By now, you surely know I’m a HUGE advocate for America’s small businesses — the very people we finance daily all over this county. When it comes to politics, I don’t consider myself especially partisan; I just want results. I’m not an ideologue, so I vote for the political candidates who promise to do the most to promote what this country was founded on: individual liberty and a limited federal role for government. In particular, I believe innovation and entrepreneurship will do more to cure the world of what ails it than anything planned or orchestrated by government officials.
With that context, I have a story to share with you about a conversation I had with my kids the other day. I was driving them to school, and we somehow managed to start discussing the President’s latest “Jobs Act.” (By the way, some of my staff like to refer to these morning drives as “programming time” for my kids, but I think that’s a bit cynical.) Believe it or not, my kids understand the economy has essentially stalled (they’re not your average 8 and 10 year olds). They were as shocked as you probably were that we created ZERO new jobs in August — the first time that’s happened in nearly 60 years.
I explained to them how most of our politicians (both parties) don’t have much experience working in the private sector (the real world that you and I inhabit) and how these career politicians have a hard time understanding that the problem we’re facing right now is low demand for products and services. Handing out temporary tax credits (as the President did in his latest plan) won’t get too many employers hiring permanently because these do nothing to address this demand problem. Demand is only addressed when our consumers, who make up 70% of our economy, start buying again. Consumers can’t start buying again if their wages are stagnant (as they have been), the purchasing power of their dollars keeps declining (as it has), the government keeps taking too much for taxes (rather than letting them keep more of what they earn)…and obviously they can’t consume if they don’t have jobs.
I explained to my kids how the last three “stimuli” (Bush in 2008, Obama getting EXACTLY what he wanted in his first stimulus act early in 2009, and his last one exactly one year ago this month) ALL failed (though that’s probably not how the President would phrase it). When he told us that unemployment would stay below 8% if (and only if) we passed his stimulus bill, he established unemployment as the measuring stick. With an unemployment rate of 9.2% staring us in the face, I don’t see how we can call that stimulus a success, do you? (By the way, that number would loom much larger if the government included people who have been out of work more than a year, which it doesn’t. Something to think about.)
I also explained how this latest plan is about half as much as Obama’s critically acclaimed stimulus plan back in February 2009 — the same one that I said wouldn’t work when I appeared on FOX Business News on four different occasions back then. That’s when my brilliant little 10-year old daughter piped in and said, “Well, if it’s half as much as one that already failed, doesn’t that mean this new one will fail twice as hard?” Obviously, she knows her reciprocals. Makes her daddy proud. Whether my precocious 10-year old is right remains to be seen, but it’s certainly interesting to have her perspective. I think she really could teach Washington a thing or two about how math works in the “real world.”
*** You’ve probably noticed by now that this is a bit long. If you want to print it out to read offline, I totally understand. Just don’t forget to come back and leave a comment when you’re done. Thanks for sticking with me so far. ***
So what’s wrong with the President’s new Jobs Act?
One of the most off-putting things about the President’s speech was his barrage of “Pass it now…Pass it…Just pass it…” One of my customers and friends, Ciaran (pronounced Keer-in) McCardle of XL Soccer World reminded me it was like listening to a coach from one of our youth soccer teams. Anyway, here’s what I didn’t like about the President’s new Jobs Act, broken down into three main points:
1. Extending unemployment benefits another year beyond the 99 weeks already in place can’t possibly create more jobs. Would someone PLEASE tell me how this dis-incentive actually creates jobs?!? Without any sense of irony, Obama wants unemployment benefits for workers who lost their jobs during periods that his past stimulus effort failed to stimulate. I’m shocked by this. We need to have things that create jobs, not just promote benefits for people that aren’t working. Now, at least he finally might want to start tying unemployment benefits to skills training. That’s a good thing — no one should get a free ride. My view is this: if you live off the government, it should be temporary and tied to learning new skills that are in demand and will get you a new job. And if you fail to make that effort (by not attending classes, for instance) then you deserve to pan-handle for food and shelter…we shouldn’t support you. I believe the saying is, “Life, Liberty, and the PURSUIT of Happiness”… it is NOT the “guarantee” of happiness or a job or even an above-average wage. That self-reliant message seems lost on some. Here in Florida, we recently decided to finally drug-test those on welfare. The way I see it is if the private sector so frequently drug-tests employees and potential employees, isn’t it just responsible to test those NOT working too? Especially since our tax dollars are going to support them?
2. All the infrastructure stuff looks like a blatant attempt to placate his union base. Transportation infrastructure and renovating schools may be needed (even though we spend more per public school pupil than any other nation while getting worse results), but it’s hard to see these as long-term job creation strategies, or even short-term for that matter. Remember: Obama himself, a few months ago, rather condescendingly said most of the “shovel-ready jobs” weren’t actually so shovel-ready…why would they be more ready now? When he said that, by the way, I started thinking he may not be so ignorant on economic matters as some think he is; perhaps it’s more “purposeful” than that…but I digress.
3. Payroll tax cuts should have been enacted a while ago. Doing it now minimizes their impact — they probably won’t help businesses thrive; they’ll probably only help some survive. I was pushing for these on FOX Business News a couple years ago as well, but alas, the USPS keeps losing my invitation to the White House Jobs Summits and other such important meetings. Can’t seem to figure out why…
Here’s the bottom line: Obama is proposing policies that are primarily oriented toward the short-term and unlikely to succeed at lifting the pace of economic growth. Taxing some of the job creators of this country isn’t going to do much for stimulating the economy. It’s another disincentive, much like extending unemployment benefits is. Perhaps it’s time we actually incentivize people instead? That would be a novel idea.
So how will the President pay for all of this?
That came out a couple days later. It’ll be the same class-warfare-themed rhetoric he’s been on since…well, since before he came to Washington, I guess. At least that’s the plan as far as I see it. But what I think the President and many others don’t seem to get is that some Americans (maybe mostly those outside the Beltway) can stand on principles. Some of us make decisions on principles and then try to rarely break those principles. The recent backlash to “soaking-the-rich” doesn’t come from defending billionaires as much as it comes from this one principle: Washington needs NO MORE “revenue” until they deliver a better return-on-our-investment from the revenue we already give them. They need to operate within their means, just like the rest of us do. When times are tough, we pull back; we expect the same from our elected officials. Why should we honestly send them more money, even if we could, when they just keep wasting so much of what we send them in the first place? THAT’S the principle that both parties must come to understand. THAT’S why the soak-the-rich argument has been largely falling flat lately — that, and the fact that Americans generally admire successful people and strive to become like them rather than envy them.
A lot of this is psychological — that’s really what people mean when they say “uncertainty is holding back the recovery.” It’s fear of the unknown; concern for what might be or what might NOT be. So how do we address this? You make things CERTAIN again. Pretty simple. You don’t continue to make things temporary.
Things like tax rates should be locked in place for a period of time (several years, not an election cycle or two). You might want to make tax rates fairer, flatter, and more incentive-based instead of adding disincentives. You cut back on regulations rather than implement more. You focus on small businesses instead of only Big Businesses (who’ve shed more jobs than they’ve created over the past 20 years). Incidentally, this is one of the reasons I told my kids that Obama’s first stimulus failed: only 0.89% of it was targeted toward small businesses…you know, that segment of our economy responsible for 50% of private sector payrolls? No wonder it failed to work.
Real solutions are needed, not political gimmicks. If the President were as smart as some would have us believe, he would have proposed a much larger package originally (directed toward small businesses) and he’d get a LOT more creative with his solutions rather than continue with temporary actions and tired-old class warfare rhetoric.
Believe it or not, I’ve only begun to scratch the surface of the suggestions I have for fixing our economy. I’ve been compiling ideas for months from our customers here in the real world and doing my own extensive thinking on this matter, too…without a fleet of well-paid bureaucrats researching it for me. But you’ll have to wait for part two to read those (probably a relief if you’ve actually read this far).
Please don’t be bashful with your feedback here and your sharing of this blog with your friends, either. I have a feeling this is going to spark quite a bit of debate, so bring it on.
Dedicated to Your Continued Success,
Chris
P.S. And just so you know: unlike some lenders, we’re still financing small business owners nationwide as they look to take advantage of today’s historically low interest rates and discounted commercial property. If you know someone who should be talking to us about this, call me at 1-866-622-4504 or email me at ChrisHurn@MercantileCC.com to introduce us right away. Thanks in advance!
Tags: Chris Hurn, commercial property financing, commercial real estate loan, Jobs Act, Mercantile Capital Corporation, President Obama, SBA 504 Loan, Small business, Small Business Administration
Marilyn says:
Why is that politicians of all shapes , sizes and colours don’t realize that business people know more about balancing budgets and running organisations than they’ll ever know. Sadly I don’t have a vote, but if I did, it would be for your common sense, Chris, and for your 10 year old daughter too. Perhaps they ( the pols) are blinded by their own rhetoric and greed!
Chris Hurn says:
Thanks, Marilyn. I’ll be sure to tell her that!
Mike P says:
When will your daughter run for congress!? I guess that’ll be if you let her. Haha! Great job with your children’s common sense instincts!
Chris Hurn says:
Thanks, Mike. She thinks she wants to become the first female President. I’m not so sure I’d want that for her!
BUT, I’ve VERY confident she could already do a better job in many cases than some of those in DC these days! Scary to imagine, isn’t it?
Karla W says:
You make so much sense, someone on the hill needs to walk a mile in our shoes. Maybe if they did things would change.
Chris Hurn says:
Thanks Karla. I wish they would.
Scott Gray says:
Great job with your kiddos… more kids need to learn about this stuff. Great job staying neutral… I would have to push them the right way but I am sure it is better to let them figure that out on their own.
Chris Hurn says:
Thanks, Scott. I want them to think for themselves and think critically — something our schools don’t always excel at these days. Whether they agree with my view or not — doesn’t matter — as long as they can effectively defend their views (and that typically means not reguritating meaningless soundbites like the pols do).
Helen says:
You and your daughter echo my take on the recent presidential plan. Unfortunately, with Congress deadlocked for the most part by party affiliation, I’m afraid I don’t see any significant change coming to our country’s situation until we citizen/business folk can exercise our vote again. I for one, plan to push the candidate(s) who make the most sense for the acutal creation of jobs; most importantly promotion of small businesses!
Chris Hurn says:
Glad to hear, Helen! We ALL should do likewise.
Marc P says:
Of the last 20 presidents, DDE & Reagan have had the most tenured “businessmen” in their Cabinet. Living through the Reagan era and despite many initially not liking Reaganomics, proved to make and keep the US economy robust through Dad Bush’s term and through Clinton’s terms. I’ve said it ever since I was a little boy. This country needs to be run like a business and who better to run it than experienced and successful businessmen (and women). Hopefully the American people will wake up and realize this and boot Obama! I also want to add that my dissatisfaction with Obama is by no means racist (as I have been accused of unfoundedly)! It stems from results, or should I say more appropriately, lack of results!
Chris Hurn says:
Thanks Marc.
Race-baiting has just become too easy anymore and we all suffer for it.
I read an interesting line recently (should probably become a bumper-sticker):
“If you voted for Obama to prove you weren’t a racist, be sure to vote for someone else next time to prove you’re not an idiot.”.
May sound harsh, but that’s what few, if any, decent and popular results will get a politician these days.
Braudis Lee Pegram says:
@Marc P & @Chris Hurn “If you voted for Obama to prove you weren’t a racist, be sure to vote for someone else next time to prove you’re not an idiot.”.
Makes sense on the surface, but who were the smart people who voted for Bush Jr? You know, that esteemed President that was in for 2 terms and got us in this mess in the first place.
Obama is definitely no clean-up artist. He lacked experience but most of us knew we needed to try something different, and soon. We should have known it wasn’t going to be too different, after we saw most of Bush’s boys standing behind Obama as advisers. But it was too late then. Sure, race-baiting is sometimes banal, belittling and ugly; but so is the truth.
Smart daughter, Chris.
Theresa says:
I’m sure your ten year old is very bright, but seriously, every 10 year old who’s had a lemonade stand knows that you can’t sell it to someone who has no change in their pocket. No matter how thirsty they are, they will drink water, not lemonade. And NOTHING that is done to the lemonade stand owner will change this fact. Ask your daughter if someone kept taking the change from her profit jar and giving it to thirsty kids if she would keep selling lemonade or if she would pack up and go inside the air conditioned house? Every ten year old knows the answer to this question. Why doesn’t our government? Truth? Because the money from the profit jar is going into the politician’s pockets and they don’t care about the lemons, the lemonade or the thirsty kids.
Chris Hurn says:
Interesting take Theresa. I don’t disagree.
Sue Odena says:
Very well written. Thanks
Chris Hurn says:
Thank you, Sue.
BobM says:
If we really want a long term fix we need to make sure all kids are as well educated as yours. Our schools are turning out hundreds of thousands of kids who know how to use a condom, but they can’t spell condom!
Add basic economics to the curriculum for all middle school and high school grades. When they become adults, they will realize when some politician is selling them some idea that sounds just wonderful, but simply cannot work.
Chris Hurn says:
Thanks, Bob, and you’re absurd correct!
Mark T says:
It’s my observation that until the majority of people in this country take back their government that government will take from us – no matter which party sits in power. So while I wholeheartedly agree with what you say Chris, nothing gets resolved until “the People” get involved to the degree necessary to actually hold politicians accountable for their actions and inaction. The politically powerful, but emasculated, “People in middle” of this Country have lost sight because they’ve lost hope. Unless and until we cause political accountability to rise to the forefront of a politician’s focus, government will run roughshod over all of us. Until We (the People) forego immediate gratification for long-terms success, until We sacrifice now for the sake of our own future, until We take back our rights as citizens, government will continue to strip them from us. Bottom line for me is that I am as responsible as the people in office for where this Country is now and where it’s headed. And in my humble opinion so are the majority of the American People.
Wade says:
Excellent read and I agree with everything you are saying here. There is no long-term thinking in Washington, no strategy what-so-ever. This newest plan is just like throwing a chronically sick person a bottle of vicodin. There is nothing here that will even begin to solve some of our serious structural economic issues.
I loved this: “Washington needs NO MORE “revenue” until they deliver a better return-on-our-investment from the revenue we already give them”.
Thanks for sharing, Chris.
Chris Hurn says:
You’re welcome, Wade!
katrina mason says:
Brilliant child!
steve says:
Chris,
We have bailed out pretty much everyone except the consumer. Only recently I have listened to speakers talikng about “stored wealth” in home ownership. I listened to the commentators on S & P being “Bold” and lowering the rating of the good old USA. Smoke and mirrors, S & P is and was part of the problem along with the other credit rating companies and security companies. We have amnesty for illegals, bail outs for businesses “too big to fail” and all the other crap. How about a credit amnesty utilizing a design that allows credit repair faster that the two to five year payment history improvement to bring the scores up. this is the group that was impacted the hardest and is the largest active group of consumers. I am not advocating an across the borad amnesty, i am looking for a method that allows older credit notations to be removed if satisfied or an easier method to erase derrogatories or other notations over three years old. Smarter people than I, may have an idea that would address this issue. The handling of this current economic turn down (depression) originated with the lending industry not adhering to its own guidelines. Then the security industry came up with unique programs to package theses mortgage loans and sell to investors, who in turn resold to other investors and so on, until the supposed securities were beyond secure. The consumer who gambled with a short term introductory fixed rate, hoping their income will grow somewhat and the market value of their home would increase modestly, along with principle paydown, would allow a refinance at better rates and terms, basically, got screwed. The purchase should not have happened in the first instance, but buyers were sold the american dream of home ownership no matter the cost down the road. Shame on them! The problem was the industry need to keep lending. Most active borrowers account for about 48% of all potential borrrowers. Housing turnover occurs with new market buyers ( young families, etc) transients (relocatiosn due to new jobs or change of jobs) retirees (leaving the income earning group) and estate (deaths and dispositions). Seniors generally do not borrower against their homes, why should they, their costs remain relatively stable depending on the benefits a community may extend to their senior population in discounted property tax, reduced municipal services, etc. That is why the reverse mortgage program was created to address this significant “under served” or “no desire to leverage” segment of the economy. Most home owners prior to this stupidity looked at their home as their savings account(Equity or “stored wealth”. Today, not so sure…..
Blake Newman says:
Nice! I really enjoyed this.
Joda Connell says:
Amen! And congratulations on your very smart and savvy children.
Chris Hurn says:
Thanks Joda.
Regina Brown says:
Great story, Chris. I’d vote for your daughter for President some day… after she’s completely educated about the “behind the scenes” of our economic system, as should be required of any U.S. President! Wishing you continued success in your business and in teaching your children!
Chris Hurn says:
Thanks Regina.
Richard Haynes says:
My thought’s exactly,however there’s an agenda behind this wreckage that’s been created,put a stop to the agenda,the country will rise again!
Basil Akers says:
You are not an unintelligent person but you as others run with the crowd in order to further your own business. For the last 100 years, governments have driven the economy for both good and bad reasons. The bad: WWI, WWII, Korean War, Vietnam War, Iraq 1 War, Iraq 2 War and the Afghanistan War. The good: The Eisenhower National Defense Highway System, the Bell Labs, ATT funded through telephone excise taxes of the development of the transistor and subsequently the integrated circuit, the spin off of military nuclear to nuclear power plants and the launch of communications satellites as an offshoot of the boondoggle, welfare for engineers space and moon program.
Within that infrastructure libertarian and entrepreneurial ventures have accomplished the development of great products and incredibly stupid and wasteful products which is why there are currently so few productive jobs.
You are laughably immature but perhaps you will grow up.
Chris Hurn says:
Basil: the hallmark of one who is immature, is when one tries to tear-down another, by name-calling or otherwise. I almost didn’t bother to reply to you, but I think you’d help yourself by looking in the mirror here. Some of your points (the coherent ones) might be accurate, but you effectively negate them with your final words… which are the truly “laughable” ones.
Sarah @RaisingCEOKids says:
Great article! Thank you for your awesome example in parenting and for your strong voice in small business. You may question your parenting when they become teens, but mark my word, all that you are doing right now is so worth it!
Sarah Cook
Founder of Raising CEO Kids
Chris Hurn says:
Thanks Sarah.