His failure to stem the unemployment tide should not have been a surprise. With no experience whatsoever in the world of employment and business formation, he had no compass to guide his path. Instead, he turned over much of his economic recovery agenda to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, themselves nearly as inexperienced in the private sector as he. Congress gave him and them everything they asked for, including a history-making three-quarters of a trillion dollar stimulus.
But it did little to stimulate the real economy — where jobs are created. Studies, initiatives and programs that liberal think tanks had long pined for were given life even as the private economy was on life support. The president's team assured us that their massive stimulus would hold unemployment below 8%. So with unemployment now at 10.2%, it is clear that their stimulus was a miscalculated failure.
In an attempt to disguise the truth, the administration has touted inflated figures of jobs "created." But every month, in good times and bad, jobs are created and jobs are lost. What matters is the net difference between the two numbers. Focusing solely on jobs created while ignoring the far greater numbers of jobs lost is Harry Houdini economics.
Growing government, as was done with the stimulus, inevitably depresses the private sector and job creation. Shrinking government and reducing government jobs is healthier for the economy, but this option was never seriously considered. That's no wonder: As White House guest logs for the first half of the year reveal, the most frequent visitor to the executive mansion was Andy Stern, the head of the Service Employees International Union, which represents government workers.
My 10-point plan
The president's economists insist that technically, the recession is over. But double-digit unemployment was neither prevented nor has it ended. To get people back to work as rapidly as possible and to restore America's economic vitality, the nation must change course. Here's the advice I would give:
• Repair the stimulus. Freeze the funds that haven't yet been spent and redirect them to immediate, private sector job-creation priorities.
• Create tax incentives that promote business expansion and hiring. For example, install a robust investment tax credit, permit businesses to expense capital purchases made in 2010, and reduce payroll taxes. These will reignite construction, technology and a wide array of capital goods industries, and lead to expanded employment.
• Prove to the global investors that finance America's debt that we are serious about reining in spending and becoming fiscally prudent by adopting limits on non-military discretionary spending and reforming our unsustainable, unfunded entitlements. These are key to strengthening the dollar, reducing the threat of rampant inflation and holding down interest rates.
• Close down any talk of carbon cap-and-trade. It will burden consumers and employers with billions in new costs. Instead, greatly expand our commitment to natural gas and nuclear, boosting jobs now and reducing the export of energy jobs and dollars later.
• Tell the unions that job-stifling "card check" legislation is off the table. Laying new burdens on small business will kill entrepreneurship and job creation.
• Don't allow a massive tax increase to go into effect in 2011 with the expiration of the 2001 and 2003 tax cuts. The specter of more tax-fueled government spending and the reduction of capital available for small business will hinder investment and business expansion.
• New spending should be strictly limited to items that are critically needed and that we would have acquired in the future, such as new military equipment to support our troops abroad and essential infrastructure at home.
• Install dynamic regulations for the financial sector — rules that are up to date, efficient and not excessively burdensome. But do not so tie up the financial sector with red tape that we lose a vital component of our economic system.
• Open the doors to trade. Give important friends like Colombia favored trade status rather than bow to protectionist demands. Now is the time for aggressive pursuit of opportunities for new markets for American goods, not insular retrenchment.
• Stop frightening the private sector by continuing to hold GM stock, by imposing tighter and tighter controls on compensation, and by pursuing a public insurance plan to compete with private insurers. Government encroachment on free enterprise is depressing investment and job creation.
The 10% unemployment crisis hangs like an albatross around President Obama's neck. Eventually, as with every recession and recovery, the economy will improve and jobs will be created, but those who were unnecessarily unemployed due to the president's faulty economic program will not forget. In order to most rapidly re-employ all Americans and to speed a strong recovery, the president must change course. If he does not, Republicans will bring a change of their own to Washington in the 2010 elections.
Mitt Romney, former governor of Massachusetts, was a Republican presidential candidate last year.
Posted at 12:15 AM/ET, | Permalink
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