Tuesday, July 30, 2013

President Obama is seeing the light!

Today President Obama will be traveling to Chattanooga, Tennessee to deliver a speech at the Amazon.com distribution center. The speech is reportedly going to include a "grand bargain" that President Obama feels will bring more jobs to America; specifically more middle-class jobs.

Senior Obama adviser Dan Pfeiffer said (http://apnews.myway.com/article/20130730/DA7ROU7O1.html),"As part of his efforts to focus Washington on the middle class, today in Tennessee the president will call on Washington to work on a grand bargain focused on middle-class jobs by pairing reform of the business tax code with a significant investment in middle-class jobs." Finally the President understands that private business creates jobs not the government; yet the government can put forth hindrances that will delay or destroy job growth.

 President Obama can start reforming the tax code by removing the tax or fine that employers must pay for not providing health care to their employees. Next, President Obama can lower the tax rate on dollars earned by companies outside of the United States as they will be taxed in the countries they are doing business in too. Finally, President Obama can raise the tariffs on all imported goods - regardless of where the company is domiciled. If a company wants to avoid the tariff then they must build and sell those goods here in the United States while being subject to business tax code here.

These three elements will increase job growth and innovation inside of the United States. In a global economy that we are in now, we cannot compete directly on labor costs until other emerging markets establish a middle-class similar to ours. By raising the tariffs on goods produced outside of the United States it will force companies to weigh the options of producing and selling goods here. There is a reason why Ford, GM, Cat, and Deere have opened plants in India - among the multitude of reasons is the structure India has for taxing goods manufactured outside of the country and sold inside it.

I have renewed optimism in President Obama if he is serious about reforming the business tax code to make it conducive to a pro-business job growth environment. At the same time I am skeptical that the "grand bargain" will come at a hefty price tag that results in more deficit spending and increased debt load that we will be passing onto our grandchildren's children.