In January 2008, the United States economy employed 138.1 million people and the unemployment rate stood at 4.9%. But the powers in Washington thought deficit spending could boost a slowing economy, so Speaker Nancy Pelosi (D-CA) passed and President George Bush signed a $168 billion economic stimulus bill made up of temporary tax cuts and increased mortgage grantees for Fannie Mae and Freddie Mac. By January 2009 that economic stimulus worked so well that the U.S. economy had lost 3.5 million jobs and the unemployment rate stood at 7.6%. Again the powers in Washington thought deficit spending was the answer, so Speaker Nancy Pelosi and newly minted President Barack Obama dialed up $787 billion in temporary tax cuts and permanent spending increases. Ten months later, the U.S. economy has now shed another 3.59 million jobs and the unemployment rate stand at 10%.
Undeterred by the complete failure of their past job creation efforts, leading leftist luminaries are again calling on the liberal majorities in Congress and President Obama to approve billions more in government spending for a third stimulus. Yesterday, President Obama hosted a “jobs summit” where academics, union leaders, and select big business leaders made their pitch for government largess. Among the ideas reported: Teamsters leader James Hoffa called for higher barriers to trade, President Obama insisted that all future aid to states go to preserving government jobs and not tax cuts, and others pushed to bring the “success” of Cash for Clunkers to a new Cash for Caulkers program.
These “new” ideas will fail for the same reason the past two government stimulus plans failed: governments do not create jobs. Only the private sector in pursuit of opportunity can create jobs on net. The best we can hope from government is that it keeps to a minimum the jobs it prevents and the income and wealth it destroys. President Obama does not understand this. At yesterday’s summit, Obama lamented the lack of job creation: “There’s a lot of money on the sidelines in the private sector. They are still nervous about whether they want to go ahead and take the risks that are inherent in a free market system.”
Wrong. Businesses aren’t nervous about “the risks that are inherent in a free market system,” they are nervous about the risks inherent in a government regulation dominated economy. Fred P. Lampropoulos, founder and chief of Merit Medical Systems Inc., told the President that businesses were uncertain about investment because “there’s such an aggressive legislative agenda that businesspeople don’t really know what they ought to do.” That uncertainty, he added, “is really what’s holding back the jobs.”
Rich, before you start, the issue is not Bush vs. Obama, it is free markets vs. central planning.
Your man, your side, owns this mess and it ain't "recovering". The harder they plan, the worse it will become. Or are you somehow arguing that 10+% unemployment is a good thing?
Job summit, what a joke.
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Ah, I love it! Hearing from a Bush voter about effective economic policy is like hearing about fire prevention from Mrs O’Leary’s cow.
2008 was a very bad year indeed – it was the final year of GWB’s eight-year reign of error. Don’t blame a $168B stimulus bill in a $14T economy for anything. It was but a drop of water in a sea of supply-side shit.
Is anyone surprised that we have record deficits during the worst economic collapse in 80 years? Dubya and the GOP Congress presided over massive deficits in times of growth. What did you think would happen should the economy gap down? Would revenues somehow go up? Would systemic demands decrease? Again, you expected what?
The $787B stimulus bill was too small and frankly, wasn’t particularly efficient with respect to speed. No one on either side of the aisle thought that the stimulus bill alone would do the trick – it was but one of many efforts coming from the White House, Congress, Treasury and the Fed.
Please note that GWB oversaw creation of a whopping 119,000 jobs in his first term. That’s right – four years and two massive supply-side tax cuts later we got 119K net jobs – the worst showing since Hoover (R). With a record like that, how can any Bush voter presume to explain job creation or effective stimulus? Be grateful that we didn’t put thousands to work pasting big L’s on the forehead of each supply-side Republican.
Another note – job losses peaked the month that Obama took the oath of office. They have steadily dropped since. Consensus estimates call for job growth at some point in 2010 - which will constitute a rapid recovery. It took longer for Reagan, who had higher unemployment and lower approval ratings at this stage of the game.
Are you surprised that Merit Medical Systems is concerned? They ought to be. The current system is grossly inefficient for consumers and gamed for the benefit of physicians, pharma and insurance companies. The rules of the road will change and the salad days of said interests are over.
This is not a question of the free market vs central planning. It is a question of responsible governance against reckless, dogmatic economic policy. To the extent that readers are intellectually curious, and would actually like to improve their understanding of this topic, I (again) strongly recommend Bruce Bartlett’s “The New American Economy”.
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