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Obama's Search for the Holy Grail

12:00 AM, Sep 10, 2011 • By IRWIN M. STELZER
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The president used the occasion of his address to a joint session of Congress to propose $450 billion in spending and tax cuts, 3 percent of GDP, to bring down the 9.1 percent unemployment rate that threatens his reelection chances. Supporters say the proposals—some new, some a continuation of existing policies due to expire—would create 4 million jobs; opponents note the president hasn’t said how he will pay for all of this, and that past such packages have proved a waste of taxpayer money. No matter: There is little chance that the Republican-controlled House of Representatives will pass most of this package.

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And Democrats believe this gives them a stick with which to beat Republicans, the real purpose of the president’s speech, according to his critics and, indeed, many neutral observers. To which Republicans respond: If the president wants to reduce unemployment, he should abandon the policies that are destroying jobs. Summoning their inner Churchill, Tea Partiers are prepared to fight the president’s plan for more spending on the beaches of Florida, the hills of crucial Rocky Mountain states, and in the streets of cities in key electoral states.

First among these job destroyers is his pandering to the trade unions. Although union members account for less than 8 percent of the work force, the unions have money and foot soldiers that will be essential to a president who is trying to persuade voters to reelect him in the face of low ratings for economic competence. The Labor Department is investigating home builders to see if they are violating the law regulating hours and pay: most use contractors who employ non-union electricians, carpenters, and plumbers. Nothing like a government investigation to put a CEO in an optimistic, hiring frame of mind.

In further deference to the unions, the president has declined to send three trade agreements to Congress for approval, although most analysts say these deals would create tens of thousands of export-related jobs, although not necessarily in heavily unionized industries. The president is holding the treaties on his desk until Republicans agree to approve spending to compensate any workers who lose their jobs due to these trade agreements—a policy that requires a vast amount of complicated paperwork that most workers have found impossible to cope with.      

Then there is Obama’s need to placate his left, which is insisting that he resist Tea Party demands for substantial cuts in spending, and instead raise taxes on “the rich,” something Republicans feel is foolish on the edge of another recession. Even Paul Ryan, the Wisconsin Republican whom even the strongly partisan president classifies as reasonable, is unwilling to go along with the White House proposals for temporary tax cuts, pointing out that most academic studies show they are ineffective in boosting demand. Result: gridlock.

The president is also limited in what he can do to create jobs by his longer-range vision of an America in need of what he calls “transformation.” He has over 4,000 new regulations already in the pipeline, with thousands more to come as regulators put flesh on the bare bones of his financial and health care legislation. These will raise the cost of doing business, with his health care plan the major culprit, and are creating job-killing uncertainty among small businessmen. Or so the president’s critics contend.

The president’s drive to transform the energy sector by restraining the development of oil, gas, and coal resources in favor of greener energy sources is also costing jobs. Despite the bankruptcy of Solyndra, a manufacturer of solar panels who has shed over 1,000 jobs and blown a $535 million federal loan guarantee, the Department of Energy has announced $445 million in new guarantees to two other solar companies. Solyndra, a company well connected to the president and the vice president, was raided earlier in the week by the FBI at the request of the Department of Energy.

Critics say that Obama’s trade union and energy policies reflect his ideological rigidity; the president’s supporters say it is an admirable refusal to allow his desire for a second term to trump a needed remaking of the American economy.

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