The American people are in the midst of learning a painful economic lesson: federal spending doesn’t create jobs. The latest evidence came from the Department of Labor, which released its monthly jobs report last week. The outlook is bleaker than experts in and out of government expected, and the government’s meddling isn’t helping.
First, all those temporary Census Bureau jobs are going away, contributing to total losses of 131,000 jobs in July. And while the private sector managed to squeeze out 71,000 new jobs, this is a disturbingly feeble number compared to what was expected by Wall Street analysts — and what’s needed for actual economic recovery. When you factor in population growth, those jobs added don’t even amount to a blip on the radar. Then it turns out that the Department of Labor underestimated June’s job loss by nearly 100,000. In fact, the only thing that kept the overall unemployment rate steady for July, at 9.5%, was the ongoing drain of discouraged workers from the job market, keeping them from being counted among the unemployed. Where would the unemployment rate be if those workers had kept looking? Where will it be when they start looking again?
Sadly, the only surprise here is that the experts are surprised. What do they expect when employers fear the government’s penalizing hiring to fund a vast new health-care bureaucracy, and when small businesses are going to have an even tougher time finding credit under the new financial regulatory law?
The old expression says that when you’re in a hole, the first thing to do is stop digging. If we want unemployment to shrink, we have to stop making life harder for our employers and small businesses. On Friday I issued a bold call to Congress to take a very simple and direct step: suspend implementation of the new health law unless and until the unemployment rate drops back down below 5 percent. This will not only reassure employers, especially our vulnerable small businesses, that they can afford to increase their payrolls; it will also give Congress time to retool the new law to make it work for, and not against, economic growth and prosperity.
But there’s even more we can do. Let’s extend the 2001 and 2003 tax cuts, now due to expire in January; eliminate the estate tax, which really hurts small businesses and family farms; and reduce capital-gains and corporate taxes. Preserving low tax rates would speed hiring by boosting small businesses’ bottom lines and giving them more flexibility to absorb the economic slowdown and delay in recovery.
Will the Pelosi Congress or Obama Administration adopt my simple proposal to kick-start hiring by unburdening our employers? I sure hope so, but I’m not holding my breath. Their behavior to this point doesn’t indicate that they have any economic common sense. Fortunately, the American public, and District 19, can exchange the Congress on November 2 for one that does understand that job growth starts in our communities, not in Washington.