Who's Who in the United States of S2?

[MARIS61]

It's 200% the size of Reagan budgets, and 150% the size of pre 9/11 budget.

As a % of the budget doesn't matter anymore. As you rightly point out, SS and Medicare will grow to dwarf defense spending. The only spending that will keep up is interest on the debt.

A % of GDP based on historical measures isn't a good way to look at it, either. Pre WW II, we spent 1% or 2%. Post WW II, a high (6%) pct of GDP made sense because of the Cold War. Once the Berlin Wall and the USSR fell, Bush and Cheney went about collecting the "Peace Dividend," or base closing commission. Defense spending did fall to 4% of GDP.

Feel free to make the case we need Cold War levels of spending to defend ourselves from terrorists. Seems to me their whole scheme of things is asymmetry - no stealth bomber is going to stop guys with box cutters from turning passenger planes into missiles.

Ike warned everyone, but they just never listen.

 

[barfo]

Sounds like fun, but maybe you should do the Secy. of Commerce thing and show businesses how, in the face of increased expenses, they will grow by hiring more people.

You really didn't understand what I was saying, did you?

Do you see employees as purely drains on profit? Would your employer be better off firing you?

barfo

 

[Denny Crane]

You really didn't understand what I was saying, did you?

Do you see employees as purely drains on profit? Would your employer be better off firing you?

barfo

I'm not that fixated on profit - cash flow is what really matters. If your cash flow is negative for long enough, you're out of business. A company that is profitable can go out of business because the profits aren't pocketed, but required to be invested in plant equipment, real estate, or some other capitalizable expense.

I don't see employees as purely drains on profit. But I do know that work expands to fill all time available, and that an employee's work does not necessarily cover his fully loaded costs.

Most businesses do not just grow and grow and grow. Like the tire shop up the road from where I live. There's only so much demand for tires in a given pay period. They only have 3 or 4 of those garages in the back of the building to actually work on cars. It wouldn't make sense to hire more than 5 or 6 mechanics. There's not a whole lot of need of management and sales beyond a certain point that sustains the business at near full capacity.

When ObamaCare kicks in and that tire shop is facing a negative cash flow situation, they are going to let someone go. At least one person.

The real question is the tire shop better off with ObamaCare or is it better off with the additional employee(s).

 

[barfo]

I'm not that fixated on profit - cash flow is what really matters. If your cash flow is negative for long enough, you're out of business. A company that is profitable can go out of business because the profits aren't pocketed, but required to be invested in plant equipment, real estate, or some other capitalizable expense.

I don't see employees as purely drains on profit. But I do know that work expands to fill all time available, and that an employee's work does not necessarily cover his fully loaded costs.

Most businesses do not just grow and grow and grow. Like the tire shop up the road from where I live. There's only so much demand for tires in a given pay period. They only have 3 or 4 of those garages in the back of the building to actually work on cars. It wouldn't make sense to hire more than 5 or 6 mechanics. There's not a whole lot of need of management and sales beyond a certain point that sustains the business at near full capacity.

When ObamaCare kicks in and that tire shop is facing a negative cash flow situation, they are going to let someone go. At least one person.

The real question is the tire shop better off with ObamaCare or is it better off with the additional employee(s).

Got to give you some imaginary rep for that answer, Denny. Clear, concise, on topic.

Ok, so I assume the tire shop doesn't currently provide the employees with healthcare, and will have to under Obamacare. Doing so would certainly increase their costs and negatively impact their cash flow, as you say. Maybe they would lay someone off in response if the business is marginal already. So that guy is unemployed now. Bad outcome.

However... demand for tires hasn't gone down. Assuming this guy wasn't a slacker, laying him off reduced the number of tires that shop can sell. But it hasn't reduced the overall demand for tires. The customers that that shop now loses are going to go buy tires somewhere else. Maybe there is another shop further up the road that gets that extra business and hires that laid-off tire worker to handle the additional load. Now our guy had to change employers, but he has health insurance.

Alternatively, the first shop might realize that most tire shops are in the same situation they are in, and everyone's expenses are going up a bit, so maybe tire prices need to go up a bit to cover. So they raise prices on tires incrementally, and keep the guy in his current job, but now with healthcare. Maybe his productivity even goes up, maybe he is healthier and misses work less often.

Another possibility is that the other tire shops aren't in the same position - they are already providing healthcare to their employees. Perhaps they are just better run companies and this marginal tire shop is simply being crushed by the forces of capitalism. Someone who was in favor of liquidating GM shouldn't take the position that a four man tire shop absolutely must be saved.

Truth is, the cost of Obamacare isn't going to cause layoffs at most businesses. Most will absorb the cost, or pass it on to their customers, or the cost will be negligible (as it is for my business, which already provides healthcare that exceeds the minimum standards). Of course there are businesses teetering on the brink which will be pushed over the edge by this, just as some will be pushed over the edge by a slight rise in fuel costs or a small decline in holiday sales or a Wal-Mart opening nearby, or whatever. And I suppose there are a few businesses like maxiep's that will lay people off due to owner temper tantrums.

barfo

 

[BlazerWookee]

I wanna be sedated.

 

[Denny Crane]

I think the tire shop would pay the 2 hours OT to each of 4 guys to make up for one they fire. Only if necessary.

And if the cost of ObamaCare is increased prices on everything else, it's got at least three bad side effects - not decreasing the cost of care, decreasing the quality of care, and increasing the price of tires (and everything else).

 

[julius]

I think the tire shop would pay the 2 hours OT to each of 4 guys to make up for one they fire. Only if necessary.

And if the cost of ObamaCare is increased prices on everything else, it's got at least three bad side effects - not decreasing the cost of care, decreasing the quality of care, and increasing the price of tires (and everything else).

so they pay 1 and a half times as much salary out to save 1 salary?

So instead of getting 8 hours of work for 8 hours of pay, they pay out 12 hours of pay for 8 hours of work.


Brilliant business decision.

 

[Denny Crane]

so they pay 1 and a half times as much salary out to save 1 salary?

So instead of getting 8 hours of work for 8 hours of pay, they pay out 12 hours of pay for 8 hours of work.


Brilliant business decision.

Depends on what the health care costs, eh? At $1200, it'd be $14K. If it's $1200 per person in the mechanic's family, it's going to be more expensive to pay the 1.5x one guy's salary.

And no, they'd pay out 10 hours a day for 4 guys instead of 8 hours for 5 guys (10x4 = 40, 8x5 = 40)

 

[Denny Crane]

Actually, they're going to pay people for less than 30 hours. Maybe they will end up hiring more people, barfo. Just they'll all be making less than 75% of full time pay.

 

[barfo]

Actually, they're going to pay people for less than 30 hours. Maybe they will end up hiring more people, barfo. Just they'll all be making less than 75% of full time pay.

I suppose it's worth noting here that the employer mandate applies only to companies with more than fifty employees. So I'm not quite sure why your tire shop is laying people off in the first place?

barfo

 

[MARIS61]

Assuming the business is already well-run by a competent manager, all employees are already working at full capacity and therefore will all remain employed as long as product/service demand does not lessen.

Denny's assumption that there are slackers all around us tells me he and I have spent our lives in quite different arenas. If a well-run company lays off workers while trying to meet the same demand for their product/service, quality and the company's reputation will suffer. If they reward their employees with benefits, quality and the company's reputation will improve.

 

[jlprk]

Aren't there hundreds of billions of dollars in tax breaks to companies to help them? That's what Republicans are complaining about, the wealth transfer from taxpayers to small business, which is almost totally Republican-owned.

 

[Denny Crane]

There are companies with 175,000 employees that are going to lay off employees or eliminate coverage.

 

[PapaG]

I suppose it's worth noting here that the employer mandate applies only to companies with more than fifty employees. So I'm not quite sure why your tire shop is laying people off in the first place?

barfo

Because the Bush cuts expiring means 1099s who claim $250k in revenue are going to have their taxes increased, anyhow.

LOL

 

[TradeNurkicNow]

COSECRATARIES OF DERAILING THREADS:

DENNY CRANE
BARFO
PAPAG

 

[jlprk]

There are companies with 175,000 employees that are going to lay off employees or eliminate coverage.

Elitists should be delighted that that company will weed out its bums. Aren't you the one who wants to slice off the fat?

 

[MARIS61]

There are companies with 175,000 employees that are going to lay off employees or eliminate coverage.

...and their names are?

 

[Denny Crane]

...and their names are?

Walmart, iHop, Olive Garden, Kroger Foods, Macy's, MacDonalds, Red Lobster, Applebee's, Papa Johns, AutoZone, and more. More to come, too.

Go ahead and boycott them. The worst that will happen is they fire everyone and go out of business.