Obama’s Jobless Recovery

The ongoing debate on the so-called “jobless recovery” is intensifying. The Obama line is that his aggressive (massive) spending “saved the economy from the brink” and current stagnation is part of a long term problem created by Bush ineptness. Finishing the job requires more government intervention and debt, as the free market is simply unable to do the job without government supervision. The notion of a second stimulus has been bantered around by some on the left as well. 

Republicans have largely rejected the Obama narrative, but don’t seem to be clear about what should be done. Some are suggesting business tax credits for new hires or temporary income tax cuts. These are not bad ideas per se, but they don’t directly address the core problem, harmful government intervention in the economy. It’s crucial that Republicans reject the Keynesian thinking and social engineering that got us into this mess in the first place, and these ideas don’t quite hit the mark.

The notion of a temporary tax cut is appealing at first glance, and is certainly better than more government spending. The problem with this proposal is that tax cuts only reduce the size of government when they are permanent and are accompanied by spending reductions. The Obama balance of high taxes and higher spending is unsustainable and economically irresponsible. A temporary tax cut suggests that Obama’s approach may not be optimal at the moment, but could be workable when the economy recovers. Nothing could be further from the truth.

Likewise, a tax credit for businesses that hire workers could have some short term positive benefits. But providing a temporary tax break for new hires encourages companies to hire workers whose value to the business would be less that the wages they pay. Such a program amounts to a government subsidy, and layoffs will follow when the tax credit expires. If businesses cannot afford to hire workers, then why not reduce their regulatory burden and taxes on a permanent basis?

Obama’s massive government intervention has failed, and Republicans must decide how to respond. One option is to propose a blend of conservative and neo-Keynesian programs that don’t address the core problem of fiscal irresponsibility and Constitutional neglect. The pundits tell us that such a proposal would attract moderates to the fold. Bush drifted in this direction during his presidency and lost the conservative base. McCain tried a similar approach in 2008 and never got it back.

Another option is to tell the complete truth. Many Americans sense something terribly wrong with Obamanomics and are open to an alternative. The left’s healthcare package wreaks of big government and restrictions on individual liberty, and those who thought the Dems were about responsible change are seeing the party for what it really is. Republicans have a chance to propose a real solution, not just a shift to the middle. 

So what should a real solution look like? Here are a few pieces of the puzzle:

1. An immediate halt to all stimulus spending.

2. Permanent tax cuts, including a simplified flat or fair tax system, a substantial cut in the capital gains tax, and the elimination of wealth transfer through the tax code (i.e., earned income tax credits). 

3. A substantial reduction in the size and scope of government that brings about spending cuts and reduced regulatory burdens on business.

4. A reorganization (if not elimination) of the Fed to end its meddling in the economy.

5. An end of global negotiations on climate change. The evidence for anthropogenic global warming is spotty at best. Cap-and-trade and other socialist schemes should be summarily rejected.

If you think I sound a little extreme, you’re right. Capitalism is the solution to our economic problems and need not be “kept in check” by bureaucrats. We owe no apologies for a system that created the wealthiest nation on earth. It’s time we take a real stand. The Dems have given us a perfect opportunity to do so. We might not get another chance.

7 thoughts on “Obama’s Jobless Recovery

  1. This makes sense. It’s time to stop the apologies. McCain already tried that. We need real and complete solutions, not a half job. We need to help those having difficulty facing the truth about capitalism see the light.

  2. sorry parnell, elections are won in the middle. obama is governing from the center but you extremists just cant face it, that’s why hes so popular. your best shot is someone like lindsey graham or susan collins. as long as you try to elect a radical you will always lose.

  3. Why do these guys like Stuart always have to try to drag the discussion down to the gutter? Can we stick to policy and facts rather that the “extremist” nonsense? First, check the Obama popularity numbers – slipping by the day – presently south of 50%. The US is a center-right country. Presently, about 40% identify themselves as conservative, 40% indy and 20% liberal. Obama is hardly governing from the center. Check the record – he had the most liberal voting record when in the Senate. He is who he is, a liberal who is rapidly losing popularity.
    We listened to people with your opinion and sent moderate John McCain and got our clocks cleaned. Lesson learned: Rep candidates without principled positions are weak. Your Reps. named above could win in 2012 because your guy is so far left, but they are not what we need to get this country back on track.

  4. lol @ stuart – obama was THE MOST LIBERAL member of the senate….he was only elected because of white guilt over slavery and it looks like people getting tired of him fast…

    and nobody wants goober graham or susan collins either…..

    1. Yes, but Reagan’s tax cuts were intended to be permanent. Short term tax cuts infer that the current tax rate is OK but only needs to be lowered while the economy is in recession, which is faulty Keynesian logic. Moreover, individuals and firms tend to ramp up their economic activity when taxes are cut over the long term because much of what they do takes a while to translate into economic gains. Short term tax cuts and other freebies (like the CARS program) are seen as gimmicks and usually have little long term effect.

      The best argument for short term tax cuts is that they are better than nothing, and that they might lead to long term tax cuts. This may be true but is a political gamble. Still, the Republicans need to set the tone for a long term culture change in Washington in terms of (lower) taxes and spending, not cut deals that reinforce the status quo.

Leave a Reply

Your email address will not be published. Required fields are marked *