Republicans were swept into Congress in 2010 in part due to their promise to create jobs. That was priority number one, not just for their party, but for our country as well. If this economy is to improve we were in need then and are in desperate need now of good-paying American jobs. Yet it took the Republican controlled House of Representatives approximately 430 days to cast a vote on something which can even remotely be called a “jobs bill.”
The bill is named the Jumpstart Our Business Startups Act and Republicans have been referring to it as the JOBS Act. However, simply naming it the JOBS Act does not mean it will actually create jobs.
On March 8th, the House voted 390-23 to pass the bill which is designed to ease certain rules that the Securities and Exchange Commission enforces on small companies going through the process of becoming a publicly traded company. As an aside, one of the provisions in the House bill will allow startup companies to raise capital on the Internet. With all the Nigerian princes trying to get money out of Nigeria and into the United States with your help one has to be concerned about potential stock scams that may arise. Hopefully, this issue can be addressed in the Senate version. But I digress.
Scott Garrett voted for this legislation along with the vast majority of Republicans and Democrats voting so I’m not singling him out. However, I am calling out Scott Garrett and the Republicans for waiting this long in the 112th Congress to vote on “creating” jobs and for showing whom they really care about by the actual legislation they put forth.
This legislation is geared toward helping Wall Street, not Main Street. A little background:
How the Initial Public Offering (IPO) works and who gets the money – I‘ll try to make this as short and simple as possible; in fact I’ll oversimplify the process. One reason a company “goes public” is to raise capital. A company hires an investment bank to take them through the process of becoming a publicly traded company. As part of the process the bank evaluates the company and determines its worth. The company decides how much of their ownership they’re willing to sell to the public. That amount is usually just enough to maintain controlling interest in the company, just under 50%.
Let’s say the company is worth $100 million and the company is willing to sell 49% or $49 million to the public. The investment bank offers 10 million shares of the company at $4.90 per share. Usually the bank offers the shares to their investment banker friends, venture capitalists, hedge funds, institutional investors, friends and family, etc; the “good old boys” network. If all the shares are purchased the company gets $49 million. If the market reacts favorably to the offering, the shares will increase in value but the company does not get any additional money when the price goes up. After the IPO, profits and losses are made by the people and funds that trade in this new stock. Since most companies see an immediate bump in their stock price when first offered, the “good old boys” generally gets in and out of the IPO with the biggest profits with the lowest risks.
Legislation making it easier for companies to “go public” might have a positive impact on the hiring process of this new company. Of course, that’s not a certainty as the company will decide how to best allocate this influx of capital.
On the other hand, an actual jobs bill – like repairing our country’s faltering infrastructure will be certain to create new jobs as people will need to be hired to build and repair roads, bridges, waterways, rails, etc.
Mr. Garrett boasts of his influence in the Republican controlled House of Representatives. Mr. Garrett, this country is hurting. We need a jobs bill that creates a straight line between legislation and putting people to work, without Wall Street getting a piece of the action. This JOBS Act is window dressing which offers little to no relief for the people who need the most help. Mr. Garrett, urge you colleagues to do what Republicans promised the American people in 2010 and pass a real jobs bill, and not another hand-out to Wall Street. Where are the jobs, Mr.Garrett?
Filed under: Economy, Financial Crisis, Just Wrong Tagged: jobs Image may be NSFW.
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