GM slashing jobs proves that tax cuts do not equal jobs

[SonOfDaedalus]

Weren't we told that corporate tax cuts create jobs? But here we see GM cutting jobs, despite a profitable quarter and getting tax cuts. Why?

Well, they're doing it because they believe cutting jobs will increase their profits. Increasing profits is what CEO's are paid to do. GM will not build new plants and create more jobs unless they see increasing demand.

Supply-side (Republican voodoo economics) says that you give tax breaks and the job creators will create more jobs. Nonsense. If you give people more money (low-income tax breaks, stimulus, redistribution) they have more money and they create DEMAND which creates jobs.

Trump's economic moves fail to prevent GM closures

The retrenchment follows Ford's announcement last month of a reorganization of its global salaried workforce. The company did not say how many jobs would be eliminated or when the downsizing would take place. It is part of a broader plan to trim costs.
The moves undercut Trump's repeated claims about the positive effects of his economic policies -- including tariffs and massive corporate tax cuts -- on American industry and test his ability to stand against the tide of fundamental forces reshaping the economy.

 

[Fledermaus]

Weren't we told that corporate tax cuts create jobs? But here we see GM cutting jobs, despite a profitable quarter and getting tax cuts. Why?

Well, they're doing it because they believe cutting jobs will increase their profits. Increasing profits is what CEO's are paid to do. GM will not build new plants and create more jobs unless they see increasing demand.

Supply-side (Republican voodoo economics) says that you give tax breaks and the job creators will create more jobs. Nonsense. If you give people more money (low-income tax breaks, stimulus, redistribution) they have more money and they create DEMAND which creates jobs.

Trump's economic moves fail to prevent GM closures

A corporate decision to counter competitors actions....

 

[SonOfDaedalus]

 

[SonOfDaedalus]

A corporate decision to counter competitors actions....

You didn't address my point at all. Did GM get corporate tax cuts? Are they laying employees off?

Tax cuts do not equal jobs. You need demand to create jobs. Supply-side economics is voodoo economics. It's total BS.

 

[Winston]

Yeah tax cuts=jobs has been thoroughly discredited. I find it hilarious that conservatives would basically enact a plan that is a Keynesian stimulus through tax relief, and not be crushed by titanic irony.


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[tres borrachos]

Weren't we told that corporate tax cuts create jobs? But here we see GM cutting jobs, despite a profitable quarter and getting tax cuts. Why?

Well, they're doing it because they believe cutting jobs will increase their profits. Increasing profits is what CEO's are paid to do. GM will not build new plants and create more jobs unless they see increasing demand.

Supply-side (Republican voodoo economics) says that you give tax breaks and the job creators will create more jobs. Nonsense. If you give people more money (low-income tax breaks, stimulus, redistribution) they have more money and they create DEMAND which creates jobs.

Trump's economic moves fail to prevent GM closures

I've been a Republican since I was 18, but I also knew that their lines about "corporate tax cuts will create oodles of jobs" was bull**** because I work in a very large corporation, and we aren't creating any jobs with our tax cuts.

His supporters fell for that line and now they are seeing how absurd it was.

I've seen Democratic politicians make similar ridiculous comments.

What shocks me most now is how Trump is bullying GM. Obviously the man doesn't like getting caught with his pants down lying, which he did, more than once, to the auto workers. Besides, whatever happened to the "conservative" and "right" talking points of let the free market do as it will and the government has absolutely no business interfering in the private sector. Trump has no right at all to tell GM where to manufacture their goods. Just like he and his spawn didn't give a flying **** about manufacturing their products using Asian slave labors.

Trump supporters are getting what they deserve, but why do the rest of us have to suffer too?

 

[Chomsky]

Related:

Jim Hackett, Ford’s CEO, is working to engineer a $25.5 billion restructuring of the automaker, hoping to cut costs and remain competitive, the Wall Street Journal reports. But auto sales are down, and one reason is the trade tariffs that Trump has imposed on metals and other goods. According to Bloomberg, Hackett has said they have already cost the company $1 billion in profit and could do “more damage” if the disputes aren’t resolved quickly.

Ford, the No. 2 U.S. automaker by sales, is making aggressive job cuts as part of that reorganization, NBC News reported. While the company hasn’t said how many jobs will be lost, a report from Morgan Stanley estimates “a global headcount reduction of approximately 12 percent,” or 24,000 of Ford’s 202,000 workers worldwide.”

(Source) Ford Prepares for Mass Layoffs After Losing $1 Billion to Trump's Trade Tariffs, Report Says

 

[Mycroft]

Weren't we told that corporate tax cuts create jobs? But here we see GM cutting jobs, despite a profitable quarter and getting tax cuts. Why?

What makes you think the corporate tax cut has anything to do with the reason GM is cutting jobs? Better yet, do you have the slightest idea WHY GM is cutting jobs?

 

[1751Texan]

A corporate decision to counter competitors actions....

No one really believed Trump would have an impact on the manufacturing jobs coming back to the region.

...except all those desperate people Trump lied to their faces.

I wish you had the balls to speak to those people and tell them now...never to believe one thing more Donald Trump tells them.

 

[Chomsky]

You didn't address my point at all. Did GM get corporate tax cuts? Are they laying employees off?

Tax cuts do not equal jobs. You need demand to create jobs. Supply-side economics is voodoo economics. It's total BS.

Exactly! Labor is a demand function!

This is one of the very first things you learn in an undergrad intro economics class! It's the reason why wages have only risen very slightly, despite the corporate tax cuts. Where did the tax-cut money go? Buy backs! Most of it! Record-high buybacks.

 

[1751Texan]

A corporate decision to counter competitors actions....

No one really believed Trump would have an impact on the manufacturing jobs coming back to the region.

...except all those desperate people Trump lied to their faces.

I wish you had the balls to speak to those people and tell them now...never to believe one thing more Donald Trump tells them.

 

[Chomsky]

No one really believed Trump would have an impact on the manufacturing jobs coming back to the region.

...except all those desperate people Trump lied to their faces.

I wish you had the balls to speak to those people and tell them now...never to believe one thing more Donald Trump tells them.

Well stated.

Ironically those 15K workers being laid-off in that small company town in Michigan, are more than the 11K voters Trump won the state by.

The recent election flipped several Michigan CD seats and the governor's mansion to the Dems. If Trump doesn't rectify these problems, he's going to lose the Upper Midwest & Great Lakes, dooming his 2020 run.

 

[apdst]

GM slashing jobs proves that government mandating the production of a weak product, in exchange for billions in subsidies was a stupid ****ing idea.

 

[Fledermaus]

You didn't address my point at all. Did GM get corporate tax cuts? Are they laying employees off?

Tax cuts do not equal jobs. You need demand to create jobs. Supply-side economics is voodoo economics. It's total BS.

The tax cuts are irrelevant to this decision...

Continuing to build what won't sell is a stupid decision...

 

[lwf]

What makes you think the corporate tax cut has anything to do with the reason GM is cutting jobs? Better yet, do you have the slightest idea WHY GM is cutting jobs?

The point isn't that corporate tax cuts cause job loss. It's that they in no way prevent it. Lowering taxes on corporations is attractive in the short term because it can temporarily keep a business located in a particular area, but if the demand is not there, no amount of government intervention can save it. When consumers have less money in their pockets, demand evaporates.

The op is exactly right. The economy is strengthened by increasing demand, not making it cheaper to increase supply. Demand alone creates supply.

 

[SonOfDaedalus]

What makes you think the corporate tax cut has anything to do with the reason GM is cutting jobs? Better yet, do you have the slightest idea WHY GM is cutting jobs?

Based on your question, I give you a pass on being a Trump supporter.

I didn't say tax cuts are the reason for the job cuts. I said that the jobs cuts prove that tax cuts don't equal jobs. It doesn't matter why GM is cutting jobs. They got a tax cut and they cut jobs. That proves that the conservative nonsense about tax cuts creating jobs is nonsense.

It seems you claim to be a conservative but you clearly don't understand conservative economic principles. Another conservative economic principle in that government shouldn't interfere in private business. But here Trump is bullying private business and the free market.

 

[Xelor]

GM slashing jobs proves that tax cuts do not equal jobs

That tax cuts, especially big reductions in corporate tax rates, have long been understood to result in behavior that boosts owner's equity. Whoever thinks increasing variable and fixed labor costs would do that is delusional. Hel, plenty of firms stated even before the tax cut that they'd use the money to buy back stock or reduce their debt.

Firms hire employees when doing so allows them to fill newly nascent demand and filling it can be don in a profit maximizing way. TCJA hasn't boosted demand; thus there's no need to create new positions for them.

 

[SonOfDaedalus]

Well stated.

Ironically those 15K workers being laid-off in that small company town in Michigan, are more than the 11K voters Trump won the state by.

The recent election flipped several Michigan CD seats and the governor's mansion to the Dems. If Trump doesn't rectify these problems, he's going to lose the Upper Midwest & Great Lakes, dooming his 2020 run.

The awesome thing is for Trump to rectify these problems, he has to trample all over conservative ideals. Government has to come in and coerce business into acting against their profit motive and acting for the social good.

Trump is moving the Republican party in a socialist direction. That's a good thing despite how completely incompetent he is in terms of policy.

 

[dirtpoorchris]

REAL trickle down economy would be taking 5% from all corporations and giving it directly to every American's bank account spread evenly. To help defeat the monopolization effect of whirlpool corporate capitalism. Well not DEFEAT it but curb it for a few years. We need a law that lasts for 10 years that taxes corporations 5% and pays it directly to the people. THIS IS A REALLL TRICKLE DOWN not a fake one. Corporations whirlpooling america's money with effective monopolies or team based-monopolies IS A REAL THING. WALMART OWES US 5% IN EXCHANGE FOR ITS WHIRLPOOLIG OF OUR MONEY WITH THEIR EFFECTIVE MONOPOLIES.

 

[SonOfDaedalus]

The tax cuts are irrelevant to this decision...

Continuing to build what won't sell is a stupid decision...

Again that only proves my point. Tax cuts do not equal jobs.

We've been losing jobs for decades because manufacturing is becoming more efficient. We need fewer workers to produce the same goods. Giving corporations tax cuts won't create jobs, it will just make the rich richer.

 

[Visbek]

What makes you think the corporate tax cut has anything to do with the reason GM is cutting jobs? Better yet, do you have the slightest idea WHY GM is cutting jobs?

You're missing the point.

The Republicans promised that the tax cut would create more jobs. That hasn't happened.

A few companies paid some one-time bonuses, mostly for the short-term optics. The reality though is that companies used the tax windfall mostly to buy back stock, not hire more employees, or raise wages, or increase business investment.

GM's layoffs, while likely necessary, is just a glaring example of how the promise that "tax cuts will create jobs!" is basically nonsense.

In fact, GM spent $10 billion buying back stock since 2015, and are now slashing 14,000 jobs to save $6 billion. While GM should not keep idle employees on the payroll, it's hard to imagine that GM could not have spent at least some of that $10 billion on efforts to increase sales or improve efficiency or increase wages. Of course, Wall Street likes stock buybacks (on the day they're announced) and hates wage increases (at any time), so guess where the money goes...?

 

[phattonez]

Yeah tax cuts=jobs has been thoroughly discredited. I find it hilarious that conservatives would basically enact a plan that is a Keynesian stimulus through tax relief, and not be crushed by titanic irony.


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When most of it ends up as share buybacks rather than capital reinvestment, then of course it won't create jobs.

 

[Chomsky]

The awesome thing is for Trump to rectify these problems, he has to trample all over conservative ideals. Government has to come in and coerce business into acting against their profit motive and acting for the social good.

Trump is moving the Republican party in a socialist direction. That's a good thing despite how completely incompetent he is in terms of policy.

And let's not forget the big picture:

China's auto market is nearly twice that of the U.S.'s. Which is why the U.S. automakers are profitable there. Keep taxing the input materials for auto manufacturers here, and they will continue to move manufacturing to China for profitability. Those that stay will continue to raise prices, thereby reducing their market share due to cheaper foreign competition.

It's actually pretty insane, in my opinion.

 

[Mycroft]

The point isn't that corporate tax cuts cause job loss. It's that they in no way prevent it. Lowering taxes on corporations is attractive in the short term because it can temporarily keep a business located in a particular area, but if the demand is not there, no amount of government intervention can save it. When consumers have less money in their pockets, demand evaporates.

The op is exactly right. The economy is strengthened by increasing demand, not making it cheaper to increase supply. Demand alone creates supply.

Based on your question, I give you a pass on being a Trump supporter.

I didn't say tax cuts are the reason for the job cuts. I said that the jobs cuts prove that tax cuts don't equal jobs. It doesn't matter why GM is cutting jobs. They got a tax cut and they cut jobs. That proves that the conservative nonsense about tax cuts creating jobs is nonsense.

It seems you claim to be a conservative but you clearly don't understand conservative economic principles. Another conservative economic principle in that government shouldn't interfere in private business. But here Trump is bullying private business and the free market.

I didn't contend that anyone said that tax cuts caused or are the reason for the job cuts.

The OP said that the tax cuts were supposed to create jobs and that the fact that GM cut jobs means that the tax cuts do not create jobs. I am asking the OP what makes him think the two...tax cuts and GM job cuts are related. I also asked the OP if he's aware of WHY GM is cutting jobs.

btw, GM is one company. The tax cuts have prompted businesses throughout the US to create hundreds of thousands of jobs.

 

[chuckiechan]

What makes you think the corporate tax cut has anything to do with the reason GM is cutting jobs? Better yet, do you have the slightest idea WHY GM is cutting jobs?

IMO, a lot of GM's troubles has to do with being prevented from going into bankruptcy and reorganization, as well has a slowdown in the US economy. We can argue the causes for that elsewhere.

There are five factories that are building cars like the Chevy Volt, the Cruise, and a couple of others that aren't selling. Even the Impala is a dog. The market is in SUV's, crossovers, and pickup trucks. Ford had the nimbleness to see the truck market as a good one, GM did not.

Some facts I cribbed this weekend:
Of the 54,000 North American salaried workers, GM is cutting around 5 percent or 8000 jobs. 2,000 or so of them have taken voluntary buyouts. That leaves about 6,000.

8000 more are general layoffs in plants that are closing or looking for an uptick in business.

The reasons are diverse.
Trucks are selling because construction is doing well.
Cars are losing ground to imports, particularly Toyota.
Luxury cars are losing ground to Lexus and BMW.
Interest rates are up.
American made steel is more expensive than subsidized Chinese steel.
Chinese components are being made elsewhere and include "true costs" making parts higher.
And with the democrats gaining ground, and speculation Trump may not run in 2020, people are tightening their budgets again worried about a return to a moribund economy like Obama's.

IMO, GM's life line from the government only served to prolong the pain. If they would have gone bankrupt and then reorganized, they would have been in a much better place.

Tesla and the Prius are winners, the Volt is a dud. Why? Lack of a clear advertising campaign addressing "range anxiety". They downplayed the fact that it had a gasoline generator/driver and let potential customers worry about getting stuck somewhere with no simple options.

Lack of bankruptcy gave the old way of thinking a lifeline.