Views on news: tax breaks and jobs

For years now it seems, the left and the right have diametrically opposed views on if tax cuts to the wealthy or business help create jobs.

It's an argument about 32 years old, and one on which Ronald Reagan was elected. Of course, Reagan endorsed the idea of tax cuts to create jobs and won over Jimmy Carter with the country hoping he was right. His Republican primary opponent, George H.W. Bush famously called it voodoo economics.

The debate tends to evolve into a social argument versus an economic one. The social one, of course, gets much more media play because it's simple to understand and easy to sell with buzz phrases, like tax the rich, class warfare, the 99 percent talk as well as job killing talk.

My old master program economic professors would be amused at the ability of politicians to abscond with reason and replace it with vitriol.

Even today, there's a little bit of pseudo economics running around. The left or even center left tends to point to the record of how we cut taxes with the Bush tax cuts in 2001 and we actually lost jobs the next five or six years in the aggregate, across the country.

While that looks like the tax cuts didn't work, it may be only partially true. It's true that employment went down, but that doesn't mean SOME employers didn't hire because they got a tax cut.

The real point here is that if we pronounced our policy will create jobs, we should expect people will measure that across the board, throughout the country. But even my most liberal professors would admit that there are many factors that influence job creation including wages, demand for products, imports, exports, the interest rate and the value of the dollar.

Unforunately as we've come to learn, bizarre, unregulated things like credit default swaps also influence job creation.

And anecdotally, we can find stories that prove both points. I know a high-earning hedge fund manager who pays the low 15 percent rate on the vast majority of their capital gain income. This person told me if they got a tax break, they would not likely buy a new car (they already have one) a new house (already got a nice one of those) or really would expend too much more income, except may go out for dinner a little more.

Of course, they would have more money to invest, which shouldn't be discounted, but it doesn't give the same bang for the buck as consumer spending, which makes up 70 percent of the U.S. economy.

At the same time, I know a small business person who said if they got a $3000 tax break on their property tax bill, they probably would hire a new employee.

Both have circumstances that direct their decision. And we should know that if we think a general policy will affect everyone the same, we are simply kidding ourselves.

The key, (if you've hung with me this long, congratulations for caring about this stuff , and you're among the top 10 percent at least) is we have to understand how a policy might affect the "aggregate." In other words, how will it affect most people or a large enough share to make a difference in job creation.

And we should ask our politicians who are espousing these economic theories this crucial question: Tell us of a study, an example or data that suggest at the most your theory about the policy is true? And if they can't give a good answer to that, we ask: So are we just supposed to take your statement on faith, just believe you that it will happen?

So do tax cuts create jobs? The answer is basically, "It depends.'

And if they end up concluding we should just believe them. Buyer beware!

Colorado shootings and the local sentiment on guns

The view of the world from Mankato, Minn., got pretty crazy this past week.

From the Aurora, Colo., theater shootings from the weekend to the biggest penalties ever imposed on a college football program, the wires were burning with breaking news and the locals weighed in too.

I'm always amazed how quickly gun rights supporters e-mail me when these shootings occur. I don't know if they're attempting a pre-emptive strike against newspaper editorials condemning gun laws, but there's nothing like a mass shooting to get gun defenders motivated.

The Free Press editorial board has not taken a firm stand on gun laws for some time. We'll likely discuss a response next week, but it will likely be centrist as our editorial board has a diverse political mix of thinking on most issues.

The prevailing pundit buzz is that both political parties are afraid to change gun laws, make them tougher and take on the National Rifle Association. It's a sentiment I tend to agree with.

The irony is that the assault rifle ban that was in place for about 10 years came from the shooting of the staff member - James Brady - of Republican President Ronald Reagan. It's equally interesting that Democrats and Republicans voted to end the ban or let it expire.

But even hunting and gun enthusiasts I know still can't see a need to sell multiple-shot, semi-automatic assault rifles.

Talks at a lunch this week centered around how its tougher to get a driver's license, or sign up for cable or cell phones than it is to buy assault rifles and order 6,000 rounds of ammunition online.

Of course, there are many hardcores who claim the Colorado shooter would have gotten an assault rifle even if they were illegal. That may be true, but one cannot argue it would be JUST AS EASY to get an assault rifle if they were illegal versus them being at the counter at the local gunshop.

Maybe if we made buying an assault rifle as tough as we're trying to make voting, we'd be dangerous, or, I mean, more safe.

Latest political moves offers some surprises

It’s no surprise that the House Republicans voted Thursday for the 33^rd time to repeal the Affordable Care Act, or the health care reform.

Even the right-leaning media declared it a symbolic act and I guess it was to re-affirm House GOP opposition to the law after the Supreme Court and one of their own, conservative Chief Justice John Roberts, was the deciding vote upholding the law.

There were some surprises though in other political arenas.

It was somewhat surprising the Gov. Mark Dayton decided he would make the final decisions on which of some 90 projects would get a piece of the $47.5 million in bonding money the Legislature allocated as a kind of open-ended, competition for the funds.

In a conference call with DEED Commissioner Mark Phillips, we learned he was not all that excited about having the final decision, as was to be the initial plan.

He told The Free Press “It defies logic” that the Legislature left it up to DEED.

A day later, Dayton announced he would be making the final decision after reviewing DEED's recommendations.

It's in a way new unprecedented power given to a governor, and especially surprising since it was the opposite party that gave him that power.

That Dayton will decide may or may not be good for Mankato’s request for $14 million in bonding for the Verizon Wireless Center expansion.

It may be good because Dayton is well aware of how many times we’ve asked for the money and been denied while other very similar projects around the state have been granted funds.

There was no subtly among Democrats in asserting our projects were long denied by Republican Gov. Tim Pawlenty through line item vetoes simply because Mankato was represented by Democrats and other areas were represented by Republicans.

Democrats voiced the same criticism even stronger this past year when Mankato was left out of the bonding bills while projects in Rochester and St. Cloud, represented by Republicans, were left in.

So it seems Dayton would be sympathetic to the nature of that battle and how Mankato has been on the losing end for no good reason.

On the other hand, the governor could see the recent Highway 14 project he helped approve as one that gives us our “share” of state dollars.

Stay tuned.