Well, the numbers are in for this month, unemployment ticked up from 9.1% to 9.2%, and 18,000 private sector jobs were created. 18,000 private sector jobs. Millions of unemployed are not reflected in these numbers and economists estimate the real rate unemployment rate is more like 15%.
Why is this happening? Why are we not recovering when our free market system is designed to fly, to “naturally” recover from recessions? The answers are obvious, and yet this administration and our Congress cannot seem to get out of their own way enough to address the key issues. The policies which have us still stuck in this rut follow:
1. An Administration and Democrat Congress that is clearly anti-business, having made unprecedented and outrageous statements about business, profit, and business leaders. This has caused corporate executives and small business entrepreneurs to hunker down, protect their businesses and themselves, and cut costs rather than invest and grow.
2. A focus on environmental policies which the President demagogues as “investments” but which cause business uncertainty and which require short term sacrifice for (alleged) long-term gains. This at a time where we have the most urgent need for short term gains, and can focus on longer term gains once the economy is put on its feet. The expansion of EPA powers to unprecedented levels, threats of programs like “cap and trade”, new complex FDA regulations, and more are a hindrance to business and employment growth.
3. Tax law uncertainty. For 2 years the President raved on and on about the Bush tax cuts and threatened to eliminate them, creating more uncertainty for businesses and investors. Then, in December of 2010, he suddenly reversed course and extended the tax cuts for 2 years, calling it foolish to do anything but extend them. How did this change so suddenly? What was so wrong suddenly became the obvious thing to do? And yet a 2 year extension turns out to only create more uncertainty and the private sector wonders what the tax rates will be if Obama is re-elected, and therefore we are caught in essentially the same uncertainty we were already operating under. Tax law uncertainty equals investment pullback.
4. Uncertainty about healthcare costs. Most corporate CFO’s still cannot calculate the costs to their businesses of the new healthcare bill (I don’t call the bill “Obamacare” because President Obama had almost nothing to do with it, he ceded all powers to Nancy Pelosi and Harry Reid). If they can’t calculate the costs, they can’t hire in volume because they don’t know how much a new employee is going to cost the business once the policies kick in.
5. Failure to pass already-negotiated fair and positive free trade agreements. For more than 2 years the Democrats and President Obama have been stalling the ratification of free trade agreements with South Korea, Columbia, and Panama. These agreement will create millions of American jobs (and have a positive economic effect on these 3 trading nations), but they are being held up by the left because the agreements are not favored by their union friends (campaign contributors). In addition, Democrats are requiring a “Trade Adjustment Assistance” money, essentially a slush fund for unions provided by us taxpayers that is wasteful and unneccessary. More on this in a future post, but suffice it to say this purely political obstruction by Democrats is killing job opportunities for us, and is immoral for its negative humanitarian effects particularly on Columbia and Panama.
6. Pro-union positions in other areas. By forcing most of the stimulus money to be spent on union labor, and by encouraging pro-union policies which have staved off our economy’s natural tendency towards lowest-cost/highest quality and forcing it towards artificial wages and inefficient cost structure, we get far less employment per dollar spent. This also creates a fear factor as well as uncertainty. See my post on Boeing trying to build it’s 787 plant in South Carolina for a shining example. Such actions and biases put a chill on new investments by businesses and entrepreneurs.
7. Failure to encourage domestic drilling for oil. There are millions of jobs lost in this area. There are so many benefits to a dramatic expansion of domestic oil production, but the biggest by far is the number of direct and downstream jobs it creates. President Obama has hid in the cloak of “environmentalism” in order to please his base, but make no mistake his policies are anti-environment, and anti-economic growth. Why? Because we are going to use the same amount of oil whether it’s produced here, or in Nigeria, or wherever. Do we believe Nigeria is more environmentally protective than we are? This is as close to a no-brainer as there is. Drilling in the Alaskan National Wildlife Reserve (on an area that is in relative terms the size of a pin head vs. the surrounding preserve), drilling in the Gulf of Mexico, the East Coast of the US, and elsewhere will provide us greater energy security, and result in a boom in employment here at home.
8. A flood of regulations in multiple industries and government agencies. Ask any business person how much more complex it is to build a new building, start a new business or bank, navigate the Frank-Dodd banking “reform”, or start a restaurant. The Obama Administration and Democratic Congress claim to be “protecting” us with all these new regulations and requirements, but in doing so have not protected us at all, and poured buckets of water on any fire that may have been starting around job growth. Also, ask any competent financial industry person and they will tell you “too big to fail” wasn’t fixed anyway!
9. Hiring bureaucrats and academics in the cabinet and key economic positions. For 2 years Obama had no meaningful representation from the private sector on his staff. In the grips of 9.9% unemployment, he had no representation from the private sector! For him, academics and former Fed members were the solution. He has only recently reached out to the private sector, but Jeffrey Immelt (CEO GE) is the only high-profile business leader he has brought into the fold. Obama reveres academics, and he has an aversion towards successful private sector leaders. This translates into disaster for our economy.
10. Economic uncertainty created by lack of leadership of the country, particularly in regards to the debt crisis. President Obama has not produced a budget in more than 18 months. He promoted a stimulus that spent $830 billion for what most economists believe produced little to no impact on the economy, adding to our deficit. He has not presented a single “plan” similar in concept to the Ryan Plan, only a “framework” that everyone regards as a joke and political ploy. He established a bi-partisan deficit reduction commission, and then completely ignored its recommendations. He has demagogued Medicare and Medicaid reform, creating a fantasy in which the Republicans are for keeping tax breaks for “corporate jets” and cutting aid to the elderly poor, while he pretends if we cut such tax breaks we can continue with our current entitlement programs without reform (which he knows and we know, is absolute folly).
As millions of Americans suffer because of the President’s lack of focus on the economy and prioritization of issues which actually damage the economy, two key questions arise: First, will he change course soon and help get us on the right track? And second, will we re-elect this man and allow him to wreak havoc on our nation and the world economy for another 4 years?