Three weeks ago, the White House promised America a government-spending-fueled “recovery summer.” What we’ve seen thus far, however, is big government’s true, destructive impact on the natural resiliency of the American economy: By spending too much, growing government too fast, and threatening to raise taxes, President Obama and the left-wing Democratic leadership in Congress have created a climate of fear and uncertainty amongst job creators that has decisively hurt the economy, not helped it.
Consider the jobs data for the month of June:
• 125,000 Americans lost their jobs. That means more than 3 million Americans have lost their jobs since President Obama signed the stimulus bill.
• The U.S. workforce shrank by 652,000, meaning that nearly 8 people left the labor force for each private sector job created. 124,000 of those workers were simply discouraged and have given up trying to find a job. Over the past 12 months, more than 400,000 Americans gave up looking for work.
• The 83,000 private-sector jobs added in June is 209,000 jobs below the “replacement level” of 292,000 new jobs a month required to get unemployment back to 5% by 2015. In fact, for every one million Americans out of work in June, only 5,600 private sector jobs were filled.
• The average time needed to find a job rose to 35.2 weeks. This average time figure is unprecedented in the post-war era.
• The ISM non-manufacturing job index fell to a worse than expected 53.8%.
• ISM’s employment index fell to 49.7% in June (below 50% means the jobs sector is declining).
(Click here for a useful graphical representation of the terrible June economic numbers from the Wall Street Journal).
Job-Killing Policies Kill Jobs
The core obstacle standing in the way of job creation in America is no longer the financial system or housing market – it is out of control big government.
As this article by Louis Woodhill makes clear, previous steep recessions have been marked by similarly steep recoveries. What makes this recession different has been the extraordinary irresponsibility of President Obama and the left wing Democrats in Congress.
Under President Obama, the national debt has increased by $2.4 trillion in less than two years. Americans look at our exploding national debt and wonder if we’re going to follow in the footsteps of Greece.
Furthermore, the healthcare law signed by President Obama is so confusing that many companies cannot project the costs of hiring new employees (more on this below). Richard Fisher, president of the Federal Reserve Bank of Dallas, predicts “slower economic growth than we’ve had in the first and second quarter” of 2010 and cites the uncertainty caused by the President’s healthcare law as a major reason why businesses are not hiring.
(One wonders if Speaker Pelosi still defends the idea that it is OK to pass a major piece of legislation before knowing what is in the bill.)
Now, job creators are wondering what destructive action the Democrats will take next.
The administration is cynically using the BP oil spill to advocate for a new cap-and-trade energy tax that is estimated to kill 5.1 million jobs over the next 40 years and cost the American economy $125 billion per year. That’s over $1,000 per household. Also, the administration has in the past few months floated the idea of a value-added-tax, scaring job creators even more.
All this economic uncertainty, much of it caused by the actions of the government, has caused companies to hoard a record $1.8 trillion in cash reserves. Three weeks ago, I met with 24 small business owners in St. Louis and none of them said they planned to hire any new employees in the next six months. Small businesses cite government regulation and high taxes as the top two challenges facing their companies, according to a recent
American Solutions Small Business survey.
Calling James Carville and Jim Jordan
President Obama and congressional Democrats must do a gut-check and recognize the destructive effect their policies and actions are having on job creation in America.
To understand how to move forward, President Obama should make two phone calls.
The first call should be to James Carville to ask to borrow his sign from the 1992 presidential campaign that said “It’s the economy, stupid.” President Obama should hang that sign in the Oval Office as a reminder that government policies can either help create jobs or help kill them, and every decision his administration makes going forward must favor job creation.
The second phone call should be to Congressman Jim Jordan.
Congressman Jordan has introduced the Economic Freedom Act, a series of bold tax cuts that would empower job creators to do what they do best. I’ve written about the Economic Freedom Act before and you can read details here.
The worsening economic data will provoke calls for Congress to take action to spur job creation. In choosing how to move forward, the administration can either repeat the same mistake they made last time and let Nancy Pelosi draft another big-government spending bill. Or he can learn from the failure of the stimulus and work with Congressman Jordan to pass the Economic Freedom Act.
If President Obama can summon the courage to recognize reality and change course, the left wing of the President’s party will be furious, but the country will be thankful.
On Thursday, America will eclipse the 100-day mark since President Obama signed his massive, 2,700 page big government healthcare bill, and opposition continues to grow. A Rasmussen poll released this weekend shows that 60 percent of American voters want Obamacare repealed immediately, 49 percent of whom feel very strongly about it.
Senators Tom Coburn, M.D. (R-Okla.) and John Barrasso, M.D. (R-Wyo.) are releasing a report today entitled, Bad Medicine: A Check-Up on the New Federal Health Law, that details problems with the new law and the punishing effect it will have on hardworking Americans. As doctors by profession, Sen. Coburn and Sen. Barrasso bring a unique understanding to their role as legislators relative to the new health care law.
As they note in the report, it is a fact that millions of Americans will lose their current healthcare coverage as a result of the law. Additionally, taxes will be increased during a time of economic uncertainty and 16 million individuals will be forced into failing state Medicaid programs that are already strapped for manpower and funding.
The report is very thorough and compelling, and can be found here.
Making Sense of the Nonsense
While Americans attempt to understand the new law and the impact it will have on them and their families, the Center for Health Transformation is helping. The Center recently released two new wall charts that detail the increased bureaucracy that the law creates and a timeline of all the deadlines contained within the 2,700 pages of text.
Obamacare includes the creation of 159 new agencies, offices, and programs (most of which are housed within the Department of Health and Human Services) that are at times repetitive, and amount to an overall massive growth in power and scope of the federal government.
The timeline chart was created with information compiled by the Republican staff of the House Energy and Commerce committee and shows 50 square feet of nearly 500 deadlines contained in the law through 2020. The administration has already missed some of these deadlines and has a long way to go to achieve completion of such a complex implementation timeline. These two charts simply illustrate increased government involvement in our health care system. They can be viewed and purchased at the Center’s website, www.healthtransformation.net.
P.S. I will be in Stamford, Conn., on July 14th for an American Solutions Real Jobs Summit. You can RSVP here.
Newt’s Quick Links
• In his piece posted at Renewing American Leadership, Marvin Olasky explains how Matthew 25:40 is theBible’s most misused verse. You can read the piece here:
• The Americano takes President Obama to task for playing politics with immigration reform. Click here.