U.S. corporations earned profits at annual rate of $1.7 TRILLION in the third quarter - highest since government began tracking more than 60 years ago. Profits surged over past seven quarters at pace that is among the fastest ever. Why should companies hire new employees? Hiring cuts into profits! And, this explains our current economic conundrum ... PROFITS over the American PEOPLE!
Due to the economic crisis, companies laid off millions of workers or cut salaries. This reduced consumption, increased unemployment, decreased tax revenues and increased our public debt.
Although companies are bringing in less money (their GROSS income has decreased), they have INCREASED their profit margins. CEOs, top execs and stockholders are making more: the RICH are doing better!
In this environment, hiring more workers would cut into profits - because there are no new customers. And, there are no new customers because (1) too many people are unemployed; (2) current workers have suffered cuts in salary or reductions in hours worked; and (3) other workers are afraid they might lose their job or suffer cuts.
Thus, consumption and buying remains depressed. To increase employment, consumption and buying must increase. Yet this means companies must begin to hire workers again and increase the pay of current workers.
Yet companies won't hire or give raises because it CUTS into profits.
And, this is why we're gridlocked.
If the American political process was logical rather than emotional, we would TAX these profits. This would reduce public debt.
Since companies HATE to pay taxes, they would hire or invest so they could AVOID paying taxes.
By keeping tax rates low, companies have NO incentive to hire or invest.
Our emotional public and "champion-the-rich" politicians continue to vote for policies that KEEP Americans unemployed and our public debt rising!