House Speaker John Boehner just rejected – but in a nice way! – the American Jobs Act, saying that the plan is “a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America.” Incredibly – and you’re not going to believe this – Boehner cited deregulation and lower taxes as the path to economic growth. But curiously, he rejected the tax cuts in the American Jobs Act, meaning that there will be higher taxes on all American wage earners by January.
In a speech to the Economic Club of DC, Boehner suggests that businesses need the right incentives to hire:
The reality is that employers will hire if they have the right incentives, but the incentives have to outweigh the costs. Businesses are not going to hire someone for a $4000 tax credit if government mandates impose long-term costs on them that significantly exceed the temporary credit. In recent years, such mandates have been overwhelming.
In other words, regulations will outweigh the benefit from hiring. Lack of demand plays no role in this fantasy world sketched out by Boehner. “Job creators in America are essentially on strike,” Boehner said, assuming a mass of job creating supermen gone Galt as the reason for the slow economy, not the fact that nobody has any money.
To highlight his deregulatory approach, Boehner cited Gibson guitars, which illegally shipped in endangered species of rosewood from outside the US for production (which is part of a criminal ring in Madagascar), and Boeing, which is illegally avoiding a signed union contract by attempting to transfer its factory to South Carolina from Washington in violation of established labor law. So the only way companies will have the incentive to hire, then, is if they are allowed to break the law.
The other parts of Boehner’s speech concerned taxing and spending, and here he made clear he opposes tax credits of the kind that appear in the American Jobs Act.
One is the current tax code, which is discourages investment and rewards special interests.
It strikes me as odd that at a time when it’s clear that the tax code needs to be fundamentally reformed, the first instinct out of Washington is to come up with a host of new tax credits that make the tax code more complex.
The final aspect of the threat is the spending binge in Washington. It has created a massive debt crisis that poses a direct threat to our country’s ability to create jobs and prosper.
Boehner endorsed “tax reform” at the Super Committee, but never defined what that would mean. I’m assuming something to do with cutting taxes at the top. Call me crazy. He paid lip service to “closing loopholes” in exchange for lowering tax rates, and we’ll see just how far that gets. But he said that this tax reform must not increase revenues at all, and that “When it comes to producing savings to reach its $1.5 trillion deficit reduction target, the Joint Select Committee has only one option: spending cuts and entitlement reform.” He admonished “gimmicks” in budget cuts like scoring ending the wars in Iraq and Afghanistan as savings, when the House Republican budget did that.
So it’s more of the same, really. The speech sought to highlight GOP ideas which will dominate the fall calendar – the bill limiting the NLRB in the wake of the Boeing decision just passed the House today. It set the stage for complaining that the Senate won’t take up the deregulatory bills. And it largely ignored the American Jobs Act, which is now squarely a political document and not legislation that will come anywhere near passing.