On August 6th the Bureau of Labor Statistics (BLS) released another anemic jobs report. This report detailed the loss of 131,000 additional jobs in the month of July and a continued 9.5% unemployment. Democrats previously promised that increased federal spending - especially their 2009 stimulus bill - would yield new jobs. The latest BLS report continues to demonstrate the failure of the Democrats’ economic policies to produce job growth.
According to the July figures, only 58.4% of adult Americans currently have jobs, which is a decrease of nearly five percentage points since January 2007 (down from 63.3%). This decline has entirely occurred on the Democrats’ watch; they have held the majority in both the House and Senate during this time period. Over the past 43 months, beginning in January 2007, the Employment-Population Ratio has steadily declined with only a slight uptick corresponding to the period in which the government employed temporary census workers.
With the enactment of the Democrats’ agenda, American workers in every demographic group have lost jobs, but certain groups have been more negatively affected than others. African-American adults, for example, have experienced an especially acute unemployment rate. From January 2007 to July 2010, the number of employed African-American adults has fallen from 59.5% to 51.9%.
President Obama is fond of blaming the “failed policies of the past” for the weak economy. He regularly overlooks the fact that these job losses and the overall economic decline occurred while Democrats ran Congress, beginning in 2007 while he was a Member of Congress. Last week at a Chicago fundraiser for Democratic U.S. Senate candidate Alexi Giannoulias, Obama characterized the upcoming 2010 elections as a choice between “the failed policies of the past” and the Democrats’ progressive policies.
While President Obama has been criticizing the so-called “failed policies of the past,” he and his administration have been adopting numerous policies from President Franklin D. Roosevelt’s administration (1933-1945). Recent studies over the past decade have proven not only that FDR’s policies failed to alleviate the nation’s economic woes, but that they were actually counter-productive, driving the U.S. further into the Great Depression.
Despite the failures of FDR’s policies to create jobs or stimulate the economy, President Obama and the Democrats in Congress remain committed to making the same mistakes FDR’s administration made by increasing taxes and expanding government payroll at the expense of creating private sector jobs.
A strong adherent of the Progressive era’s failed policy ideas, President Obama is borrowing FDR’s tax policy ideas. Treasury Secretary Timothy Geithner recently stated that he believes it is imperative to end the Bush tax cuts on the wealthy in order to balance the budget and address the growing deficit. Secretary Geithner also said tax cuts are “…not the prescription the economy needs now, and the country can't afford [them].” In these instances, Geithner echoes President Franklin D. Roosevelt’s sentiments behind his Wealth Tax of 1935, which allowed the federal government to tax wealthy Americans at the confiscatory tax rate of 75%. (Predictably, the tax hikes in the mid-1930’s did nothing to encourage economic growth or spur entrepreneurship.)
The government takeover of America’s health care system, ObamaCare, is further evidence of the Democrats’ misguided trust in tax increases to solve the country’s economic crisis. The new healthcare law contains numerous tax increases on small businesses and individuals, including:
* Employers with more than 50 employees who do not offer health insurance will be forced to pay an annual $2,000 tax per employee.
* Medical companies that manufacture life-saving medical technology will be forced to pay a 2.3% excise tax.
* The individual mandate to carry health insurance has a corollary punitive tax to compel individuals to purchase health insurance. (The Obama Administration in federal court now admits that the individual mandate is itself a tax imposed by the federal government.)
While the Obama Administration frequently promotes the new healthcare law as one that will increase jobs, Democrats have failed to explain how higher taxes and financial burdens for small-business owners could possibly create jobs. The unfortunate reality is that these tax increases have already caused a hiring freeze in many sectors, as small-business owners feel less secure about their escalating tax burdens.
In addition to the tax increases, Democrats are also experimenting with another failed policy from FDR’s playbook – expanding the government’s payroll. President Roosevelt believed all jobs were created equal, regardless of whether they were in the private sector or within the government. President Roosevelt launched the Public Works Administration (PWA) in the early 1930’s to put the unemployed to work on federal projects, including building dams, canals, and tunnels. The PWA quickly spent more than six billion dollars on 13,000 federal labor projects.
While the Public Works Administration certainly created work, it failed to create long-term productive jobs. President Obama’s team, following in FDR’s footsteps, fails to grasp the distinction between “work” and “productive jobs.” The “shovel-ready” projects that the Obama Administration and Democratic leadership have touted are reminiscent of FDR’s public works projects. In the same way that FDR’s federal work programs failed to achieve long-term economic success or foster competitively-priced labor, we can expect to see the same results with the numerous shovel-ready projects across the country. Obama’s federally-funded work projects are expensive, often unnecessary, and fail to stimulate the private sector, which is the foundation for long-term economic growth.
If Obama truly hopes to jettison the “failed policies of the past,” he should start by rejecting the job-killing policies of the Great Depression era. In spite of the bad news from the most recent jobs report, Team Obama appears willing to maintain counter-productive policies in pursuit of ideology, rather than proven policies that would go a long way toward stimulating the economy.
***Shonda Werry is a former staffer at the Senate Republican Conference from 2004 to 2007, and has extensive public policy experience. She is a graduate of the University of Chicago and holds a Master’s Degree from Johns Hopkins University.
