President Obama announced a renewed focus on jobs in his State of the Union address. His budget stated (PDF) “it is critical that we take steps to jump-start job creation”. He’s right, of course. He is also explicitly admitted the failure of last year’s $862 billion “jump-start” stimulus program. On March 4, the House passed yet another admission of failure as it moved a $17.6 billion mini jobs bill built around an ineffective hiring tax credit and highway spending. Why another bill? Because even politicians cannot duck the data forever, such as today’s jobs report released by the Labor Department which means the Obama jobs deficit stands at 8.3 million workers.
According to the latest report (PDF), the U.S. economy shed another 36,000 jobs in February. The unemployment rate stands at 9.7 percent, almost double the rate thought consistent with full employment. Further, the only reason the unemployment rate isn’t higher still is that millions of Americans have left the workforce altogether as shown by a drop in the labor force participation rate to 64.8 percent from a peak in 2007 of 66.4 percent.
The economy’s continued poor performance means President Obama is falling further and further behind on his promise to create millions of new jobs. Obama promised that if elected he would create 3.5 million jobs by the end of 2010 through new economic policies, beginning with the enactment of a massive economic stimulus package. Accompanying his jobs promise, the President also emphasized accountability and measuring his presidency by results. The result of the President’s jobs promise means total employment which in February stood at 129.5 million should be at least 137.8 million by the end of 2010, leaving the Obama jobs deficit at almost 8.3 million jobs.
Fortunately, the economy’s natural resilience spurred by powerful monetary stimulus from the Federal Reserve means the economy is growing again, albeit at a slow trend pace. Consequently, job losses may persist for months to come. Even the Administration’s rosy forecast for economic growth for the next two years leaves the unemployment rate around 10 percent through all of 2010 well into 2011. By his own official forecast and by his own standard, the Obama jobs deficit attests that his policies have failed and will continue to fail.
The federal government can stimulate the economy in the short term not by increased spending and borrowing but rather by improving incentives and the general economic environment. Businesses invest not when they are manipulated by Washington, but when they are confident enough to take risks in pursuit of opportunity. Individuals and businesses across the nation see tremendous opportunities for starting new businesses, investment, hiring new workers, expanding into new markets. Understandably, many are holding back due to concerns about the economy. However, many others are holding back due to concerns about the threatening policies from Washington while others are holding back because existing tax and regulatory burdens are already excessive. For private sector job creation to “jumpstart” in the President’s words, the first step is to fire Washington’s job destruction machine. The President and his allies need not repudiate their ideology, as helpful as that would be, but they do need to hit the pause button on their anti-growth policies.