On Monday we will celebrate Labor Day, a holiday to commemorate and give thanks for the contributions of the American worker to our nation’s strength and prosperity.
This year’s holiday is a particularly opportune time to reflect upon that message.
America’s unemployment rate stands at a stubborn 9.5%. If you include those who are underemployed (working part-time but seeking full-time work) that number is closer to 18.4%.
Last week, the Labor Department revised second quarter economic growth down from 2.4% to 1.6%.
Sales of existing homes are at the lowest level since 1995.
The small business confidence survey is at the lowest level since the survey began in 2003.
Overall, it has been 31 months since the recession started and the economy is still losing jobs.
This Labor Day, ask yourself: If America’s strength is indeed a product of the strength of the American worker, what does it tell us about America’s prospects when so many Americans are not working?
In other words, can America work if Americans aren’t working?
John Boehner was right: Geithner and Summers Must Go
Last week, House Minority Leader John Boehner called on President Obama to ask for the resignations of Treasury Secretary Tim Geithner and Larry Summers, the head of the National Economic Council.
John Boehner is exactly right. While President Obama cannot be blamed for causing the recession, it was the actions of his administration (and his accomplices in the Democratic Congress) which have artificially extended the length of this recession and caused more pain for the American people.
John Boehner has good standing to lead the charge for a change in direction in our economic policies.
In addition to being a small business owner himself, John was the fourth ranked conference chair when I was Speaker of the House from 1995-1998. Two weeks ago, in this newsletter, we reviewed the record on job creation of the Gingrich Congress versus the Pelosi Congress. By controlling spending and cutting taxes under the Gingrich Congress, job creation soared while the budget was balanced, leading to over $600 billion of federal debt being paid. John remembers these principles well.
In the speech, Boehner rightly targeted the out-of-control spending, a tax code that is too complicated and has become a tool for special interests, and big “government run amok” as some of the chief culprits behind our prolonged recession.
The big government stimulus bill, the tax increases of the health bill, the plan to let the 2003 tax cuts expire, and the massive growth of government under the Obama Administration are all actions directly attributable to this administration which have killed jobs.
President Obama must be willing to hold his administration officials accountable.
The Worst Decision of All?
A few weeks ago in this newsletter, I cited a study by Robert Barro which estimated that without the extension of unemployment benefits to 99 weeks, the unemployment rate would be 6.8% instead of 9.5%.
Barro had an op-ed in the Wall Street Journal this week that echoed Leader Boehner’s call for the President to replace his economic team, and outlining why the Obama Administration’s policies are directly responsible for the unnatural long life of this recession.
In the piece, Barro points out that the extension of unemployment insurance to 99 weeks was unprecedented compared to previous extensions during economic downturns, which averaged around 40 weeks. For instance, during the 1982 recession, the unemployment rate was even higher—10.8%. Yet, we did not have anything close to a 99-week extension for unemployment benefits.
Borro notes that during the 1982 recession, the peak mean duration of unemployment was 21.2 weeks and the share of long-term unemployment (those unemployed more than 26 weeks) was 24.5%. Contrast those figures with those of the current recession, where mean duration of unemployment last month stood at 35.2 weeks and the share of long term unemployment was 46.2%.
Borro writes, “The dramatic expansion of unemployment-insurance eligibility to 99 weeks is almost surely the culprit.”
This decision, too, lies squarely on the back of the Obama Administration.
It is even more embarrassing considering that Larry Summers had previously written that welfare payments and unemployment insurance are a significant cause of long-term unemployment.
Geithner and Summers must go.
“Our fresh start needs to begin now”
As Boehner said in his speech:
“Now, this is no substitute for a referendum on the president’s job killing agenda. That question will be put before the American people in due time. But we do not have the luxury of waiting months for the president to pick scapegoats for his failing stimulus policies. We’ve tried 19 months of government-as-community organizer. It hasn’t worked. Our fresh start needs to begin now.”
Even Democratic Congressman Tom Perriello has called for Geithner and Summers to be fired.
There could be no stronger signal from President Obama that his economic policies have not worked and that it is time for a change in direction than by replacing his economic team to get new ideas and new perspectives into the Oval Office.
Mr. President, Geithner and Summers must go.
Consider it a Labor Day gift to the American people.
P.S. If President Obama is willing to admit it is time for a new economic policy, he should start with the American Solutions Jobs First Plan, which features tax relief, an energy plan and spending restraint to return to a balanced budget. Read more at www.americansolutions.com.
Newt’s Quick Links
• The Americano writes that the engagement with Castro’s Cuba has clearly failed, and wonders if it is time for an embargo
• After Glenn Beck’s “Restoring Honor” rally held in Washington D.C., Dr. Jim Garlow discusses alliances between evangelical Christians and Mormons—two groups he united during the Proposition 8 battle in California. You can read the piece here.
• Catholic Online had a wonderful review of Nine Days that Changed the World last week that connects the struggles of the Polish people with those of Americans today. Read it at www.gingrichproductions.com.
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