Is it just me or are we being suckered?

Can somebody PLEASE explain to me how giving a tax cut to (primarily) businesses and the wealthy will create new jobs? 

The argument the GOP seems to be putting forward is that businesses would LOVE to expand and hire more, but they just can't afford to.  But if they had a few hundred billion dollars more thanks to a tax cut, they'd hang out their "now hiring" shingle.

Consider this:  Southwest Airlines, headquartered right here in my back yard (Dallas), has bought back FOUR BILLION DOLLARS worth of their own stock in just the past two years, even after doubling their dividends.  They're swimming in cash, but can't find anywhere better to invest it than in their own company. Lucky them!

They could have taken that four billion dollars and bought another 30 Boeing 737's, and hired a corresponding number of pilots and flight attendants and mechanics, etc, AND PAID CASH FOR IT ALL, but they didn't.  Why?  Because they knew there wasn't enough demand to fill all those new seats without cutting prices to the point where there was no profit in it.  

I doubt many people making more than $500K a year, the ones who would benefit the most from a tax cut, are holding back taking a trip to Florida because they can't afford it.  But among those making $50K a year, a tax cut might indeed tempt them to jump on a Southwest jet and travel. 

The tax cut now being presented to us would only benefit the middle class for a couple of years, then they'd see their taxes go UP.  It seems to me that would dampen demand.  The "middle class" reference is just a tease, hoping it will pacify us until their bill is passed and signed, then they'll drop us like a hot potato.

Just increasing capacity will not create long term jobs. Once businesses realize they can't sell all they can produce, they'll start laying off all those new workers they just hired.  If the gubment truly wants to create jobs, why don't they take a few hundred billion dollars and start building new and repairing our older interstate highways, bridges, airports, etc?  That would create sustainable DEMAND for new heavy equipment, concrete, steel and more for years to come.  All those middle class people doing the work would then be able to buy more, thus creating a snowball effect.

Am I missing something?  I swear I was paying attention during my college Economics classes.  If someone can explain to me where I'm wrong, I'll certainly consider their argument.

S

Mine...mine...IT'S ALL MINE! *cue the scary music*

Did you see the roll-out of the new Trump Tax Reform Plan yesterday?  Have you actually read it?  If you have, it probably didn't take you more than a minute or so as it's really not a "plan", but just a few bullet points.  Here it is if you're interested:

That's it.  This is what The Prez and his Team have been working on for the past 98 days.  Honestly, it looks like something I might have whipped out at 2am the night before a college paper topic outline was due.  I give it a half hour effort, max.

In short, it's insulting.  It seems at first glance to give a break to the middle class by increasing the Standard Deduction, but also seems to take away some possible deductions, too, most notably property TAX deductions.  Property INTEREST deductions appear to be left intact.  What will the middle-class bottom line look like?  Probably either "revenue neutral" (Gubment speak for "no change") or maybe a slight tax cut, just enough to give the incumbent Congressman a good shot at re-election, which is all he cares about.

On the other side, corporations, notably including privately held corporations like Trump, Inc, will make out like absolute bandits!  It will result in tax cuts, on paper at least, to small businesses like mine, but it will be a drop in the bucket compared to what the ultra-wealthy will get.  Let's face it, this is simply another wealth transfer to the rich.  They haven't even made much of an effort to disguise it.  We reportedly already have approx $1.7 TRILLION +/- parked in short term investments looking for a better place.  Another trillion dollars isn't needed....there is NO shortage of investment capital.

The bean counters say the tax cut will leave the Treasury short by approx one TRILLION dollars, to be offset by the ever popular "future growth" somewhere in the future.  Maybe.  Hopefully.

The one possible good thing in there:  The one-time opportunity for corporations to bring back earnings from overseas that they haven't before now because of the higher taxes that would be due here.  This has been done before (so much for "one-time") with minimal success, as it didn't create the new jobs it promised.  Instead companies used their windfall for stock buy-backs and dividends, which *big surprise* went primarily to the already wealthy.

Those who read my protestations will again probably accuse me of being a pinko anti-capitalist, but nothing could be further from the truth.  I am an ARDENT capitalist, one who understands it is the middle class that is truly the goose that laid America's golden egg, and who is trying to see to it it isn't slaughtered.  Right now, in Washington at least, words like mine are like a lonely voice in the forest.

When you stiff the middle class and concentrate too much wealth in the hands of too few, you get Czarist Russia 1917 (revolution), America 1929 (Great Depression), TWA under Carl Icahn, (bankrupt), Eastern Airlines under Frank Lorenzo (kaput), etc.  When companies share their wealth, you get wildly successful stories like The Staubach Companies (Roger Staubach), Broadcast.com (Mark Cuban), Ford (after Henry Ford doubled employee wages), Southwest Airlines, Yahoo, Google, Facebook, Microsoft, and more.  The owners actually made MORE money thanks to the efforts of their grateful employees than they EVER made before. Come on people....this ain't rocket surgery!

*sigh*

Rough landing ahead.  Hold on.

S

You make HOW MUCH??

When I look at the issues that have our country tied in knots today, it seems to me that every single one can be traced straight back to income inequality.  Its beginning predates Citizens United (the court ruling allowing unlimited political contributions by corporations), it didn't get this way overnight, and we won't get out of it with just a few new Executive Orders.  It's WAY more complicated than that.

Without doubt my all-time favorite corporate CEO was Herb Kelleher, the (now retired) Chairman of Southwest Airlines.  His business model was simple:  "Take care of your people first, your customers second, and your stockholders last."  If you take care of your people first, they will be happy and give impeccable, smiling service to your customers.  Happy customers will come back time and again, ultimately giving your stockholders a handsome return.  Win-win-win.  While the airline industry has been in constant turmoil for years, with bankruptcies, mergers, and layoffs common, Southwest has had an unbroken string of profitable years with no layoffs, ever.

That's Herb in the red shirt with some of his ramp employees, and the photo was not staged.  He would on a daily basis walk around and greet his people, swap a quick joke, do some back-slapping (the ladies got a kiss on the cheek....times were different then!), and just in general tell them how much he appreciated them....and they worked their asses off for him!

In 1965 the average CEO made 20-times as much as his average employee.  By 2015 the average CEO made 303-times as much as his average employee.  (source:  Fortune magazine) 

Here's where I'm going with this:  While most airline CEO's of the day were making handsome 7-figure salaries, Herb kept his salary at around $350K (?) per year.  He was seen by his people as well paid, but still with his feet on the ground.  He made sure that ALL Southwest employees received yearly profit sharing, real health insurance, a generous 401K, and stock options.  (That's where Herb made his very sizeable fortune.)  If the company made money, so did he, and his model worked....there was never an unprofitable year.

This is critical....right after 9/11, when planes were flying virtually empty and other airlines were laying off as fast as they could, top executives at SWA said they would work without pay until the crisis was over, while their employees were never asked for any wage concessions.  THAT'S how you show solidarity with your people!  (As I recall, American Airlines was at the time cutting employee pay, all while they were quietly giving generous bonuses to upper management.  The rank-and-file found out about it and the s__t hit the fan!)

Today we have a dangerous divide between workers and the "One Percent".  The upper class has never had it so good, while the middle class is actually shrinking.  Their inflation-adjusted income has been stagnant for 25 years.  Too many don't have health insurance, or if they do, they can't afford the deductibles.  Large companies are generally not expanding here, and many are moving operations overseas.  Employees are scared.  Small companies are where new jobs are being created today, but many of those have modest or even no benefits.

Too many of our new jobs that we use to pump up our high employment figures are low-paying positions.  Part-time or contract workers are popular because they allow companies to skirt offering benefits, among other things.  Workers feel estranged from their bosses, and bosses can't empathize with their workers.  Distrust and hostility is the norm.  This income inequality/attitude now permeates how our country operates from top to bottom, and it's unhealthy.

I'm not looking for some sort of instant Robin Hood "rob from the rich/give to the poor" income redistribution scheme, for that, too, would cause resentment.  But our rigged tax laws and subsidies and sweetheart breaks for the rich need to be reversed.  We all need to be on a level playing field, where everyone feels like they're getting a fair shake.  

All I'm hearing from our leaders is promises.  The "haves" are trying to get even more for themselves by taking away what little the working class has left.  This is not good.  We should look to Herb Kelleher as an example of how we can ALL thrive if we pull in the same direction.

S

A two-part-er.....

Tonight the top-10-polling Republican presidential candidates will bloviate in a nationally televised debate.  And front and center will be The Big Wind himself, Donald Trump, aka "The Donald".  He's a lightning rod for sure, but I must give him due credit for two things:  

First, I like the way he speaks his mind.  It's obvious he says what he thinks, and not just what this morning's poll numbers say people want to hear.  Whether I agree with what he's saying or not is another matter, but at least I never have to wonder what he's thinking. 

Second, I like the way he is paying for his campaign out of his own pocket instead of having to prostitute himself before the usual cesspool of special interests.  

Of course, following this logic, that would mean only billionaires should run for president, which is of course a complete other problem.  But as my lovely wife pointed out, it's either the billionaire who funds his own campaign, or the common man who is corruptible.  Maybe we should look at public funding of campaigns, taking fund raising and all it's corrupting influence out of the equation?

~~~~~~~~~~~~~~~

The Securities and Exchange Commission is expected to rule soon on whether publicly traded corporations will have to reveal what their CEO's make (in TOTAL compensation, not just salaries) as well as the gap between what they make and what their employees make.  The two Republican commission members are against it, the two Democrats are for it, and the lone Independent is expected to be the tie-breaking "yes" vote.

Big business interests such as the US Chamber of Commerce are steadfastly against it saying it will cost businesses $700 million to calculate and report the yearly numbers (the SEC says it shouldn't cost more than $73 million), and that it is simply an excuse to embarrass highly paid CEO's.

That last excuse seems self incriminating to me.  If you haven't done anything to be embarrassed about, why should you fear being embarrassed?

I have no problem seeing CEO's make big bucks IF THEY DESERVE IT.  But too often they make their money via smoke and mirrors.  Think of the 2008 financial meltdown and today's Greek debt fiasco....those were just giant shell games!  They tweaked things to make it look like they were masterful business people when they were just blowing up a property bubble that eventually burst, or were making loans to credit-worthy sovereign countries.  Their shareholders were left ruined, while they lived happily ever after (with their millions of $$$$ in ill-gotten compensation) in the Hampton's.

Legitimate, skillful management that builds a solid, long term company SHOULD be handsomely rewarded (former CEO's like Southwest Airline's Herb Kelleher and Costco's James Sinegal come to mind), but not these "skim all you can and move on" shysters.  

Maybe this new rule will shed light on the "too good to be true" CEO's.  If their company is a laggard, but their pay is at the top of their segment chart, why shouldn't it be brought forcefully to the attention of their shareholders?  What possible excuse can you use to justify NON-transparency?

S

Thank Gawd for Southwest Airlines!

While most of their flights deliver the standard FAA mandated "get in, sit down, shut up, hold on" spiel, if you're really lucky you just might someday be on a Southwest Airlines flight and hear something like >>this<<.  (Suck it up and once you get past the obligatory commercial I promise you'll have a great laugh.  Be sure and listen to the end.)

I hope Southwest Airlines never loses their goof-ball sense of humor.  Not many companies would let their employees have this much fun at work.  Kudos SWA!

~~~~~~~~~~~~~~~

Once when flying SWA I was being my usual smart-assed self (playfully of course) with one of their flight attendants.  After a little back-and-forth fun she went to work, walking through the cabin carrying one of those small trays holding a number of Styrofoam coffee cups.  As she walked toward me (I was in an aisle seat) she "tripped" and dumped it all into my lap.  *gasp*

The cups were full of confetti.  Ha!  She/we had the whole plane in stitches.  That would probably be a firing offense on any other airline, but not Southwest.  Gotta LUV 'em.  

As we were deplaning at the gate, she was standing by the door giving us all the "thanks for flying Southwest" line.  When I came to her and turned towards the door I smiled and handed her my barf bag which had some ice and a little Coke sloshing around inside.  Karma is a bitch.  :)

I think we both had a good laugh that day.  :)

S

It's deja vu all over again

I'm sure that's what Yogi Berra will say when he hears that Virgin America Airlines is vying for the right to fly from Dallas Love Field.  It would be a real coup as they are fighting the big kid on the block, Southwest Airlines, for those last 2 gates at Dallas' in-town airport.

Sitting there in Fargo, ND you might ask, "Why should I care about this?  I'm sitting here in Fargo, North #@$%^ Dakota?"  Here's why:

It was in 1971 from Dallas' Love Field that Southwest Airlines flew its first scheduled flight.  It was the "rebel with a cause" that stood the airline industry on its head.  For the next 30-something years it moved in to one airport after another and undercut the going airfare there by 50% or more.  We all benefited.

The airline execs said this caused much turmoil in the industry, causing some of the weaker carriers to go belly up.  Consumers said YEAH BABY!  

SWA's eventual CEO Herb Kelleher (now retired) is an absolutely brilliant, crazy guy who put sex appeal back in the air.  I like Southwest Airlines.  It's still based in Dallas, and is an absolute hoot to fly.  But it is no longer the precocious kid with big plans.  It isn't even a true "low cost airline" anymore. 

Now the Wright Amendment (the political deal that inadvertently pretty much gave Love Field to Southwest) is being repealed and other carriers are fighting for the right to go toe-to-toe with SWA.  Now the winner has been announced and it is......

 

....yes....Sir Richard Branson and his Virgin America Airlines.

It's like Herb Kelleher had an illegitimate son and he started his own airline, too.  Both are flamboyant, both love the airline biz, both love ladies in sexy uniforms, and both know how to treat customers.  Now we'll see if Sir Richard can set Dallas on fire today like Herb did in 1971.

Straight from Herb's playbook.

Do you see it?

I'm glad Dallas didn't cave and give the 2 gates up for grabs to the entrenched 500 pound gorilla.  SWA already has 97% of the business at Dallas Love.  That's enough too much.  Competition is good, and I think Virgin America will be good for us consumers and will keep SWA on their toes, too.

Welcome to Dallas Virgin America!  Now go out there and shake up the airline biz just like Herb did.  (Might you some day make it to Fargo, North #@$%^ Dakota?   I sorta promised.... :)

S

Learning about business from Herb

I usually spend my drive time listening to news / talk radio, and yesterday I heard something that really got me to thinking.  The topic was raising the minimum wage and of course the arguments were the same as we've heard time and time again:

The conservative speaker pointed out that raising the minimum wage would help some, but would cost many jobs in the process, making it a net negative to the economy.  He went on to say that no company can pay employees more wages if they don't make the company any more money along the way.

Then the liberal speaker said workers (inflation adjusted) pay, especially at the lowest level, hasn't gone up in 20 years, while the top tier execs have seen their pay go up 200%+ in the same time.  For these people the American dream is just a mirage.  Working even two minimum wage jobs won't support a family.

Both good points, and the argument ended just as it began....square peg, round hole.  

Wanna know what I think?  I think somebody needs to sit down with Herb Kelleher and pick his brain.

This self effacing, hard drinking (Wild Turkey) smooth talking "naturalized" Texan was one of the co-founders, and later the long-time CEO, of Southwest Airlines.  He grew a handful of employees and 3 leased airplanes into the low-cost (?) juggernaut it is today, with over 550 aircraft and 45,000 employees. And they all love him.  (At least the people do, not sure about the planes.)

Herb wasn't noted for throwing around mega paychecks.  In fact, his employees were traditionally some of the lowest paid employees in the industry.  And he was one of the lowest paid major corporate CEO's, too, never receiving a salary of more than a few hundred thousand dollars a year.  (That "good for the goose, good for the gander" thing.)

When their company did well, and it almost always did, they all shared the profits and received stock options, too.  And with that, they all did just fine.  Herb might come across as just an "aw shucks" kinda guy, but I promise you he is ALL business, he is brilliant, and his people trust him.  The unions worked with him because he was fair.

He took care of his employees, never laying off even one, and if they played their cards right, more than a few retired multi-millionaires.  True!  To this day people fight for a job there, positions are that coveted.

Oh, and Herb retired in 2008 filthy rich, too.  (He had juuuuust a few more options than the rest of 'em, rightfully so.)  Herb proved that business doesn't have to be a zero-sum game....for someone to win, someone else does NOT have to lose.

And I don't think many if any of those 45,000 employees give a damn if he's a liberal, a conservative, or a pink unicorn.  So why can't the rest of us figure it out?

S

Coffee, tea, or an exit row seat?

I wonder how long it will be before some airline marketing type decides thay can charge a premium price on exit row seating?  Just one more menu item for you to choose from when booking a trip.

"Priority boarding....a mere $20."  Nope.

"A cocktail, Sir?  Only $5?"  Umm....sure.

"Would you like a sandwich....only $8?"  Eight bucks?  No thanks.

Think you might need to use our convenient in-flight toilet facilities?  Just $3?"  No, it's only a 2 hour flight.  I can hold it.

"How about an exit row seat for a measly $100 additional?  Can save your life....whatdayasay, sport?"

After the Asiana 777 crash in San Francisco I'll bet the flight attendants will have a plane full of attentive passengers when they give their pre-flight spiel about how to bail out in an emergency.  I always volunteer for exit row seating because you generally have more leg room there, but I'm not sure I'd pay for it.  But of course I always know where my exits are anyway.

~~~~~~~~~~~~~~~

Back a dozen years ago when I was active in the airshow biz I completed ARFF (Aircraft Rescue and Fire Fighting) training at Dallas' Love Field.  The Dallas FD periodically puts on training classes for suburban fire departments that have small airports in their area.  It was a very eye opening experience.

Not me.  This was pinched off the internet for example.

We trained on the Southwest Airlines mock-fuselage at their Dallas home base.  In one exercise we were all seated inside, then they pumped in some sort of cloudy gas so thick you couldn't see the end of your nose.  Then they told us to find the exit, open it, and slide out.  You meet the nicest people crawling around on the floor of an airliner.  :)

Next we had to gear up.  We put on full firefighter "bunker gear"....heavy boots, fire coat and pants, nomex hood, air mask, helmet, gloves, and a Scott Air Pack.  Then in 3-man teams we had to climb a ladder up onto the wing (not easy dressed like we were), open the escape door from the outside, and climb in.  That opening is smaller than it looks.  It was very hard for me to get my head down and under while at the same time picking my feet/legs up and over.  I was pretty much folded in half.  And I don't fold in half very gracefully. *no*

Then we had to find the injured guy (a 160 pound dead weight dummy), unbuckle him, pick him up (it's all about leverage), get him down that narrow aisle onto a backboard, and slide him down the chute, all while being timed.  The professional firefighter teams did it in 3-4 minutes.  My team of amateurs did it in....let's just say my guy would have been dead, cold, stiff, and ripe before we got him out.  

Then we got to go out and play with the big trucks.  FAA requirements say that equipment must be able to get to any spot on the airport within 3 minutes.  Because of this some airports are so large they have multiple fire stations.  (DFW has four.)

The surprising thing to me was how fast they are!  And when they get to where they need to be they can dump a LOT of water/foam/whatever in no time.  As soon as they arrive the driver, using a joystick like a video game, can aim his water cannon and unload in seconds.  Very impressive!  I got to use the joystick and squirt water, but they wouldn't let me drive the truck.  I can't imagine why?  ;)

Bottom line:  These guys and ladies are VERY good.  And they go out on calls a lot more often than you might imagine.  Fortunately most incidents turn out to be non-events as the landings turn out OK.

Point is....be thankful for our first responders, pay attention to what your flight attendants say, and bring your own crappy sandwich.  ;)

S