Today is the greatly anticipated White House Jobs Summit. Today is the day when unemployment will be fixed. Today is the day when we will get real solutions. You’d wonder why “today” didn’t come any sooner.
In reality, today’s gathering of business leaders, journalists, economists, and other demographics represents the next great PR stunt of the Obama administration. The goal of the summit is to develop ideas to return America to a state of healthy employment. But there will be nothing new at this summit that the President couldn’t have learned by listening to the different interest groups over the past few months. Everyone at the event either has lobbyists representing their industry or are communicators of ideas themselves. The ideas that will be discussed in the summit on Thursday are the suggestions—good and bad—that have been floating around for months.
Paul Krugman will be there to promote a New Deal-like public works program. I just hope it involves handing out fedoras to the homeless so we can really return to the 1930s. Tax credits for businesses will be discussed. More infrastructure spending will be on the table.
But they probably won’t be considering how government policies are hurting employment and could continue to make it worse. The health care, cap and trade, and financial services reforms that are being debated in Congress—all supported by the President—would all do great damage to businesses and employment opportunities. Wall Street reform alone would sucker punch small businesses and decrease incentives to start new businesses.
So how can the president really be promoting solutions to unemployment with one hand while he supports policies that destroy jobs on the other hand?
The simple reality is that we cannot spend our way to job creation. In theory we could take $135 billion and pay three million people $45,000 a year to just sit around and do nothing. But how sustainable would that be?
Right now economic growth in America is almost completely supported by government spending. While the economy grew 2.8 percent in the third quarter, 91 percent of that was supported by government dollars. This is certainly not a sustainable situation. At some point there simple aren’t enough revenues to cover the interest payment on the loans we definitely wouldn’t be paying off. Either we default or hyper inflate our currency.
Either way, it is not good.
As to creating jobs through stimulus programs other than direct hiring, at this point it appears to be a crapshoot. Christina Romer and Jared Bernstein came out with a graph in January that said, with the stimulus money, unemployment would peak at around 8 percent in September and then decline, clearly we are way past that now. And if you ask them, the White House economists will admit that their model necessarily have to have a lot of assumptions. It is just not proven that stimulus spending creates sustainable jobs.
We know from the Japan experience that it doesn’t.
Econopundit Paul Krugman for The New York Times, wrote on Monday that “it is certainly worth trying” a tax credit for hiring workers. That is not the language of confidence in an idea.
Valarie Jarrett, a top advisor to the president, has said there is a limit to what the government is capable of doing. President Obama should really heed what Jarrett has said, even if she didn’t mean it in this way: The role of government is not to create jobs, the limits of the government are to promote private sector, sustainable growth by establishing a framework for competition and rule of law.
I get that the President wants to help. We don’t necessarily need a job summit to show us that. I think it is silly for the political right in America to go out and act as if they are the only ones who care about the economy and unemployment. I believe the President is a very compassionate man, and I’m sure that the rising unemployment in the country is eating at him.
But I believe that is part of the problem, but his political philosophy is that he must do something about this. That is what he campaign on, organizing the government to advance social change. He almost cares too much. He is trying to put his arms around this mess and solve it himself. It just can’t be done.
In the end, this job summit probably won’t hurt anything. There is some good that might come from the summit, if the business leaders in the room stand up and point out the destructive nature of the massive proposals moving through Congress right now. But we need to understand the summit, and PR tour around the country that will follow it, for what it is: the president trying to fight off disapproval ratings and a desperate attempt to keep the 10.2 number from growing under his watch.