A year ago Barack Obama inherited a recession brought on by financial panic following the collapse of the housing bubble. The market crash was made worse by Wall Street shenanigans and recklessness at Freddie Mac and Fannie Mae. Job losses followed.
In response, Obama pushed through a stimulus bill that went well beyond the borrowing done by George W. Bush in his last months in office. In fact, Obama and the Congress borrowed an additional $787 billion to infuse the economy with fresh job-creating cash.
The president warned us that without this borrowing, unemployment might reach double digits. Yet with the stimulus, unemployment has soared from 7.6 percent to 10 percent. That translates into over 4 million jobs lost in 2009 alone.
In reaction, an embarrassed administration continues to cite hypothetical jobs saved, rather than the actual number of jobs lost this year. Just this week senior White House adviser Valerie Jarrett, press secretary Robert Gibbs, and senior White House adviser David Axelrod variously claimed “thousands and thousands,” “1.5 million,” and “2 million” jobs saved. If the White House insiders can’t get their theoretical numbers straight, how can anyone else?
Why the continual job losses?
First, the government can create only so many jobs by borrowing and spending. It is less efficient than private enterprise in reacting to market needs — new products, new services, and new consumer tastes. Higher federal budgets eventually translate into more bureaucrats to shackle the private sector with more regulations that discourage innovation and experimentation.
In contrast, the U.S. Small Business Administration claims that small businesses employ about half of all working Americans. Yet building contractors, orthodontists, local real-estate agents, and small software companies (to name just a few types of small businesses) in the last year have not been convinced that it is time to start buying new equipment and hiring more employees to gear up for increased consumer demand.
Why the continued depression among employers?
Many may suspect that the administration does not appreciate how hard it is to be self-employed — an understandable conjecture when neither the president nor many in his cabinet have had careers outside government or academia. Tenure and near-automatic annual pay raises do not exist in the worlds of the insurance agent, farmer, or trucker.
Instead, when employers listen to the president’s grand ideas for health-care reform, they must quietly cringe at increased costs per worker. When they hear soaring rhetoric about cap-and-trade energy policy, they must silently fear higher power costs.
Worse still has been the promiscuous talk this past year about all sorts of higher taxes.