Why Tax Cuts Don’t—and Won’t—Create Jobs

http://www.inthesetimes.com/working/entry/6726/why_tax_cuts_dontand_wontcreate_jobs/

Monday Dec 6, 2010 2:30 pm

By Jack Rasmus

Last Friday, December 3, the U.S. Department of Labor announced that the unemployment rate had risen once again. A full three years after the current recession began in December 2007 there is no end in sight as to when the jobs markets will recover. This is in stark contrast to the full recovery of corporate profits and bankers bonuses, now back roughly to where they were in 2006-07, according to U.S. government data.

Banks now have a hoard of cash reserves of more than a trillion dollars, according to the business press. However, as U.S. Federal Reserve Bank data show, as the biggest 19 U.S. banks recovered in 2009-2010, their lending to small and medium businesses declined steadily. Nor has that lending recovered in 2010. Without bank lending to small businesses—the main engine of job creation in the U.S.—there can be no job creation.

Similarly the largest companies, the S&P 500 non-bank corporations, are also sitting on a hoard of cash. At last estimates, an amount of $1.84 trillion in liquid assets, according to the Financial Times business daily.

So with all that cash, why aren't banks lending and big companies investing and creating jobs, one might ask?

The even more important question is: if banks and businesses have that record hoard of cash on hand why should their taxes be cut, in effect increasing even more that hoard of cash that isn't being invested? Won't they just continue to hoard the tax cut too?

FULL story at link.

...and I used it all throughout last campaign season. Just ask how many jobs were created over the past 6 years (since all the cuts kicked in)...and either wait for the crickets or the laughter. The laughs usually were from someone who had lost their job.

The dirty side of this matter is how bankrupt our corporate are. Look at their balance sheets over the past decade and all of them have had one period or another of wild price fluctuations or other financial distress. Many corporates that played the ponies and ran up their stock prices through wild acquisitions and mergers are now saddled with major debts that are only "solved" through more job cuts and off shoring.

The tax cuts mean nada as long as so many of our corporates are in constriction mode and face even bigger debts and subsequent cut backs in the year ahead. It's the debt bomb that is destroying our economy as more and more people and businesses go underwater and rising costs push more toward the edge.

Yesterday's measures will have little affect in creating jobs...just keeping the wolves from the door for some for another year or two...and then reality will set in. Not gonna be pretty...

of cash until the repubs get back in charge. then they will create jobs to prove that tax cuts work. that's my conspiracy theory.

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