Pie in the Sky Proposals by Kerry

[FishForLunch]

Kerry's Spending, Tax Plans Fall Short
Review of Proposals Shows Expenditures Exceeding Savings by $165 Billion

By Jim VandeHei and Brian Faler
Washington Post Staff Writers
Sunday, February 29, 2004; Page A05

Democratic presidential candidate John F. Kerry repeatedly assures voters he can pay for his top domestic priorities and cut the federal deficit, all by rolling back President Bush's tax cuts for top income earners and shutting down corporate tax loopholes.


But a review of his campaign proposals shows that the Democratic front-runner is promising to spend at least $165 billion more on new programs during his first term in office than he could save with his tax plan, a mix of breaks for the middle class and increases for corporations and the most affluent. The $165 billion figure does not include the cost of several proposals Kerry has not fully detailed or backed with estimates.

A policy adviser with Kerry's campaign said the candidate can fulfill his promise to cut the deficit in half by 2009 by slashing spending in other areas and "shedding" or "paring down" some proposals if necessary. Kerry also anticipates stimulating the economy with greater spending during his first two years in office, the adviser said.

The Massachusetts senator has vowed not to touch entitlement programs such as Social Security, which eat up a huge chunk of tax dollars, forcing a likely squeeze or freeze of popular programs to make his deficit-cutting goal. The adviser said it is not uncommon for a campaign's political team to overpromise during the primaries and then turn to the policy staff during the general election battle to cram the pledges into a workable budget.

"When John Kerry outlines the full details of his budget -- both his proposed initiatives and the significant government waste and corporate giveaways he will get rid of -- it will be clear that his vision will reduce the Bush deficit and restore fiscal discipline," said Stephanie Cutter, a Kerry spokeswoman.

A review of John Edwards's campaign proposals indicated that the North Carolina senator appears to cover the cost of his agenda for two chief reasons: He has proposed less than Kerry in new spending -- particularly on health care, the costliest item for both candidates -- and would increase the capital-gains tax rate for Americans making more than $300,000 a year, carving a bigger revenue stream for the federal government.

Bush has promised to cut the deficit in half by 2009, too, though his budget relies on several controversial assumptions, including no new spending on operations in Iraq and cuts Congress is unlikely to approve. The Congressional Budget Office on Friday projected that Bush's budget plan would not halve the deficit in five years and would run up $2.75 trillion in additional debt over the next decade.

With the Bush deficits projected to hit historic heights, Republicans and Democrats expect the federal budget to be a major issue in the election. Deficit reduction rarely ranks among the chief concerns of voters, but Democrats believe Bush is vulnerable to charges he mismanaged the people's money, especially by cutting taxes so deeply for wealthier Americans. The Bush campaign's response: Kerry would tax and spend the country into an economic mess.

Elaine Kamarck, senior policy adviser to the 2000 Al Gore campaign, said it is important that presidential candidates explain how they will pay for their agenda. "We were extremely careful" to make sure Gore's numbers added up, she said, adding that Bush's numbers were not sufficiently scrutinized. "It was possible to predict these terrible deficits as early as 2000," she said, if Bush had been forced then to explain how the country could afford his tax cuts and new spending plans.

Playing to Democratic audiences, who largely oppose the Bush tax cuts, Kerry almost always touts his support for repealing the tax breaks for those making more than $200,000 -- and for beefing up programs that he says the savings would fund. This would mean reinstating a top tax rate of 39 percent and eliminating the breaks for capital gains and dividends available to those top income earners. This repeal would generate more than $200 billion in revenue over four years, according to William G. Gale of the Brookings Institution, a think tank Kerry campaign officials consult on budget numbers. Kerry also projects saving more than $180 billion over the first four years by eliminating loopholes and subsidies for corporations.

What Kerry rarely mentions is that he would extend all the Bush tax cuts for those making less than $200,000, which would cost about $75 billion over the next four years. In 2005, married couples, parents and others would see their taxes go up if the Bush cuts are not extended for this group because several reductions are set to expire; Bush wants the cuts made permanent. Edwards would do the same as Kerry.

In a general election, when Kerry will need to attract moderates and independents, aides said he would highlight not only his support for extending many of the Bush tax cuts but also tout his own, albeit little publicized, tax-reduction plans aimed at the middle class. Kerry has promised tax breaks for education, health care, manufacturers, small businesses and technology companies. His campaign has not detailed how much many of these cuts would cost the government or when they would take effect. Some advisers are pushing Kerry to propose more tax cuts if he wins the nomination.

If Kerry makes good on his tax-cutting promises, budget experts say he will run into the same problem Bush is having with soaring deficits, especially considering his myriad spending programs.

Kerry's advisers said the candidate's support for middle-class tax cuts will help deflect attention from his liberal voting record in the Senate. Republicans are planning to pounce on the large number of new spending programs Kerry has proposed in the campaign, as well as during his Senate career. Like many of his current and former Democratic primary rivals, Kerry has several big-ticket programs in a few key areas: health care, education, national security and the economy.

On the campaign trail, Kerry has proposed, for example, a health care plan that would cost $288 billion over his first four years in office -- although campaign aides say it would also save the government $100 billion over that period, through a variety of cost-saving measures. He would also boost spending on homeland security by more than $20 billion. Kerry wants to provide $50 billion to states grappling with tight budgets, while spending an additional $40 billion on jobs-related programs -- among them, tax breaks for small businesses, manufacturing companies and workers, and technology firms.

Kerry, who voted for Bush's No Child Left Behind education program, has relentlessly criticized Bush for underfunding it, and promises to increase annual funding by at least $8 billion. Kerry would increase spending on special education programs by almost $12 billion per year, and spend an additional $14 billion over four years on programs that help students pay for college education.

Kerry has proposed other, narrower initiatives that would add billions of dollars to the government's yearly bills, including expanding public service programs -- for seniors, teenagers and the Peace Corps -- by several billion dollars annually. And Kerry supports spending an additional $14 billion over the next four years on energy and environmental programs.

Veterans, in particular, would receive generous new support, including mortgage insurance to those in the National Guard and reserves who are called to duty and an increased death gratuity to be paid to the families of those killed in action. Kerry has also proposed providing 1.5 million rental units over the next decade for low-income families, while encouraging the building and rehabilitation of 500,000 homes in poor areas. He supports expanding funding for AIDS programs, including, according to his Web site, providing "at least $30 billion in the fight against AIDS by 2008."

His campaign has offered varying estimates of how much Kerry would spend on veterans programs, AIDS initiatives and urban renewal programs. Aides initially said they would be funded -- along with the plans to expand the preschool program Head Start and the number of police officers on the streets -- by a single pot of money that they estimated to be about $68 billion over the next four years. Aides later reduced that estimate to $54 billion and, later still, said Kerry could pay for all of the plans by squeezing or freezing other programs and eliminating government waste.

[Mavdog]

I wonder what the total amount of GWBush's proposed spending will add up to? Seems that both parties are promising way more than can be delivered, especially when one considers we've already increased the federal deficit by about $1 Trillion in the 01 to 04 budgets.

From Kerry's web site, a note on how he intends to pay for his initiatives:

5) RESTORE FISCAL DISCIPLINE: By borrowing from future generations to give tax relief to those who need help the least, George W. Bush’s economic policies have, for the first time in history, forced the federal government to spend $1 billion more EACH DAY than it takes in. President Bush’s exploding deficits are destroying the solvency of Social Security and Medicare and he has placed the enormous burden of saving these programs on the shoulders of our children and grandchildren. John Kerry believes that we need a smaller and smarter government that wastes less money. John Kerry’s plan will:

Balance the Budget

Cut the Deficit in Half: John Kerry is committed to balancing the budget. He has put forward a sensible plan that will at least cut the deficit in half in his first term, while investing in economic growth and investing in workers.

A Balanced Budget Summit: The best way to get to a balanced budget is not in partisan bickering, but in bipartisan cooperation. As President, John Kerry will call a Balanced Budget Summit that will require all sides to work together to make at least temporary sacrifices -- even in their top priorities -- as part of a concerted effort to restore fiscal discipline and fight for our future.

End Special Tax Breaks: To restore fiscal discipline and strengthen our economy, Kerry will repeal Bush’s special tax breaks for Americans who make more than $200,000.

Cut Excesses in Government: One of the Bush Administrations well-kept secrets is that under his watch the size of government has actually gotten bigger – not smaller. John Kerry will reduce the size of the Federal government by: bringing spending down to the level of GDP it was under Clinton, requiring federal agencies to submit annual plans to reduce energy costs by 20 percent by 2020; cut the Federal government’s administrative costs by five percent; cut the number of political appointees and ban providing bonuses for political appointees; cut fraud and abuse in government programs – fraud and abuse is estimated to cost $12 billion in Medicare alone and end rules that prevent the Federal government from having the same purchasing authority as the private sector.
Reign in Out of Control Spending

Restore Budget Rules to Stop Runaway Spending. John Kerry believes we need to reverse the new budget rules Republicans in Congress have established that make it easier to spend into deficits with fewer votes. He will also review and reassess all discretionary spending programs to determine their effectiveness and whether they should continue to be funded.

Implement the McCain-Kerry Commission on Corporate Welfare. Powerful special interest groups make it hard to cut special tax loopholes and pork barrel spending projects. John Kerry supports a Commission that would recommend cuts and require Congress to vote on all recommendations, so no single special interest could fight for pet projects.

Pass a Constitutional Line-Item Veto to Reduce Corporate Welfare and Excessive Spending. Under Kerry’s plan, the President would identify wasteful spending items in the budget and submit the list to Congress to vote on in an up-or-down fashion – saving billions of dollars.

[madape]

after Kerry's done raising everyone's taxes and grinding the recovery to a hault, he'll increase discresionary spending on entitlement programs to FURTHER encourage fat, lazy democrats to stay at home and live off the dole. Spending goes up, tax revenue goes down,but at least we'll all get free basement level health care (even if it means we'll never cure cancer, AIDS or heart disease) These are the hallmarks of a socialist... er, I mean Democratic economic agenda. Hell, if it's worked in the USSR, and it's doing so well in Germany today, it must be good enough for America. Bring on the 11% unemployment rates Kerry! I've been practicing my goulash recipe.

[Blonde Bomber]

Originally posted by: madape
after Kerry's done raising everyone's taxes and grinding the recovery to a hault, he'll increase discresionary spending on entitlement programs to FURTHER encourage fat, lazy democrats to stay at home and live off the dole. Spending goes up, tax revenue goes down,but at least we'll all get free basement level health care (even if it means we'll never cure cancer, AIDS or heart disease) These are the hallmarks of a socialist... er, I mean Democratic economic agenda. Hell, if it's worked in the USSR, and it's doing so well in Germany today, it must be good enough for America. Bring on the 11% unemployment rates Kerry! I've been practicing my goulash recipe.

AMEN!!!

Could not have said better than that. I hate to get into political talk but if people think Kerry will turn this around with his ideas your crazy.

[Blonde Bomber]

Plus his brilliant idea to make the Minimum Wage start @ $9 is ridiculous. All that will cause is small companies to fold because of higher overhead and will make large companies go overseas for cheaper labor.

Great Idea Kerry!!!

Kerry'04....what a putz!!

[Mavdog]

Blonde Bomber wrote:

Plus his brilliant idea to make the Minimum Wage start @ $9 is ridiculous. All that will cause is small companies to fold because of higher overhead and will make large companies go overseas for cheaper labor

Any increase in the minimum wage WILL NOT send those miminum wage jobs offshore, these aren't that type of jobs. The issue of outsorcing is typically when a medium to high wage earning position can be replaced by similar skilled workers elsewhere getting much less than the American worker for the same job function.

You can't hire a custodian who lives in Asia to clean a building in downtown Dallas, nor can you hire a person in India to flip the burgers at McD's in Irving.

Likewise if it is a small business who has to pay higher wages for the labor, they will not be at a competitive disadvantage as all the other businesses will need to do the same. It would be a level playing field for all businesses, large or small. That small business can either 1) pass the increased costs on to their consumers, 2) find other areas to cut costs, or 3) realize a lower profit margin by not passing the increased costs through.

The question is if the marketplace should be left alone to set the wages that supply and demand produces, or if we should establish a floor on those wages that guarantees a "living wage" to all workers.

Here's some good reading on the issue:
Living Wage information

[madape]

That's incredibly naive, Mavdog.

Do you think that if Wall Mart is forced to increase their payroll expense by 40%, that no jobs will be lost? As if retail and food service industries will just sit back and take it? Sorry. Those companies will lay off tens of thousands, if not hundreds of thousands of people. That is IF they can manage to remain in business after getting this crippling "payroll tax" slapped in their face. In theory, the only places that will remain competitive are higher end stores who's prices are high enough to enable them to pay their own workers crazy sums of money. In addition to causing a job crises for the lower class, it will mean higher prices for everyone, for every single product we buy. We'll have to save up all week long in order to take our kids out to McDonalds (where a happy meal will be $12). It will crush the standard of living in this country. It's devastating, incomprehensibly stupid thing to do for the lower and middle classes. Fortunately for Kerry, those people are naive and uneducated, so of course they'll vote for it. That's all that matters to Kerry.

[Max Power]

Originally posted by: Mavdog
The question is if the marketplace should be left alone to set the wages that supply and demand produces, or if we should establish a floor on those wages that guarantees a "living wage" to all workers.

Since I actually OWN a small business I thought I might put my two cents in. First off, $9 an hour is NOT a living wage - nobody can live on $18720 a year. Second, most mininum wage earners are either young or elderly. The youngsters do not warrant a higher salary because they have no work experience. The elderly are usually working to supplement their retirement and are not seeking jobs that have higher expectations and thus higher wages.

It is also an economic reality that every time the mininum wage goes up then the fast food places (by far the largest employer of minimum wage jobs) buy equipment that is more efficient thus needing fewer workers. Mass retail outlets and grocery stores (the #2 & #3 employers of mininum wage jobs) also cut back on hours and implement measures that increase efficiency and reduce payroll. So the small business owner gets it in the shorts. They can't afford to buy the very expense labor saving devices and they can't afford the payroll. This accelerates the closing of small businesses and also accelerates the dominance of retail giants like Wal-Mart. There is a direct correlation between the rise in mininum wage and the closure of small business and the rise of big chain retail. And now you know why.

So actually when you raise mininum wage, you only help a small segment of the workforce and one that does not really need the increase in pay. The very, very few workers who actually need the income are likely to get laid off as the big retailers go towards more efficent programs and small businesses close.

[mercury_rev]

Another effect of raised minimum wage laws is that entry-level jobs become harder to find. Businesses won't hire young or inexperienced workers -- even if those workers are willing to work for a lower-than-minimum wage! The consequence is many young people are barred from the job market and the entry-level experience needed for them to work their way to higher wages. (It helps to remember that most people do not live their entire lives on minimum wage, and that "the poor" is a dynamic group consisting mostly of youths who will reach higher income brackets over time.)

Labor unions with experienced workers love minimum wage laws....and unions vote en masse.

Mavdog, as for the "right to a living wage," why not a "right to a comfortable living" or a "right to stress-free work" as well? Why not make the minimum wage $20/hr? Where does this rights inflation end? Why must the people who put forth the effort to create wealth and create jobs be told how much to pay for willing labor? I'll go with Adam Smith on this one, if it weren't for greedy capitalists, we would all be much worse off than we are now.

[Mavdog]

Do you think that if Wall Mart is forced to increase their payroll expense by 40%, that no jobs will be lost?

Why would jobs be lost? Would WalMart still have their retail sales? YES, maybe even more sales due to higher disposable incomes. They would still need to have employees to stock the shelves and ring up the purchases. Talk about "naive"...

As if retail and food service industries will just sit back and take it? Sorry. Those companies will lay off tens of thousands, if not hundreds of thousands of people. That is IF they can manage to remain in business after getting this crippling "payroll tax" slapped in their face.

Yeah, they would just fold up and go away....in your dreams. All increased employee costs would either 1) be passed on to the consumer, 2) be absorbed in lower profit margins, or 3) be funded by other efficiences in their business. A happy, well fed employee is more productive than an unhappy, hungry employee.

In theory, the only places that will remain competitive are higher end stores who's prices are high enough to enable them to pay their own workers crazy sums of money.

Never worked in retail have you? In theory, ALL the stores can pass through any higher wage costs as ALL the stores will be faced with ALL the same rules on wages.

In addition to causing a job crises for the lower class, it will mean higher prices for everyone, for every single product we buy. We'll have to save up all week long in order to take our kids out to McDonalds (where a happy meal will be $12). It will crush the standard of living in this country. It's devastating, incomprehensibly stupid thing to do for the lower and middle classes. Fortunately for Kerry, those people are naive and uneducated, so of course they'll vote for it. That's all that matters to Kerry.

Huh? The Lowest class would be the beneficiary, that is the class who is used/abused by the lowest wage payers. Any prediction that a living wage "will crush the standard of living in this country" is NOT backed up by the real life experiences noted in the link which I provided, in fact the areas that have applied the concept of a living wage have seen no discernable job loss or decrease in their standard of living.
Good job of utilizing unsubstantiated rhetoric tho...

[FishForLunch]

Washington's upward-ratcheting minimum wage needs to be moderated. The Senate has voted out a reasonable reform that the House leadership ought to bring to a vote.

The problem with current law is that it raises wages when business is good and raises them when it is bad. The law was sponsored by unions and passed by voters with a 66 percent yes vote in 1998, when business was strong. The law raised the effective minimum in Washington from $5.15 (still the federal standard) to $6.50, and tied it to the Consumer Price Index for urban workers. As of Jan. 1, it is $7.16, the highest of any U.S. state.

The reform would stop the increases when the state unemployment rate is higher than the national rate — which it has been.

Supporters say it is unfair not to give raises to the people at the bottom. These are warm feelings. That is about all they are. The reality is that the higher the minimum wage, the more that certain workers have their hours cut back or will not be employed at all.

It is no coincidence that the states with the highest minimums — Washington, Oregon ($7.05) and Alaska ($7.15) — have recently had some of the highest unemployment rates.

Central Puget Sound families often think of a high minimum wage as progressive. They can afford to think that way because they are in the state's high-wage zone. In rural Washington, family incomes are sharply lower, and a high state minimum prices more of them out of work.

That division showed up in the Senate vote. It was along rural-urban lines, with the rural districts voting strongly to rein in the minimum wage.

The urban Democrats who hold the power in the House should give their rural colleagues a break. It is not progressive to price the people at the bottom out of work.

Source (Hope the Seattle Time is not a Right wing paper)

[Blonde Bomber]

Originally posted by: Mavdog

Why would jobs be lost? Would WalMart still have their retail sales? YES, maybe even more sales due to higher disposable incomes. They would still need to have employees to stock the shelves and ring up the purchases. Talk about "naive"...

Only if they don't raise there prices. If they had to increase there minimum wage then someone gets on the other end. Either they lay off people, which puzzles me how this helps the economy, or they pass the buck onto the consumer. What gives?

Yeah, they would just fold up and go away....in your dreams. All increased employee costs would either 1) be passed on to the consumer, 2) be absorbed in lower profit margins, or 3) be funded by other efficiences in their business. A happy, well fed employee is more productive than an unhappy, hungry employee.

Never worked in retail have you? In theory, ALL the stores can pass through any higher wage costs as ALL the stores will be faced with ALL the same rules on wages.

Huh? The Lowest class would be the beneficiary, that is the class who is used/abused by the lowest wage payers. Any prediction that a living wage "will crush the standard of living in this country" is NOT backed up by the real life experiences noted in the link which I provided, in fact the areas that have applied the concept of a living wage have seen no discernable job loss or decrease in their standard of living.
Good job of utilizing unsubstantiated rhetoric tho...

[Blonde Bomber]

The wage change will also have a trickle down effect. People making $10 - $12/ hour jobs will want to make more because of the wage increase and so and so forth.

If people want to make more the the minimum then they have options to further there education to get that wage. I really only see negatives in this increase. I guess because I run a small business myself and deal with these issues on a daily basis.

[madape]

Next time you apply for a job, try telling your perspective employer that you deserve twice as much as everyone else because
1) You'll be happier, and happy people work harder
2) You'll probably use some of your money to buy the company's products.

My guess is that you'll get a quick kick out the door.

Businesses exist to make money. Take away their ability to do so, and they will disappear. When businesses disappear, guess what else does? Jobs. That's reality.

To address just a couple of your insane points... There is no such thing as "absorbing into lower profit margins". Lower margins mean less profitable companies, less market value, less capital spending, less growth, less expansion. And yes, those companies that were previously barely breaking even WILL go out of business.
And as I said in a previous post. Of course prices will rise. This is a BAD thing. Remember the standard of living argument? When all of a sudden people who used to eat out three times a week can only eat out once time a month, that's BAD. It's not GOOD. (Is that simple enough for you?) What's the use of making $9 bucks an hour, when the $9 won't buy you as much "stuff" as you could afford when you made $6 an hour?

It's amazing to me that left wingers demonize businesses, when business are the entities that puts food in the people's mouths. Dems freely promote anti-business propositions such as minimum wage increases, trade restrictions, and massive tax obligations, yet scream bloody murder when their plant shuts down.

As ridiculous as it sounds to most of us, there really are a number of people in this country as misguided as Mavdog. It's a scary thought.

Just like in the above example, the lower class just might be pricing themselves out of a job this November with a vote for Kerry.

[Mavdog]

Fish posted;

That division showed up in the Senate vote. It was along rural-urban lines, with the rural districts voting strongly to rein in the minimum wage.

The urban Democrats who hold the power in the House should give their rural colleagues a break. It is not progressive to price the people at the bottom out of work.

The concept of a living wage is different than a minimum wage, as the relative costs which a person has to pay- housing, food- form the basis of a living wage, as opposed to a set amount nationwide which is a minimum wage. Yes, the living wage establishes a "minimum" wage an employee must receive, but it is a function of the expenses of living in a specific area. Different areas of our country have different costs of living.

In the illustration in Oregon, those in Portland would most likely see a higher living wage than those in the rural areas, where the living wage would be lower as a function of lower living costs.

[madape]

Mavdog, I have no argument against the point that if a minimum wage must exist, it should be indexed with something like the CPI, or even a state-level cost of living index. But I don't think that's the argument you are trying to make (or the point that the link you posted was trying to make).

[Mavdog]

Madape wrote:

Next time you apply for a job, try telling your perspective employer that you deserve twice as much as everyone else because
1) You'll be happier, and happy people work harder
2) You'll probably use some of your money to buy the company's products.

My guess is that you'll get a quick kick out the door.

Sure, one would be insane to make such absurd demands. Fortunately for me, I never suggested that anyone "deserves twice as much as everyone else" hence none of those were suggestions of mine. good try tho...

Businesses exist to make money. Take away their ability to do so, and they will disappear. When businesses disappear, guess what else does? Jobs. That's reality.

yawn. Tales of doom and gloom....no one is "taking away their ability...to make money". Such sensationalism...

To address just a couple of your insane points... There is no such thing as "absorbing into lower profit margins". Lower margins mean less profitable companies, less market value, less capital spending, less growth, less expansion. And yes, those companies that were previously barely breaking even WILL go out of business.

So you assume that ALL businesses are at their lowest possible profit margins? False assumption on your part. Strangely, there are many cos. that have enough GPM that they could absorb the higher wages to their lowest earners. Market value is a result of operating efficiencies and earnings, which could be impacted by too high labor costs but also may not be affected by those higher costs, it matters if they can pass through the increase to their consumers. Cap ex are influenced more by ROI and tax treatment of those budget items IMHO.
BTW, those cos. that are "barely breaking even" are NOT healthy to begin with...you're a fan of market forces, let them work.

Yes, prices will rise. This is a BAD thing. Remember the standard of living argument? When all of a sudden people who used to eat out three times a week can only eat out once time a month, that's BAD. It's not GOOD. (Is that simple enough for you?) What's the use of making $9 bucks an hour, when the $9 won't buy you as much "stuff" as you could afford when you made $6 an hour?

NO, prices are NOT automatically going to rise (another item covered in the link I provided). Any presumption that prices would rise has no validation as supply/demand influences pricing (is that simple enough for you?)

It's amazing to me that left wingers demonize businesses, when business are the entities that puts food in the people's mouths. Dems freely promote anti-business propositions such as minimum wage increases, trade restrictions, and massive tax obligations, yet scream bloody murder when their plant shuts down.

Feel better that you got that rant off your mind? Good, try to stay on topic. A living wage is NOT anti-business, it is anti-poverty.

As ridiculous as it sounds to most of us, there really are a number of people in this country as misguided as Mavdog. It's a scary thought.

Not as scary as someone who proclaims that businesses "put food in people's mouths"...people's work puts their food on the table, and that could be a wage from a co. or by their own efforts. Sounds like you would prefer corporate america to be running Washington...wait a minute, they do in this administration! Holy Halliburton Batman!

Just like in the above example, the lower class just might be pricing themselves out of a job this November with a vote for Kerry

What "above example" is that? The example that doesn't consider supply/demand affecting prices. or the example of the company that is "barely breaking even" being forced out of business for their lack of efficiency/competitiveness?

[madape]

First off, let me just say that I hate it when posters go into a previous post and make a comment after every single point. It's absolutely impossible to follow as a reader, and more trouble than it's worth as a poster. As much as I'd enjoy writing a rebuttal to each one of your comminist arguments, i'll relegate myself to some of the more ludicrous one.

To begin, I never made any assumption that ALL businesses are at their lowest possible profit margins. I don't even know what you mean by that. I do know that if you can't just "absorb" costs into any company, regarless of how profitable they are, and not expect there to be negative repercusions. Healthy companies that were planning on using their profits to grow their bussiness will need to scale back their expansion plans. That means less jobs, at least in comparison to the situation Kerry is proposing. Those companies who do not have profit margins large enough to take on a large increase in payroll expense will need to scale down their costs in order to stay in the black. I don't see anything anti-free market in this argument at all. Having the government turn a corporation from profitable, to unprofitable through restrictions on labor sounds an awful lot like anti-capitalsm to me, but that's YOUR argument, not mine.

Another one of YOUR arguments was that businesses would "pass on the higher costs of labor on to the consumer" (in reference to your also insane response to Max Power's legitimate concerns about minimum wage increases costing him his small-business). I assume you mean through higher prices. I absolutely agree with you on this. However, I don't think you agree with yourself, because you slammed me for agreeing with you. You defended the arguments you made against yourself by saying that prices would not rise, because "supply/demand influences pricing". Of course, the massive inflationary impact of systematically raising the cost of prodution in almost every industry in this county would have absolutely no effect on prices.. right? Hell, a Big Mac might even become CHEAPER if it cost $2 to make, as opposed to the good old days when it cost 50 cents. In any case, you exhibit an incredibly primitive understanding of macroeconomics. I fear they are rooted more in political idiology than in common sense.

Finally, the "previous example" I referred to was in reference to the scenario I created in which you were validating your desire for high pay based on the theory that happy workers work harder, and are more productive, than unhappy ones. And also that it doesn't matter how much an employee is paid because he will more than likely just reinvest a portion of that money on the company's products, resulting in a net wash for the company. You see, I used your earlier arguments that to illustrate how stupid your idea was. Neat trick, huh? It's a lot smarter than slamming your own arguments. The results are the same of course, you wind up looking stupid in both cases. But just between you and me, you might want to reformulate your defense strategy.

[Max Power]

Originally posted by: Mavdog
Never worked in retail have you? In theory, ALL the stores can pass through any higher wage costs as ALL the stores will be faced with ALL the same rules on wages.

You've never owned a retail store have you? I could not pass on ANY of a wage increase because the prices on my products are printed on the product. My only option to this large increase in payroll will be to cut hours or lay-off employees. Now we have a young worker who WILL NOT HAVE A JOB. Nobody is going to hire kids at $9 per hour.

So you assume that ALL businesses are at their lowest possible profit margins? False assumption on your part. Strangely, there are many cos. that have enough GPM that they could absorb the higher wages to their lowest earners. Market value is a result of operating efficiencies and earnings, which could be impacted by too high labor costs but also may not be affected by those higher costs, it matters if they can pass through the increase to their consumers. Cap ex are influenced more by ROI and tax treatment of those budget items IMHO.
BTW, those cos. that are "barely breaking even" are NOT healthy to begin with...you're a fan of market forces, let them work.

Larger business will automate because they will go with the cheaper alternative. Why do you think automakers went to automated equipment? Because payroll costs had increased to the point where it was cheaper in the long run to automate. Why do McDonalds have so many labor saving devices in their kitchens? It isn't to make the lives easier on the employees, let me assure you. It is to eliminate as many employees as possible.

Feel better that you got that rant off your mind? Good, try to stay on topic. A living wage is NOT anti-business, it is anti-poverty.

Pure bullshit. $18720 a year is below the poverty line for a family of four.

http://aspe.hhs.gov/poverty/04poverty.shtml

But the #1 reason to not raise the mininum wage right now is benefits. Those are payroll dollars that will be chopped when a business needs to cut costs. With health care costs rising at an alarming rate, many businesses will look at a raise in the mininum wage as a signal to cut benefits.

So a raise in mininum wage will kill small businesses, cut jobs, give more advantages to the rich mega-companies, and provide a burden on the health care system. Tell me why this is good again?

[Mavdog]

Sure, if you don't want to respond to specific rebuttals I'll understand. I find it easier to repost the prior response so direct answers are made to direct assertions. Much easier to follow and stay on topic. You should try it.

Speaking to on topic, the point I am making is (certainly not “comminist” BTW) that a living wage- a minimum wage in a way sure, but not a flat amount across all areas- will not increase the level of unemployment. A living wage will have a negligible affect on consumer costs.

It takes a lot more earnings to get food/shelter in metros, and some metro areas are more costly than others.

I see the american worker deserving of that wage that will provide these essentials of food and shelter. A worker who has neither isn't going to be very productive (did I make that simple enough for you this time?)

Unfortunately, there are supply/demand situations as well as structural problems in the labor force where the employer is able to dictate less than a living wage, a wage which is needed to live with these essentials. Business should not be allowed predatory practices with the labor force.

Different cos. have different labor costs, some are labor intensive and some are not. I’m not the one trying to make generalizations about a dramatic negative affect on all business should a minimum wage be the standard. Business can afford to pay that amount if all businesses have the same obligation.

There is no reason to expect “a large increase in payroll expenses” should a living wage become the standard, by claiming so are you then saying that these companies are filled with employees earning too little to survive on? If the answer is no, which it should be, then the actual impact on these companies is negligible. If the answer is yes, and now we’re talking about fast food workers, custodians and the like, these businesses have some of the highest GPMs in business. They can afford to pay a living wage.

You like making extreme statements about “the massive inflationary impact of systematically raising the cost of prodution in almost every industry in this county” without thinking about what you’re saying…which is that almost every industry in this country is now paying their workers the minimum wage, and that wage is not a high enough wage to live on. You have a false assumption of what % of the workforce is paid the minimum wage, eh? Hint: not as much as you apparently think

You mentioned that american businesses would be harmed by this living wage, specifically the business that us “just getting by”. My response is that such a business must be inefficient. ALL businesses would have the same wage requirements, all are affected evenly. This does not stifle competition as it’s a level playing field for all business.

Your “previous example” was an absurd exaggeration, much like your allegations of “comminist” and “primitive understanding of macroeconomics”. You are the one who just doesn’t get it due to your knee jerk "primitive" reactions.

[mercury_rev]

Thomas Sowell on living wage

[Mavdog]

Originally posted by: Mavdog

Never worked in retail have you? In theory, ALL the stores can pass through any higher wage costs as ALL the stores will be faced with ALL the same rules on wages.

originally posted by max Power

You've never owned a retail store have you? I could not pass on ANY of a wage increase because the prices on my products are printed on the product. My only option to this large increase in payroll will be to cut hours or lay-off employees. Now we have a young worker who WILL NOT HAVE A JOB. Nobody is going to hire kids at $9 per hour.

Actually yes, I have. I'm surprised that you get MSRP on all your inventory, and that the manufacturers set the retail prices. You do have an option not mentioned, that of of increasing sales.

As far as kids, they shouldn't be guaranteed a living wage, as they don't have the same living expenses (not head of household).

Posted by Mavdog

So you assume that ALL businesses are at their lowest possible profit margins? False assumption on your part. Strangely, there are many cos. that have enough GPM that they could absorb the higher wages to their lowest earners. Market value is a result of operating efficiencies and earnings, which could be impacted by too high labor costs but also may not be affected by those higher costs, it matters if they can pass through the increase to their consumers. Cap ex are influenced more by ROI and tax treatment of those budget items IMHO.
BTW, those cos. that are "barely breaking even" are NOT healthy to begin with...you're a fan of market forces, let them work.

Max Power posted

Larger business will automate because they will go with the cheaper alternative. Why do you think automakers went to automated equipment? Because payroll costs had increased to the point where it was cheaper in the long run to automate. Why do McDonalds have so many labor saving devices in their kitchens? It isn't to make the lives easier on the employees, let me assure you. It is to eliminate as many employees as possible.

I agree that automation can replace workers, its been going since the 1800s.

Mavdog posted

A living wage is NOT anti-business, it is anti-poverty.

Max Power responded

Pure bullshit. $18720 a year is below the poverty line for a family of four.

http://aspe.hhs.gov/poverty/04poverty.shtml

OK, so I say again how is a living wage anti-business? I agree that a family of four cannot live on the minmum wage in many areas of our country...which only bolsters the point that in some areas a living wage should be the practice.

But the #1 reason to not raise the mininum wage right now is benefits. Those are payroll dollars that will be chopped when a business needs to cut costs. With health care costs rising at an alarming rate, many businesses will look at a raise in the mininum wage as a signal to cut benefits.

Ah, a good point. The living wage tho isn't the problem then, but the additional costs that a business has with each employee. Perhaps its the taxes, comp insurance as well as health insurance that is the real issue with some employers paying a living wage.

So a raise in mininum wage will kill small businesses, cut jobs, give more advantages to the rich mega-companies, and provide a burden on the health care system. Tell me why this is good again?

I'm advocating a living wage, which is not the same as a minimum wage as it reflects the cost of living in specific MSAs. As far as "killing small business", that is not proven. Studies show that the businesses absorb the marginal increase in labor costs. From the link supplied above:

Do living wage ordinances cause job loss?
"EPI's evaluation of Baltimore's living wage ordinance found no job loss as a result of the ordinance (Niedt et al. 1999). The majority of workers interviewed for the study reported no changes in the number of hours they worked after the ordinance went into effect.

Employers interviewed for another study reported that although wages increased, these costs were absorbed by improvements in efficiency; raising wages decreased employee turnover, which decreased recruitment and training costs.

The evidence from minimum wage increases also suggests that there should be little or no job loss as a result of living wage ordinances. A recent EPI study failed to find any systematic, significant job loss associated with the 1996-97 minimum wage increase (Bernstein and Schmitt 1998)."

So "no job loss as a result of the (living wage) ordinance". It's a really interesting site with a ton of good info....

[Max Power]

Originally posted by: Mavdog
Originally posted by: Mavdog

originally posted by max Power

Actually yes, I have. I'm surprised that you get MSRP on all your inventory, and that the manufacturers set the retail prices. You do have an option not mentioned, that of of increasing sales.

I sell books and magazines with the MSRP printed on them. The option of increasing sales is certainly viable. I know for a fact that every book store can increase their sales by 20-25% just by wanting too. It's really easy - you just pretend you have more sales and ignore the reality.

In fact, I'll double tomorrow's sales just because I want to.

[Mavdog]

Max wrote;

I sell books and magazines with the MSRP printed on them. The option of increasing sales is certainly viable. I know for a fact that every book store can increase their sales by 20-25% just by wanting too. It's really easy - you just pretend you have more sales and ignore the reality.

In fact, I'll double tomorrow's sales just because I want to

ha ha ha, good one.

How about this...decrease the price of your books and magazines by 15%, which would undercut your competition who is getting full MSRP, and the result is increased sales receipts as your unit volume increases by (let's say) 25%...

IMHO figuring out how to maximize sales/SF (and minimize markdowns) is what makes a merchant a merchant [img]i/expressions/face-icon-small-happy.gif[/img]

[Max Power]

Originally posted by: Mavdog
Max wrote;

ha ha ha, good one.

How about this...decrease the price of your books and magazines by 15%, which would undercut your competition who is getting full MSRP, and the result is increased sales receipts as your unit volume increases by (let's say) 25%...

IMHO figuring out how to maximize sales/SF (and minimize markdowns) is what makes a merchant a merchant [img]i/expressions/face-icon-small-happy.gif[/img]

Actually it is difficult to impossible to discount books and remain in business (unless you are a big chain). No matter how much you discount them you will never match internet prices. And the money you give away in profit has to be made up with increased sales of a factor that is difficult to achieve. Usually you wind up working harder for the same money you would have made at full retail. So you have to be better in other areas.

But no option will make me enough money to increase payroll significantly. I have no costs to cut or I would have cut them already. I am maximizing sales already. A healthy business needs to maintain a certain payroll percentage and that means less hours for staff or less benefits for the staff.