If you want to understand the key difference between the Democratic and Republican parties’ views on government’s role in creating jobs, then the debate on Sept. 20 between Sen. Scott Brown and his Democratic challenger Elizabeth Warren is a good place to start.
Warren insisted that government could stimulate employment by increasing spending, which would be paid for with higher taxes on the wealthy.
“And that’s how we get this economy jump-started. We get people back to work. Those families have paychecks. Those small businesses see more customers coming in. That’s how it works. I want to go to Washington to fight for jobs,” she said.
Scott Brown — who Warren lambasted for voting against three government-funded jobs bills — echoed what has become a Republican Party article of faith: “Taking more money out of hard-working businesses and individuals and giving it to the federal government is not a good idea and I’m not going to be part of that.”
The debate over jobs comes amidst a lingering national unemployment rate exceeding 8 percent and a slight uptick in joblessness in Massachusetts. The competing views of government’s role in creating jobs — or not — are playing out in the presidential election and in the neighborhoods of Boston.
Dr. Azzie Young, following the opening of the new $34 million Mattapan Community Health Center in September, was eager to explain how taxpayer money is not only improving the health needs of an entire community but creating jobs in the process.
"Over 600 construction jobs. And we were so happy, thrilled to see folks on the job, and they too were happy. They kept saying to us thank you for the work. That's what we heard over and over as we would visit the site Thank you for the work," she said.
And some of the jobs are long lasting, said Young. “We are hoping to create 40 to 90 permanent jobs between the health center, CVS — one of our tenants — as well as Citizens Bank, another tenant. So within 3 years we should be building to nearly 100 jobs."
One of those jobs went to Elizabeth Thomas, a clinical operations assistant at the Mattapan Community Health Center. She also supervises the staff in medical records. It’s a job she dreamed about as the construction on Blue Hill Avenue neared to an end in the spring of 2012.
“Every time I would drive by I would whisper a little prayer: 'I need to get into that building.' I could see the potential. I could see what it was bringing to the Mattapan community and I wanted to be part of it,” she said.
And that dream of working there, she insists, came about as a result of the 2009 federal stimulus package, which passed over the objections of Congressional Republicans. Following his upset victory in the U.S. Senate race in 2010, Brown told reporters, “The stimulus did not create one new job.”
The Washington Post rated that assertion false, citing top economic forecasters who estimated that the stimulus produced about 2.5 million jobs and added between 2.1 percent and 3.8 percent to the gross domestic product. But the belief that the stimulus did not stimulate is widespread among Republicans, and it leaves Thomas, a self-proclaimed independent voter, incredulous:
“That’s ridiculous. They haven’t seen the clinic. They haven’t been to the health center, because if only they would just take a minute to come by even for a peep, they would know very well that stimulus money is at work. And I am thrilled that I was able to secure this position because of that and I thank the Obama Administration for this.”
Republicans historically have not always opposed stimulus plans. A majority supported bills sponsored by both Presidents Reagan and Clinton. And many backed George Bush’s efforts in 2008 to bolster the economy through government spending. But the current GOP, led by Tea Party stalwarts, has been nearly unanimous in opposing Obama administration job proposals.
As a matter of ideology, the GOP believes that cutting taxes, rather than leveeing taxes on the wealthy, will do more to spark economic revival than stimulus spending. This economic belief is often described as trickle-down. This point, more than anything else, underlies the tension between Republican and Democratic Party views on the role of government in creating jobs. Here’s Warren and Brown tussling over the three jobs bills that Brown voted against.
WARREN: “Those were three jobs bills that would have supported jobs here in the Commonwealth of Massachusetts. And how would they be paid for? They would have been paid for by just a fraction of a tax on people making more than a million dollars a year.”
BROWN: “I’m not going to raise taxes on our job creators: those small- and medium-sized businesses. Those sub-s corporation and others who pass through ordinary income and are considered the so-called wealthy.”
“Job creators” is a politically effective term coined by Republican marketing strategist Frank Luntz to describe everyone from small-business owners to billionaires. And by job creators, Brown was referring to people such as Judy Nitsch, the owner of Nitsch Engineering in downtown Boston. I asked her if she considers herself to be a job creator.
“We are. We were about 50 people and we’re 80 people now and we’ve added people in all of our departments but when you’re growing a business and you have work and you have a market, access to capital is so difficult,” she said.
Nitsch founded the civil engineering firm named after her in the late 1980s. It’s a relatively small business with about 10 million in revenue, and Nitsch said if the government was to keep capital gains tax rates at no more than 15 percent it would also create more opportunities for hiring “because that money will go into something. If the tax rate’s higher it just going to go to the government and I think personal tax rates are important to people, especially to my employees. The rollback that they had last year, which I guess will not go back to the regular payroll taxes in 2013, you know, that will make an impact on employees.”
Jim Klocke, executive vice president of the Greater Boston Chamber of Commerce, agreed. He was concerned about what will happen to area companies if the Bush-era tax cuts are allowed to expire in January 2013.
“For a lot of small-business owners, the taxes they will pay on the profits of their companies will go up dramatically, because a lot of small businesses file as individual income taxpayers. The second effect is that tax rates on capital gains dividends will jump dramatically, not just a little but a lot, and that will have some depressing effects on investments. We know from members that we talk to every day that tax policy either at the federal level or state level can make a big difference in a company’s operation,” he said.
Klocke oversees legislative work for the Chamber, which views itself as nonpartisan. But often the Boston Chamber’s legislative priorities dovetail with the mainstream Republican viewpoint on the role of government in creating jobs: fewer regulations and lower taxes.
“Over the long run, if you have a capital gain incentive structure in place, that creates new investment, that attracts new startups, some of those companies turn into medium and big employers over time. You can think of all kinds of examples. Apple is the most obvious one: started in a garage, and it’s the biggest company in the world right now,” he said.
So we are still left with this question: How do you negotiate the tension between two disparate viewpoints on the role of government in creating jobs? One that advocates greater stimulus spending paid for by asking more of the well-to-do and that would in turn create more middle-class consumers, and another view that believes that the wealthy create jobs and therefore should be given a break on their taxes, which will in turn lead them to hire more staff and workers.
Nitsch says Republicans and Democrats will likely never compromise on their perspectives on the role of government in job creation — but she will.
“I think there’s a lot of people that make a heck of a lot more money than I do that could afford to pay more in capital gains tax. Unfortunately, it will trickle down to me and I have to live with it,” she said. “From a personal point of view, it means that I will pay more tax. That’s the whole point of getting more money into the government — and we do need to get more money in there. The government really needs to spend some more money on infrastructure and invest in infrastructure because that will get so many more people back to work. If we as a nation aren’t supporting infrastructure than we’re losing out on job creation but we’re also creating really a mess for every single person because of crumbling roads, deficient infrastructure, water and sewer systems and that’s not good for anybody. It’s not good for job creation. It’s not good for the country as a whole."
It’s a vision of shared responsibility, she said: A vision that she hopes will broaden the public discussion about government’s role.
Business owner Brian Maloney also believes in community and teamwork. “I started off with 500 bucks. Started a little body shop and was able to bring together people, one at a time. A lot of them are still right here, behind me, to work as a team to make this place successful,” he said.
But unlike for Nitsch, there is no place for government on Maloney’s team: "We don’t need any more of government’s help. We haven’t had any. We’ve only had pain."
Maloney founded Middlesex Truck & Coach in Roxbury. He hosted a press event for Romney in the summer of 2012. Though his firm has benefited from government contracts, tax credits and incentives, Maloney argues that private enterprise, not bureaucratic government is the engine of job creation. “The cross-purpose aegis of so many controlling interests hold us back. They keep us from hiring,” he said.
Another approach. Two different visions and views about government’s role in setting conditions for what millions of people still desperately desire: a job.
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