Create Jobs with American Ingenuity

The US Congress is in the process of voting on a bill to challenge China’s valuation of the yuan. Last week the House Ways and Means Committee voted in favor of a bill designed to address China’s undervaluation of its currency. The accusations against China are based on the premise an artificially low yuan steals manufacturing jobs from the US. The banter between the two countries has escalated in recent months with the pressure on Congress and the White House to create jobs. The November elections are playing into the process  posturing to look as if something is being done towards creating and saving jobs. This isn’t a problem that will be fixed by attacking China. It is one that is best dealt with by building opportunities for good old American ingenuity.

At home, Senate democrats are pushing legislation to discourage companies from shipping jobs overseas. The bill proposes a tax cut on new US jobs that replace those in overseas markets, but it lasts only two years, then back to business as usual on taxes. Also, it wants cuts in tax incentives for companies moving jobs outside the US (lost write-offs for hiring overseas employees). In addition, it does not allow companies to defer taxes on earnings until brought back into the US, and taxes them as earned. These do little to change the course of action relative to creating jobs. If the Senate democrats think that they will create jobs by taxing corporations further and making them less competitive in the global markets, they are missing the point.

Abroad, US poultry producers were hit by a 30+% Chinese tariff on poultry exports. Why? According to the Chinese government the “dumping” of products by US companies was impacting the domestic producers. Or, it could be the 35% tariff the US levied on Chinese tire companies earlier this month. Poultry stocks fell 1.5-3% on the announcement. The impact to these companies may expand depending on the timeline of the tariff.

Similar types of actions during the 1930′s only exacerbated the length and depth of the depression. Saving jobs from global expansion and production of products isn’t the best course of action. The challenge for America is building and expanding jobs at home based on new industries (alternative energy) and an expanding economy. Find revolutionary ways to reform the housing market, lending, and banking. Find new ways to deliver healthcare through the private sector. Focus on growth of business versus roadblocks.

What are the answers? Time and effort from all involved. Putting our collective minds together and finding solutions that work versus fighting about who is right. A growing economy creates jobs from both big and small businesses. Focus on growth of the US economy versus government jobs. The jobs report will be out next Friday for September and the number one producer of jobs will be the government. Find industries that need improvement and innovation, and invest in the growth of that industry.

Here is a crazy idea. We have spent nearly $1.4 trillion dollars to bail out the financial sector, and who has not paid the government back? Fannie Mae and Freddie Mac. We have all these houses facing foreclosure, so why not take the billions in bad loans, etc. and put them into a F&F REIT that qualifies for Section 8 housing tax credits. Rent the homes back to the people the government is attempting to help under this provision. It takes the house off the balance sheet of Fannie and Freddie. The house is rented to someone under the government guidelines and tax credits are provided to the investor. Win-Win-Win! This is better than giving them another $50 billion to bail water out of a sinking ship. When we take the time to find solutions that are win-win, the end result is a growing economy.

The key for economic and job growth in the United States is to focus on what we can control and influence. We can take steps in the right direction, but throwing rocks at China isn’t the answer for growth. It may get votes, but in the end Americans are looking for solutions not politicians.