaps you actually don't get to define what 'left' is, your presentations to the contrary notwithstanding?

[Hannah Bell]

27. I applaud Obama saying he won't support an extension of the Bush tax cuts for the rich, but these

added corporate tax cuts would almost completely wipe out any gains from rescinding the Bush tax cuts, making it a wash.

just bullshit.

[BzaDem]

42. They don't even wipe out a FIFTH of it.

Tax cuts for the wealthy cost us 700 billion for 10 years.

The R + D development tax credit is 100 billion over 10 years. (This is just a tax credit that has been extended every year since the early 80s. But we'll count it in full.)

The accelerated depreciation that people refer to costing 200 billion actually only costs 30 billion, because all it is doing is allowing businesses to move deductions from the future to the present. It is essentially an interest free loan (not a grant).

So we have 700 billion in tax cuts to the rich going away, and only 130 billion in new tax cuts for businesses.

[Better Believe It]

43. You're math is bad. It's 300 billion in business tax cuts being proposed.

Please try to base your comments on hard facts, not things pulled out of the air.

Thanks.

[BzaDem]

53. YOU are the one pulling made up "facts" out of mid air and not reading my post.

You are calculating it wrong. You are saying that 100 billion in R+D tax cut + 200 billion in accelerated depreciation = 300 billion.

Except the accelerated depreciation does not cost 200 billion. It costs 30 billion. Why? For exactly the reasons I posted. It is NOT a tax cut. Businesses already deduct expenses off their tax returns. This just lets them do it earlier. It is essentially an interest-free loan to businesses -- NOT a cut or credit. That's why it only costs 30 billion. Exactly what I wrote.

So the total cost of the tax cuts is 130 billion.

[Hannah Bell]

45. my error, then. i understood it to be $200B over a shorter time frame; i will recheck.

[BzaDem]

54. The 200 billion is a misleading number. Accelerated depreciation just means businesses can deduct

expenses earlier than they would have otherwise without the new law.

In other words, if I have a $1000 piece of equipment, I would normally have to deduct that over a long period of time (say, 1/15 of the total every year for 15 years). Accelerated depreciation just means you can deduct it all now. It is NOT a net tax cut.

It is essentially an interest-free loan relative to previous policy. So businesses will save $200 billion over the next 2 years, instead of $200 billion over a much longer period of time without the law. The net difference (due to interest) is $30 billion.

[secondwind]

28. I'm not an economist, or an analyst. All I know and see is that this country is

at a crossroads, turning from manufacturing to other industries, trying to go green, handling an economic disaster left behind by Bush and those before in, and this President is doing the best he can. Will it be enough? The election in November will not be an indicator as to whether he is doing what he needs to do, but it WILL determine whether or not he can move forward and do what needs to be done.

Let's get out there and help this guy in any way we can!

[Panaconda]

29. Austerity

for the austere.

Corpulence for the rich.

That's entertainment.

K&R for truth.

[madrchsod]

31. "it`s alright, ma (i`m only bleeding)

'....but even the president of the united states

sometimes must have to stand naked...'


so shall barack obama

[AzDar]

32. K & R

:kick:

[another saigon]

33. been there done that

'The economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox.'

-snip-

But this cynical exercise could backfire if Republicans call Obama’s bluff and demand the corporate tax cuts be put on a fast track and get signed into legislation before the midterms.

More troubling, Obama’s whopping proposed corporate tax cuts help legitimize the supply-side dogma that the economy’s biggest obstacle to growth is the cost of capital, rather than the plight of ordinary working people.

[Jakes Progress]

34. Hey. Let's give some money to rich corporations.

Then they will let some of it come down to the middle class and workers. We could call it "drop down". Or how about "Trickle On". Oh hey, that's it. We could call it "Trickle Down". Hmmm. That sounds familiar.

[JCMach1]

39. Reich is exactly right in a recessionary climate, no one is going to increase capacity

unless they were going to anyway... i.e. they have the cash and incentive to do it.

This will only help companies that would have expanded regardless and so will only help increase the deficit.

[rhett o rick]

44. And increased production doesnt equate to higher payrolls.

Since middle class killer Reagan, worker pay has not increased with production as it did pre Reagan.

[Better Believe It]

46. It's clear. The 200 billion business tax cut will destroy jobs. Not one job will be created.

Whatever money they spend from that 200 billion dollar tax cut bonanza will be used to automate people out of their jobs.

[ClarkUSA]

51. How is that clear? Because you said so? Reich has been a loose cannon since his Clinton days.

<< Not one job will be created. Whatever money they spend from that 200 billion dollar tax cut bonanza will be used to automate people out of their jobs. >>

And you know this how? Now you think you can predict the future of U.S. manufacturing? :tinfoilhat:

[Better Believe It]

52. They are sitting on 1.8 trillion in cash. What do you think they will do with an extra 200 billion

outside of possibly investing some in yet more "labor saving" automatic machinery that will increase worker productivity?

You seem to have a great deal of faith in the good intentions of Wall Street and corporate America.

Why is that?

[ClarkUSA]

55. Who is "they"? Do you have any evidence to back up all of your doomsday predictions?

You seem to dislike all Democrats and all Democratic legislative efforts under this Democratic president. And everyone who supports Democrats.

Why do you spend so much time on a site that supports Democrats?

[Better Believe It]

56. "You seem to dislike all Democrats" I just don't support Democrats who surrender to Republicans

How about yourself?

And did you really ask "who is they" when I mentioned the 1.8 trillion dollars in cash corporate America is sitting on?

I back up all of my statements with hard facts.

You might want to do the same thing for a change.

[ClarkUSA]

57. That's what it seems like alright. Who are the "Democrats who surrender"? Obama? Pelosi? Who?

<< I back up all of my statements with hard facts. >>

So cough it up. This is the third time I've asked.

You can start by providing evidence which led you to make this doozy of a prediction:
"The 200 billion business tax cut will destroy jobs. Not one job will be created."
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9091000&mesg_id=9097428

Then you can provide evidence that led you to make this prediction about the future of U.S. manufacturing:
"Whatever money they spend from that 200 billion dollar tax cut bonanza will be used to automate people out of their jobs."
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9091000&mesg_id=9097428

[Better Believe It]

59. Read Robert Reich's article. He lays it out, or is he too liberal for you?

[ClarkUSA]

60. Reich never made your claims. So you have no evidence and refuse to name names, eh?

I didn't think so. To refresh your memory, here are your totally unsubstantiated and rather outlandish claims:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9091000&mesg_id=9099962

BTW, Reich was never a liberal. He was as DLC as his best buddies in college, Bill and Hillary Clinton.

Furthermore, I already responded to Reich awhile back but since you obviously don't bother to read your own OP replies, here's the link:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9091000&mesg_id=9098311

[Better Believe It]

62. You linked to your posts, not my statements. Just quote the statement so readers know what you're

writing about.

[ClarkUSA]

64. Um, I did just that. My post listed and linked to your still unsubstantiated claims.

And you have yet to list "the Democrats who surrender to Republicans":
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9091000&mesg_id=9099924

[defendandprotect]

72. Instead of personally attacking Reich as a "loose cannon" and this poster ....

why don't YOU try to provide some debate and information as to why you disagree

with the OP?

Haven't seen anything yet but name-calling and threats!

[defendandprotect]

71. Hartmann/Bernie Sanders said ... using profits to build plants in Mexico/China with the $$$

Amazing!!

[defendandprotect]

70. "Loose Cannon" ... what is that . . . do you mean he's not DLC-corporate ... ????

Republicans and corporate lobbyists have been demanding tax cuts on corporate investments for one reason: Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable.

This is government subsidizing the next round of business lay-off's -- with our money!!

PLUS these new plants/equpment would be competing with plants/workers who haven't been

subsidized!!

[ClarkUSA]

49. Reich is wrong. Freeing up cash to invest in growth will create jobs and increase demand for goods.

Obama to Propose Tax Write-Off for Capital Investments

WASHINGTON — As part of his emerging program to jolt the economic recovery from its stall, President Obama will call this week for allowing businesses to deduct from their taxes through 2011 the full value of new equipment purchase, from computers to utility generators, to increase demand for goods and create jobs.

The upfront deduction would allow businesses of all sizes to keep more money now and would give large corporations, many of which are sitting on cash because of uncertainty about the economy, an incentive to spend and invest.

http://www.nytimes.com/2010/09/07/us/politics/07tax.html?hp

"Reich is the outlier in Democratic policy circles. This discussion goes back to the 1992 campaign, when wonks like Rob Shapiro (Clinton) and Lester Thurow (Tsongas) advocated for tax policies that promoted productive investment and long-term productivity rather than simply cutting baseline corporate income tax rates.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=433543&mesg_id=433575

"Reich has never figured it out. Reich has always underestimated the value of capital investment as a driving factor in economic growth. He bitched and moaned about this endlessly in the Clinton years, and his influence evaportated rapidly. Since the Clinton years gave us a damn good economic climate, I really can't give Reich a ton of credibility anymore."

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=433543&mesg_id=433547

[Better Believe It]

63. What part of this statement by Reich is wrong and why do you think that?

The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.

In any event, small businesses don’t have enough profits against which to use these tax credits and deductions, and large corporations are sitting on over a trillion dollars of profits and don’t need them.

Republicans and corporate lobbyists have been demanding tax cuts on corporate investments for one reason: Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable.

In sum, Obama’s proposed corporate tax cuts (1) won’t generate more jobs because they don’t put any cash in worker’s pockets (as would, for example, exempting the first $20,000 of income from the payroll tax and making up the difference by applying the payroll tax to incomes over $250,000); (2) will subsidize companies to cut even more jobs; and (3) will cost $130 billion — money that could better be spent helping states and locales avoid laying off thousands of teachers, fire fighters, and police.

http://robertreich.org/

[ClarkUSA]

65. I already responded in my previous reply. Why don't you list "the Democrats who surrender"?

Or substantiate your ridiculous claims that you made here:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9091000&mesg_id=9097428

[defendandprotect]

73. Correct . . . in fact we've had 50,000 manufacturing plants close in 10 years ....trade agreements..

are sucking jos out of America -- 500,000 PLUS every month --

Sanders/Hartman said 700,000 per month --

And destroying purchasing power of American consumer --

PLUS this which Reich comments upon --

Republicans and corporate lobbyists have been demanding tax cuts on corporate investments for one reason: Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable.

Therefore Obama is subsidizing the next round of lay-off's -- with taxpayer $$ -- !!

ADDITIONALLY, this subsidy for these "new" plants gives them an upper hand in competing with

the plants and workers that are still operating!!

Wrong on all counts, Obama!!

[TheKentuckian]

77. Reich is right and you and the right wing are wrong in your most basic assumptions

Every assumption built on your absurd supply side/trickle down ideology compounds those fundamental errors.

Your model is wrong and reality is the clear evidence.

[bertman]

58. Give the billions in tax breaks to the working class Americans who make

less than $100,000 annually, then maybe those businesses will need some new equipment and new plants to meet the needs of those new customers.

Too late to rec, but here's the kick.

[lonestarnot]

61. Yep.

[defendandprotect]

75. +1000% --

[ClarkUSA]

66. Why do you spend so much time on a site that supports Democrats?

You seem to dislike all Democrats and all Democratic legislative efforts under this Democratic president. And everyone who supports Democrats.

Why do you spend so much time on a site that supports Democrats?

[bertman]

76. ClarkUSA, I believe you were posing the question to Better Believe It, but since

BBI and I share some of the same sentiments on the topic of this thread, please allow me to explain why.

I am a business owner. I am a Liberal Democrat. I have been a Liberal Democrat for over 40 years and with one exception have never voted for anyone but Democratic candidates because I ALWAYS thought the Democratic party was looking out for my best interests as an American citizen, a business owner, and a working-class taxpayer.

Candidate Obama promised us he was going to change the way business was done in Washington. He promised us that he was going to be the President who listened to and worked for the working-class American. So far, that has been a hollow promise. We are almost two years into his Presidency and he has consistently supported Corporate America and Wall Street over working Americans and Main Street. So I am very unhappy with the Democratic party and the President.

Does that mean that I want to abandon the ideals that the Democratic party stood for when I first became a Democrat? No. Even though the party has been taken over by the DLC Corporate Class moneyed interests there is still hope in my heart that we can force the party to return to its true Democratic roots and work for the majority of Americans who are not wealthy and who do not have the financial ability to influence their Congressional representatives and President by how much money they give to them.

The reason this commentary by Robert Reich strikes a chord with me is because my business is hurting for lack of customers. We are surviving but we are not in a position to purchase new equipment or build a new facility in order to get a tax break from the Federal government. IF the economy were thriving and we were flush with business, then this proposal would be one I would support. I am not alone in this situation. Almost all of the small business owners that I know--and there are a lot of them--are suffering from LACK OF CUSTOMERS not from the inability to buy more equipment or to expand their facilities.

So, I see this as just one more giveaway to business--and mostly to the businesses who have enough capital to spend on equipment and facilities. Robert Reich is correct. The first two paragraphs of this thread sum it up for me.

[beforeyoureyes]

67. Is there really ANY confusion left about who Obama represents?

Good grief!

Obama is coming out and turning on the charm and it is predictable and disheartening to see that more empty rheoteric and Repuke policies in Dem clothing is all it takes to keep the lie going.

How thick can we be?

[defendandprotect]

69. Question is, can we even make it to 2012 with this guy!!???

How much more damage can he do before the next election???

[defendandprotect]

68. Obama is subsidizing the next round of business lay-off's with our money -- !!! Great!!!

And thanks to Robert Reich we know that!!


Republicans and corporate lobbyists have been demanding tax cuts on corporate investments for one reason: Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable.

[kenny blankenship]

74. But they'll be perceived as "Business Friendly"

(so he hopes anyway). And that's the important thing. That Democrats always be willing to take steps to PROVE that they're business friendly. And the next step, and then next step, and then the next step. We'll get there eventually - and boy, when we do, won't the Republicans be mad!

[defendandprotect]

78. Kicky --