When President Barack Obama was sworn into office, the U.S. economy employed 134.6 million people and the unemployment rate stood at 7.6%. In response to growing job losses, President Obama passed an $862 billion stimulus plan that his economic experts promised would help the United States employ at least 138.6 million people by 2010. Reality has not been kind to President Obama’s hope. Today, the Bureau of Labor and Statistics released its monthly jobs report showing the U.S. economy shed another net 20,000 jobs, leaving only 129.5 million jobs, almost 10 million short of the President’s promises.
Anticipating this bleak job news, the President announced in his State of the Union address last week: “That is why jobs must be our number one focus in 2010, and that is why I am calling for a new jobs bill tonight.” It is understandable why the President wants to call this new legislation a “jobs bill” instead of what it really is: his second stimulus. But that would mean admitting that his first stimulus completely failed, which both the objective evidence and the opinion of the American people show it has.
And why did the President’s first stimulus fail? For the same reason his second stimulus is destined to fail: Only the private sector in pursuit of opportunity can create jobs on net. The best we can hope from government is that it keeps to a minimum the jobs it prevents and the income and wealth it destroys.
And the specific policies being talked about on Capitol Hill for this second round of stimulus are particularly pernicious. The $5,000 tax credit for any business that hires a new worker not only does not create any incentive for already-struggling companies to begin hiring, it could even result in some currently unemployed individuals remaining unemployed until the tax credit is passed into law, or similarly, some companies firing some workers and then re-hiring once the tax credit is passed into law.
The President’s TARP-funded government-subsidized loans for small businesses are also terrible policy. Besides the fact that unspent TARP funds ought to be used to pay down the deficit, the Small Business Administration has a terrible record of effectively allocating capital to the private sector.
There is one sector of the economy that is thriving under President Barack Obama: government. This week, the Obama administration announced that the number of government employees will grow to 2.15 million this year, topping two million for the first time since President Clinton declared that “the era of big government is over.” And today, USA Today reports “the lobbying industry is humming along in the nation’s capital” as the top 20 trade associations and companies increased their lobbying expenses by 20% in 2009. ConocoPhillips spent $18.1 million dollars lobbying Congress in 2009, up from $8.5 million the year before, while it also laid off 1,300 people.
This is a perfect example of what happens to an economy when government becomes “the focus” of job creation. Jonathan Rauch explains: “Economic thinkers have recognized for generations that every person has two ways to become wealthier. One is to produce more, the other is to capture more of what others produce. … Washington looks increasingly like a public-works jobs program for lawyers and lobbyists, a profit center for professionals who are in business for themselves.”
The real way Washington could create jobs is by getting out of the way. Fred P. Lampropoulos, founder and chief of Merit Medical Systems Inc., told the President in December that businesses were uncertain about investment because “there’s such an aggressive legislative agenda that businesspeople don’t really know what they ought to do.” That uncertainty, he added, “is really what’s holding back the jobs.”
- Stocks worldwide suffered sharp losses as the cost of insuring Greek and Portuguese sovereign debt soared.
- The House voted Thursday to allow the federal government to go $1.9 trillion deeper in debt, an increase of about $6,000 for every U. S. resident.
- The Senate health care bill would raise effective marginal tax rates on lower and middle-income singles and families up to 41%.
- Windmills installed by Minnesota cities to meet the state’s new mandated global warming renewable energy requirements are failing to provide any power thanks to the snow.
- The White House is preparing for the possibility they will have two Supreme Court vacancies to fill on news that Justices John Paul Stevens and Ruth Bader Ginsburg both may retire.