California’s Republican gubernatorial nominee, former Ebay CEO Meg Whitman, has been touting her economic platform, calling job creation “the number one thing we have to do.” Today, on Fox News, Whitman once again asserted that she will create two million “new, good, private sector jobs,” and when asked by Fox’s Bill Hemmer how she actually planned to do that, she claimed that eliminating fees and regulations will magically create a flood of job creation. Watch it:
Whitman’s assertion that she’ll create two million jobs in five years looks a tad less impressive when you consider that the California State Department of Finance estimates that “California should gain 1.25 million jobs by 2015 without any of Whitman’s policies.”
This isn’t surprising, as tweaking on the edges of tax policy traditionally doesn’t have much effect on job creation, particularly when demand is as weak as it is right now. In fact, economist Terry Buss has concluded that when it comes to California, “tax literature, now in hundreds of publications, provides little guidance to policy makers trying to fine tune economic development.”
However, Whitman’s plan most certainly will cost California revenue, at a time when it is trying to dig out of a huge fiscal hole. As UC Berkley economist Michael Reich found:
Whitman’s proposed cuts in taxes and fees paid by businesses are likely to have little positive effect relative to the number of jobs that would be lost by the resulting drop in public investment. These cuts could result in a loss of revenue of $6 billion to $10 billion a year or more, depending on how they were implemented. These tax cuts would add substantially to the state’s budget crisis.
There is, of course, something to be said for eliminating fees and regulations that make no sense, but Republicans this year have seized upon them as one of the main impediments to job creation. But the elimination of a fee doesn’t save a small business that’s suffering from severe lack of customers or that can’t find a line of credit. And the number one thing holding back small businesses from hiring, at the moment, is poor economic conditions and lack of sales prospects.
Plus, some of the regulations that Whitman wants to do away with — including one guaranteeing overtime pay to workers — “would transfer over $1 billion from workers to employers,” reducing the ability of those workers to purchase goods and increase demand, while lining the pockets of employers. Such a step doesn’t create jobs, but simply exacerbates income inequality and gives employers the upper hand in labor relations.