President Obama talks, talks, talks about jobs. The first 20 minutes of his State of the Union address in January was all about jobs. Immigration reform would “create jobs for everybody,” he said. His energy policy “is creating jobs.” Obama said he’s assigned Vice President Biden to make sure training programs match workers with “good jobs that need to be filled right now.” Last week he described his new budget as “a road map for creating jobs.”
Yet for all the talk, his record on jobs is pathetic. It raises this question: Does the president have a clue about what creates jobs and what kills jobs? Based on the evidence from his five years as president, the answer is no, he doesn’t.
Consider that record. Obama boasts that 8 million new jobs have been created on his watch. But rather than an achievement, this marks the slowest economic recovery in decades. There are 1.2 million fewer jobs today than in 2007 when the recession began. The 6.6 percent unemployment rate would rise to 13 percent if participation in the workforce were the same now as when the downturn began. The labor force participation rate—the percentage of those able to work who actually have jobs or are looking for jobs—is the lowest it’s been since the late 1970s. And 18 percent of those employed have part-time jobs.
Obama’s excuse is that he took office in the midst of a deep recession. But President Reagan also faced a harsh downturn soon after he entered the White House, and he ignited an economic boom and robust growth in jobs.
The key difference is the policies they pursued. Reagan cut taxes and spending, imposed sweeping deregulation, and supported slower growth of the money supply. Obama has done the opposite. He’s raised taxes, increased spending, re-regulated nearly everything, and backed a loose monetary policy. Reagan offered the private sector incentives to create jobs. Obama has relied almost entirely on government to enlarge the workforce. It turns out the private sector is far better at creating jobs than the government is.
By now, Obama should know better. If Reagan’s example isn’t enough, there is President Clinton’s. True, Clinton was no Reagan. He raised taxes. But he also reduced the tax rate on capital gains, reformed the welfare system, contained spending with the help of congressional Republicans, and produced four balanced budgets.
Obama appears to have learned nothing from his predecessors. His attitude toward incentives for private job creation is perish the thought. Instead, his new budget calls for eliminating tax preferences and loopholes and using the money saved to pay for infrastructure construction. Yes, it will create some jobs, but not as many as would be if the proceeds were applied to tax reform that lowers tax rates.
One of Obama’s pet projects is a network of “hubs for high-tech manufacturing.” He’s launched two and announced in his State of the Union speech that he intends to “launch six more this year.” The goal, he said, is to “beat other countries in the race for the next wave of high-tech manufacturing jobs.”
However, the premise of the program is flawed. It sees government as the trigger for innovation and job creation. If this were true, we’d currently be experiencing a historic Obama economic upsurge, led by Washington. Obviously, we’re not. A major reason for the high-tech boom in recent decades is that government played such a small role.
Obama seems oblivious to the job-killing effect of his policies. The Congressional Budget Office (CBO) projects the equivalent of 2.5 million jobs will be lost as a result of Obamacare. The 2.3 percent excise tax on medical devices—it’s part of Obamacare—has already cost 33,000 jobs, according to the Advanced Medical Technology Association, a trade group.
From all appearances, Obama is unfazed by the plethora of studies that have concluded a boost in the minimum wage kills jobs. In fact, he has declared there’s “no solid evidence that a higher minimum wage costs jobs.” The CBO respectfully disagrees. It reported in February that hiking the wage to $10.10 an hour would cause a net loss of 500,000 jobs and possibly as many as one million.
Obama persists in advocating an extension of unemployment benefits for 1.8 million jobless. Perhaps the president doesn’t understand that subsidizing joblessness is a sure way to keep people out of work.
His environmental policies are relentless job killers. The crackdown on the coal industry has come at the cost of tens of thousands of jobs. Approval of the Keystone pipeline would lead to thousands of new jobs, but Obama has balked. So too would the opening of federal lands to natural gas production, just as it has on private lands.
Obama’s reference to his budget as a “road map” to more jobs is sad since he may truly believe it. It’s really a “net negative” on job creation due to its higher taxes, increased regulations, and deficits, says Douglas Holtz-Eakin, the former CBO director. The rule of thumb now is that job growth occurs in spite of the president, not because of him.