President Barack Obama's $447 billion jobs package won't incentivize businesses to hire but rather will actually discourage hiring, especially among smaller firms, says Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute and a contributing editor of RealClearMarkets.com.
Stimulus measures won't work in a country plagued by economic uncertainty.
"If you look at January 2009, President Obama pushed through an $825 billion stimulus package, and that was followed by other packages, such as cash for clunkers, home mortgage help, and then the unemployment rate was 7.3 percent, and 22 percent of the unemployed had been out of work for six months or longer," Furchtgott-Roth tells Newsmax.TV in an exclusive interview.
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"Now, over two years after his stimulus plan, the unemployment rate is 9.1 percent, and 44 percent of the unemployed have been out of work six months or longer," she said.
"If his $825 billion stimulus package did not succeed in lowering unemployment, in fact it raised the unemployment rate and increased the duration of unemployment, why would a $447 billion stimulus package reduce our current level of unemployment as it is right now?"
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The $447 billion jobs bill comes at the same time the president announced tax hikes targeting wealthier Americans.
In reality, many in the crosshairs of new taxes aren't that wealthy and are earning $200,000.
"That's because many individual employers — small businesses — hire and pay taxes under the individual tax code. So they would be subject to President Obama's new tax proposals," Furchtgott-Roth says.
"He talks about these tax proposals, these tax hikes on millionaires and billionaires. But the majority of them would apply to individuals making more than $200,000 a year and joint filers making over $250,000 a year."
Add to that, in 2014, the administration's new healthcare law will impose a $2,000-per employee tax on companies that don't buy the right kind of health insurance dictated by the government.
The new regulation applies to businesses of 50 employees or more, and it does exempt that per-worker tax up to 30 employees.
But 20 employees not covered could translate into $40,000 a year in fresh taxes for failing to meet new healthcare standards, which only encourages businesses to forgo hiring and keep staffs below 50.
"They think employers are stupid. They think employers don't plan ahead. But really employers do. They are just as intelligent as all our viewers out there and they know that if a tax is going to kick in 2014, they better prepare for it now," Furchtgott-Roth says.
"And research shows that the biggest gains in jobs are from small firms. Small businesses are the engine of growth in America. And what the new healthcare tax does is it prevents them from expanding."
Taxes aside, fresh regulations are prolonging the labor market's recovery from the Great Recession.
Labor bodies are out telling aircraft maker Boeing where it can and cannot open new plants in the U.S. to build planes, while environmental regulations are hampering the development of clean natural gas.
General Electric took its X-ray unit to China, and other businesses may follow suit if the government continues to get in the way.
"What we are doing is we're penalizing employers who want to create jobs here in the United States," Furchtgott-Roth says.
Ready for battle
Some Republicans vow to fight the president on his tax and jobs policies, pointing out they don't work.
"Veto threats, a massive tax hike, phantom savings and punting on entitlement reform is not a recipe for economic or job growth — or even meaningful deficit reduction," says Senate Republican leader Mitch McConnell, according to the Associated Press.
If uncertainty is scaring companies from hiring, some call for eliminating all the disagreement surrounding who pays what in taxes and just enact a flat tax, including publisher and one-time presidential hopeful Steve Forbes.
"I think about 26 countries have the flat tax now, and it’s worked wherever it’s been tried," Forbes tells The Fiscal Times.
"You have a low rate, generous deductions for adults and for children, and you can literally do your tax return on a single sheet of paper."
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