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Taxpayers bought the GM assets; WHY CAN"T WE USE
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Commentary Posting WSJ, NYT, Newsweek, Fox News

Recovery: The 100% Solution

Today’s countrywide turmoil is largely centered on where the
United States should focus to bring about a change in our
economy. Almost without exception the resounding chorus is
we must create jobs. The President, Congress, and the
taxpayers are, unusually, in agreement that we must restart
hiring thus reducing unemployment to get our economy
running again.

Certainly, selecting which economic button to push is a vexing
problem. Earlier this year President Obama proposed a tax
credit for hiring new employees. Tax credits have been an
important part of our growth in the past and should be
considered again. Do we really know the impact of an
employment credit? Why wouldn’t we consider a tax credit
solution that is almost a no fail alternative?

Even without aid of super computers, and economic
doctorates that certainly could put a guy with an eye for trends
using an Excel spread sheet at a disadvantage, One might
ask; Do we need those quantum tools when the result is
always the same? A picture is worth many words:

There are few economic actions that produce the same
results every time. From 1986 through 2009 every year that
the portion of our GDP calculation representing investment in
business assets (“Gross private domestic investment” less
residential housing) increases from the previous year,
unemployment decreases. In fact, the multiplier effect is that
for every 1% increase in year to year investment, there is an
average of a 1.3% decrease in the unemployment rate.
Conversely, for every year that investment decreased from
year to year, a one percent decrease in investment multiplies,
on average, into almost a 10 times percentage increase in the
unemployment rate. Thus, if our unemployment rate in the first
year was 7% and business investment dropped 1% the
following year that would result in the unemployment rate
increasing to 7.7%.

Rather than electing to venture into a hiring tax credit, perhaps
we can look at some at least antidotal evidence that bringing
back the old fashioned Investment Tax Credit (ITC) might drive
the economy and our unemployment out of the gutter. For
those unfamiliar with ITC this was a credit against corporate
taxes ranging from 7% to 10% of new investment in productive
assets. It was first signed into law by President Kennedy in
1962 and ended by President Reagan’s Tax Reduction Act of
1986. While those super computers and doctorates might
prove appearances incorrect this graph of manufacturing
employment is at least fascinating from an employment
perspective:

Starting in 1962 there was an almost unprecedented growth of
manufacturing employment and of course jobs creation.
Similarly, there was an almost unprecedented decline in
manufacturing jobs starting, I believe, in 1986, interrupted
briefly by the Tech bubble of the late 90’s.

There is no question that jobs are the key to revival. There is
no doubt that we must jumpstart the jobs and investment
engine to focus attention on those jobs. Our Administration
should consider the ITC rather than an employment credit.
Most people would much prefer to bet on a sure thing rather
than calculations created by the same people that brought you
derivatives and CDS’s.

Please visit: www.savingpontiac.org Let’s start the change
NOW!

About SavingPontiac.org
Savingpontiac.org is a non-partisan, non-profit organization
focused on the influencing policy making regarding the
disposition of the Pontiac Brand by The Treasury Department
and General Motors.

Contact: Ben 678-561-6552 or ben@savingpontiac.org

The Taxpayers own Pontiac and every idle asset
of General Motors. Why not let entrepreneurs
take the reins of Pontiac and some idle
assets...add a small amount of the bailout
money; ='s real "shovel ready jobs".

SAVINGPONTIAC.ORG