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Morning Bell: Blaming Bush Doesn't Create Jobs

Posted By Conn Carroll On August 9, 2010 @ 9:22 am In Ongoing Priorities | Comments Disabled

In January 2009 after it became clear that the leftist majority in Congress would pass President Barack Obama’s $862 billion economic stimulus bill without a single vote from a Republican, Speaker Nancy Pelosi (D-CA) defended her partisan approach, telling Politico [1]: “Yes, we wrote the bill. Yes, we won the election.” Last Friday, some 19 months after the stimulus bill became law, the Labor Department issued its monthly jobs report [2] showing the U.S. economy shed 131,000 jobs and unemployment tread water at 9.5% as 181,000 workers left the workforce entirely. These numbers are so terrible that the Federal Reserve is expected to downgrade its assessment of the U.S. economic outlook [3] when it meets tomorrow. Desperate to shift blame away from her economic policies, Speaker Pelosi released a statement Friday blaming President George W. Bush [4] for the economy’s anemic recovery: “Today’s report shows our teachers, police officers, firefighters, and nurses are still feeling the worst of the Bush recession.”

Notice how Speaker Pelosi is only concerned about the economy’s effect on government and unionized workers: teachers, police officers, firefighters and nurses. If you happen to work for the government, Speaker Pelosi is prepared to move heaven and earth to make sure your pay isn’t cut. But if you work for the private sector, Speaker Pelosi has nothing to offer you but higher taxes. That is why she is calling back the House to vote on another state government bailout [5]. This time the price tag is $26.1 billion, funded in part by $11 billion in tax hikes [6] on U.S. companies that compete internationally [7].

Speaker Pelosi can try to play the blame game all she wants, but the facts of her economic record are rapidly catching up with her. Since becoming Speaker in 2007, Pelosi has embarked on an unprecedented deficit spending spree, including a $700 billion financial bailout [8], a first $186 billion stimulus [9], a second trillion dollar stimulus [10], a $1.5 trillion health care expansion [11], a $447 billion omnibus spending bill [12] and a $15 billion doc fix/Medicaid bailout [13]. All told, since Speaker Pelosi first took the gavel, discretionary spending has jumped 25% [14]. The results of the Speaker Pelosi Spendapalooza? Since Pelosi became speaker in 2007, the nation’s unemployment rate has risen from 4.6% [15] to a high of 10.2% [16], to today’s 9.5% [17].

What Speaker Pelosi and her leftist colleagues in Congress just do not understand is that government spending does not reduce unemployment [2]. The resources the government spends do not materialize out of thin air—they are taken from the private sector. Government spending substitutes for private sector investment; it does not supplement it. Increased government hiring does not increase the total number of jobs in the economy. Money spent on government jobs creates new jobs in government, but it also takes jobs away from the private sector. The result is fewer jobs overall. Studies of Sweden’s labor market show that for every 100 new jobs the government creates, 114 jobs in the private sector are eliminated [18]. Other studies have shown that countries with greater government spending and larger public sector payrolls have higher unemployment [19].

The only thing worse than Speaker Pelosi’s accomplished spending spree is her hoped-for record tax hike. Despite a 9.5% unemployment rate, Speaker Pelosi wants to raise taxes [20] on those businesses that earn 72 percent of all small business income and pay 82 percent of all small business income taxes [21]. Speaker Pelosi doesn’t seem to care that small businesses generate about two out of every three new jobs during recoveries [22]. And why should she? As long as unemployment remains high, she’ll just blame Bush.

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URL to article: http://blog.heritage.org/2010/08/09/morning-bell-blaming-bush-doesnt-create-jobs/

URLs in this post:

[1] Politico: http://www.politico.com/news/stories/0109/17834.html

[2] monthly jobs report: http://www.heritage.org/Research/Reports/2010/08/Heritage-Employment-Report-July-Jobs-Scarce

[3] expected to downgrade its assessment of the U.S. economic outlook: http://www.marketwatch.com/story/federal-reserve-to-downgrade-outlook-for-us-ft-2010-08-09?reflink=MW_news_stmp

[4] blaming President George W. Bush: http://www.politico.com/news/stories/0810/40758.html

[5] calling back the House to vote on another state government bailout: http://thehill.com/homenews/house/112647-house-may-cut-recess-short-to-move-26b-state-aid-package

[6] $11 billion in tax hikes: http://online.wsj.com/article/SB10001424052748703748904575411384086577058.html

[7] U.S. companies that compete internationally: http://www.heritage.org/Research/Reports/2009/05/Obama-International-Tax-Plan-Would-Weaken-Global-Competitiveness

[8] $700 billion financial bailout: http://blog.heritage.org../2008/12/16/morning-bell-time-to-end-the-tarp-bailout-parade/

[9] first $186 billion stimulus: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMljy8GxkKoc&refer=home

[10] trillion dollar stimulus: http://www.foundry.org/2009/02/06/house-stimulus-plan-actually-costs-134-trillion-%E2%80%93-senate-bill-even-more/

[11] $1.5 trillion health care expansion: http://www.foundry.org/2009/11/03/the-true-cost-of-the-house-health-bill-15-trillion/

[12] $447 billion omnibus spending bill: http://voices.washingtonpost.com/capitol-briefing/2009/12/senate_clears_447b_spending_me.html

[13] a $15 billion doc fix/Medicaid bailout: http://thehill.com/blogs/healthwatch/medicare/105453-house-approves-six-month-doc-fix

[14] discretionary spending has jumped 25%: http://www.heritage.org/Research/Reports/2009/12/Business-as-Usual-in-Washington-Another-Bloated-Pork-Filled-Omnibus-Spending-Bill

[15] 4.6%: http://www.bls.gov/news.release/history/empsit_02022007.txt

[16] a high of 10.2%: http://www.bls.gov/news.release/archives/empsit_11062009.htm

[17] 9.5%: http://www.bls.gov/news.release/empsit.nr0.htm

[18] for every 100 new jobs the government creates, 114 jobs in the private sector are eliminated: http://www.jstor.org/pss/3440860

[19] countries with greater government spending and larger public sector payrolls have higher unemployment: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=312208

[20] Speaker Pelosi wants to raise taxes: http://thehill.com/blogs/blog-briefing-room/news/110339-pelosi-rejects-extending-bush-tax-cuts-for-wealthy

[21] earn 72 percent of all small business income and pay 82 percent of all small business income taxes: http://www.heritage.org/Research/Testimony/Small-Businesses-Face-Steep-Tax-Hikes-Unless-Congress-Acts-Soon

[22] small businesses generate about two out of every three new jobs during recoveries: http://online.wsj.com/article/SB124753106668435899.html

[23] more people filed for Social Security in 2009 than in any year in history,: http://www.washingtonpost.com/wp-dyn/content/article/2010/08/08/AR2010080802591.html

[24] President Barack Obama is still committed to pushing a carbon tax through Congress: http://www.politico.com/blogs/politicolive/0810/WH_official_Potential_for_climate_change_in_lameduck.html?showall

[25] 60,000 babies were born to illegal immigrants in the state of Texas alone,: http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/080810dnmetbabies.2be9a7e.html

[26] a “major second stimulus” might create more uncertainty: http://www.bloomberg.com/news/2010-08-07/u-s-economy-improving-more-stimulus-isn-t-the-answer-rubin-o-neill-say.html

[27] National Review investigates: http://www.nationalreview.com/corner/242731/did-tarp-money-really-get-paid-back-kevin-d-williamson

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