Talking About Jobs
To: President Barack Obama
The White House
Dear Mr. President:
In listening to your speech last month, I was happy you didn’t appoint a jobs czar. We frankly have too many czars: a crime czar, a drug czar, a pay czar. The real czars are all unemployed, and they’re probably illegal aliens to boot. Besides, you have Joe Biden, who is in charge of assembling the cabinet secretaries to look at how to reduce waste at the federal agencies. I bet they didn’t do that in imperial Russia!
There is no question that your focus should be on job creation—not the least because it would help you retain your own job. The Census Bureau just announced that as of 2010, we have more people living below the poverty line than we have had at any time in the 52 years that poverty estimates have been published. And in analyzing this recent report, Lawrence Katz, an economics professor at Harvard University, noted that this is now the first time since the Great Depression that the median American household had a lower income than 13 years earlier. Professor Katz referred to the period since the late 1990s as “the lost decade.”
The middle class is clearly in dire distress. Again, according to the Census Bureau report, 48 million people aged 18 to 64 did not work a single week during the previous year. Even the national unemployment rate of 9.1 percent fails to account for those who have given up looking for work or who are underemployed. As Professor Katz stated in the New York Times, “once you’ve been out of work for a long time, it’s a very difficult road to get back.” Of course, as a former community organizer, you know all that.
The economists at Macroeconomic Advisors estimate that your plan would add roughly 1.3 percentage points to the GDP and create 1.3 million jobs in 2012. JPMorgan Chase estimated that the plan would increase GDP by 1.9 percent and add 1.5 million jobs in 2012. Other economists, including Moody’s Analytics, have forecasted that the Obama jobs package would add 1.9 million jobs (cutting the unemployment rate by 1 percentage point) and 2 percent to GDP in 2012.
But the plan does not address in any way why we are at this point. And so I wish you would make at least four points in your frequent speeches in support of the jobs package:
· Personal Responsibility My casual online search indicates that you have quit coupling health care costs and the need to reduce those costs with the phrase “personal responsibility.” Obesity and its unwelcome companion, diabetes, have been rising tandem epidemics since 1970. Self-indulgent behavior involving drug, alcohol, and tobacco products are also big cost drivers. It is well past the time when we as a society and culture should address these personal behaviors—or the tremendous debt caused in part by health care cost increases will continue to erode our ability to support job creation. s
· Entitlement Reform Reliable estimates put combined federal and state indebtedness in excess of $17 trillion, with much of this being driven by entitlement promises. It should be crystal clear by now that we cannot afford to continue to pay these entitlement programs—social security, Medicare, Medicaid—and have any resources left for job creation. These programs should be means tested, benefits should be pared back, and provider payments reduced. These unkeepable promises are close to bankrupting our country’s ability to provide quality education and opportunities for the rest of our population.
· Tax Theft Tax expenditures as they are currently hidden in the 60,000-plus pages of our tax code and regulations are the meat and potatoes of the politicians’ reelection menu. This is where the real money is. The Simpson- Bowles Report—which should have been mentioned in your speech and every speech—specifies $1.3 trillion in deductions and exemptions that should be ended. Putting this country on a transparent and fair tax system will go a long way to establishing the kind of tax regime that would, at a minimum, not retard job creation. Sustainable job creation is impossible without meaningful tax reform.
· Regulatory Reform Job creation is most likely to occur in the midsize business sector of the economy; large companies shed 2.9 million jobs between 1999 and 2009 while adding 2.4 million jobs overseas. Particular attention should be paid to removing, not increasing, the regulatory burden on small and midsize businesses— precisely the kind of businesses that keep jobs in America. The strictures of the recently enacted Dodd-Frank Act and the continued application of Sarbanes-Oxley to small and midsize businesses hurt job creation without advancing legitimate economic objectives. At a minimum, small and midsize businesses should be exempt from both of these colossal regulatory overreaches.
In summary, the current jobs proposal will be beneficial in the short run, but does not address long-term anti-job trends. Transparency in taxation, regulatory reform, and entitlement reduction are all long-term job creators. As one employed person to another, I wish you luck.
Vance K. Opperman,
Vance Opperman (email@example.com) is owner and CEO of MSP Communications, which publishes Twin Cities Business.