Time for an economic course change
Examiner Editorial
November 8, 2009
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President Obama has been in office for nine months, and the Democrat-led Congress approved his $787 billion economic recovery program eight months ago. In the ensuing months, the president and Congress have spent $1.4 trillion more than the government received in revenues. Two of the nation's oldest and biggest corporations - General Motors and Chrysler - have been effectively nationalized, as have most of the largest banking institutions. And legislation to put two more major economic sectors - health care and energy - under federal supervision is being moved steadily forward toward passage. Yet unemployment in October reached the highest level since 1983, 10.2 percent, and the total number of jobs lost under Obama and the Democratic Congress now stands at more than 2.7 million. Finally, as The Examiner's Irwin Stelzer noted in his Friday column, instead of investing in new jobs, corporations have been hoarding money. The value of their cash reserves has surged past $1 trillion to 11 percent of assets, compared with barely 8 percent a year ago. That is effectively a no-confidence vote by the business community.
The economic policies put in place by Obama and Congress have failed for at least three reasons. First, as the Heritage Foundation's Brian Riedl argues, the White House claim that the recovery funds spent since February account for significant numbers of jobs "saved or created" is a denial of economic reality: "The White House is telling us that adding $200 billion to one part of the economy created/saved 650,000 jobs, but removing $200 billion from another part of the economy has not cost a single job."
Second, it quickly became evident within hours of the White House claiming those 650,000 jobs that the numbers behind that figure were wildly unrealistic, if not outright fraudulent. Reporting by the Associated Press, Chicago Tribune, Milwaukee Journal-Sentinel and other news organizations found multiple examples of double-counting, counting raises as jobs saved, and miraculously saving jobs that don't exist. In the latter category, for example, the White House claimed that stimulus funds had saved 473 teacher jobs in a North Chicago district. "Problem is," the Tribune reported, "the district only employs 290 teachers."
Finally, the rush to pass health care reform is generating massive uncertainty, even fear, about the future. Small-business men, for example, whose firms create three-fourths of all new jobs, know they are likely to be hit with a health care reform payroll tax of up to 6 percent if they don't fund at least 72.5 percent of each employee's insurance coverage. But there is no way to know whether the insurance will be affordable after health care reform passes. So they aren't hiring new employees now and they aren't investing in new ventures. That's a prescription for economic stagnation.
