Monday, August 27, 2012
On the Failed Job Creation Front, Obama Has Completely Run Out of Ideas
Unemployment is the millstone around President Obama’s neck in the 2012 election campaign. Attentive voters understand he is offering excuses — a worse-than-expected economy, financial crises requiring longer recoveries, bad luck of tsunamis, droughts, and the Euro — not solutions. Obama cannot deliver solutions because a real jobs program contradicts his core principles, alienates his base, and infuriates his crony contributors. He can only promise more of the failed policies –stimulus and tinkering — of his first three and a half years
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Obama’s last foray into job creation was his American Jobs Act (AJA) submitted to Congress on September 12, 2011. Labeled “Stimulus 2” by its critics, Obama’s shopworn list of remedies, promised to “put more people back to work and put more money in the pockets of working Americans….without adding a dime to the deficit.” The AJA’s temporary tax credits to businesses that hire, extension of the payroll tax holiday, and more money for teachers and infrastructure stalled in both Houses and had to be taken up piecemeal. The payroll tax holiday extension passed Congress. Small businesses decided his tax credits for hiring were not worth the trouble.
A deafening silence followed. Obama’s vaunted Jobs Task Force has not met for more than a half year. Obama is out of ideas. He can only offer excuses, criticize those offering new solutions, and divert attention from the worst recovery in history with chatter about the rich not paying their fair share and his opponent’s tax returns.
One year ago, on the eve of the President’s jobs address, I wrote Why Obama Cannot Support a Real Jobs Program. In this piece, I showed what a real jobs program looks like and how it largely would have increased jobs, to use Obama’s AJA message, “without adding a dime to the deficit.” Here is the substance of what I wrote then as advice to the President:
go to forbes.com
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We are at fascinating juncture, where, we might experience what we have observed during the last two decades of the countries in transition. A larger government, a smaller private sector, is often thought of as a way of ensuring employment, or the wild swings in the economy. Before its transition to a market system, the Former Soviet Union had an almost ubiquitous government. The process of transition to a market system proved to be lengthy and costly; a huge drop in the output before a lengthy recovery. So, one wonders if promoting a bigger private sector after this dramatic increase in the public sector---an extra 5 trillion dollars plus what the Fed is doing via its backdoor fiscal policy (selling government bods and buying private ones)---will be marked with a decrease in output before a slow recovery takes hold. In other words, a hidden and unaccountable cost is associated with each dollar raised (leading to smaller private sector) and spent (crowding-out the private sector) that is beyond the known institution-free dead-weight loss.
ReplyDeleteWell, it is more painful to lose weight than (enjoyable) to gain them. But, we often gain weight easily and then try hard to lose them.
A confused "Tom Friedman" argues that a market economy is actually a command economy:
ReplyDeletehttp://www.charlierose.com/view/interview/12524