Job growth continues to sputter—this morning’s jobs report shows that 12.1 million Americans are still out of work.
Going against other economic indicators, the unemployment rate dropped to 7.8 percent. Economists are already looking into the drop, saying it seems to be a statistical fluke, because it doesn’t match up with the sluggish job creation and recent downward revision of GDP growth. Heritage’s J.D. Foster says:
One time out of a hundred, the true figure will be much different than the reported figure. One time out of a hundred for a monthly survey means about once every eight years. What seems to have occurred with the September household survey is the one time in a hundred. The last time the household survey showed such a huge jump in employment was in 1983 during the Reagan-era economic boom. Today’s economy does not look much like the Reagan boom.
The real story, then, from the more reliable employment survey is the economy created a paltry 114,000 jobs, leaving 12.1 million out in the cold. This story is getting old. And the economy has no good news to look forward to.
Congress has gone home until after the election. When it returns to Washington, the end of 2012 will be staring us in the face. In just a few short months, the largest tax increase in history will hit America. It sounds like hyperbole, and we only wish that were the case. It’s been dubbed Taxmageddon, because for millions of workers it will be an end-of-working pink slip scenario. But on January 1, a nearly $500 billion tax increase will slam the economy.
Not only will this mean individual tax increases—if you’re a middle-class family, your taxes will go up around $4,100—but the whole economy will also suffer. The Congressional Budget Office has said that unless Congress and the President act, we will be plunged into a new recession extending through 2013—when we haven’t even recovered from the previous one.
The irresponsible behavior of Congress and the President in bringing the nation to this state means a significant slowdown is already almost certain. Mounting uncertainty about what, if anything, Washington will do is rapidly draining the vitality out of the economy.
The facts are plain: The economy will shrink and unemployment will spike unless Congress acts to prevent Taxmageddon. If Congress and the President choose to continue to play politics with the economy, we stand to lose 1.6 million more jobs.
Why can’t we seem to recover from the most recent recession? According to a new report by Heritage’s Salim Furth, a select group of businesses isn’t hiring: start-ups.
“Even in recessions, start-up job creation has been a constant—until now,” Furth reports. “Employment at start-up companies has fallen for five years in a row, reaching unprecedented lows in 2010 and 2011.”
This is devastating because start-ups normally create the vast majority of the net new jobs in the economy, he says. Larger businesses do expand with new jobs, but significant job creation comes from new businesses. And it’s more difficult than ever to jump through all the government hoops to create a new business. The system is completely against job creation right now. As Furth says:
With new regulations and business requirements in health insurance, small-business finance, environment, energy, and tax compliance, not to mention the ever-expanding reach of state licensure boards, it is expensive to open a business.
Businesses, and those who would start businesses, are looking at looming tax hikes and new regulations and simply deciding it isn’t worth it. There are many new regulations coming soon, but the Administration has gone silent on what they will be. So employers can’t even prepare.
Repealing the heavily regulatory Dodd-Frank law and Obamacare, with its 18 new tax hikes, would remove major burdens on businesses and individuals. But that won’t happen before next year.
Our elected leaders can prevent Taxmageddon. It would be the best thing they could do for the economy, including job creation, in the short term. There is still time, though it is growing short.
Quick Hits:
- An email has surfaced that shows the State Department rejecting a security request from the U.S. embassy in Libya, ABC News reports.
- A top Iranian official says all Iran needs is “24 hours and an excuse” to attack Israel.
- The Federal Election Commission reached a stalemate on a Democratic proposal to require greater disclosure by third-party groups running political advertisements.
- Will the Obama Administration attack targets in Libya before the presidential debate on foreign policy? Heritage’s James Carafano says “probably.”
- What are you doing for lunch today? Join our online chat to discuss the presidential debate at noon ET.
