Did the big March jobs report put President Obama back on the road to reelection? If so, he can thank the GOP, whose tax cuts saved him from himself.
You could hear cheering all the way from the West Wing when the Labor Department showed a 216,000 gain in nonfarm payrolls, the biggest number in quite some time. Plus, the unemployment rate continued its decline to 8.8 percent. Not so long ago it was nearly 10 percent.
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Corporate payrolls have now increased by 478,000 for the first three months of the year. Over the past three months, the average payroll gain has been 159,000, which is more than twice the monthly gain in 2010. If payrolls stay on track, that would mean nearly 2 million jobs created in 2011.
So sure, the White House must be very happy. In fact, everybody should be happy at an improving jobs picture.
But here’s the sublime irony. The wake-up in job creation is a function of Republican policy. After all, for two years the Obama Democrats spent themselves into oblivion, with over $1 trillion of so-called big-government stimulus. Didn’t work. By the end of last year, that failed stimulus wore off, and it was replaced by Republican tax cuts.
Remember that in mid-December, after his election shellacking, President Obama signed a deal that extended the Bush tax rates across the board. The top marginal rate stayed at 35 percent. Investment tax rates for cap-gains and dividends held at 15 percent. Most business people I know — folks who work in both large and small companies — welcomed the tax-rate freeze as a sign that maybe the war against growth, capital formation, and small business was either coming to an end or at least a two-year truce.
So, presto, the jobs numbers start jumping in the new low-tax year.
The most important tell-tale sign for jobs is the household employment survey, which includes most of the nation’s small businesses. It’s the survey that signals real turning points in job creation since it’s the small-business owner-operators who are most sensitive to changing marginal tax rates.
And clearly, tax incentives matter: For March, the household survey jumped 291,000. Year-to-date, household employment is up 658,000, and is on track for a 2.6 million gain for the year. This small-business jobs push is also what’s driving down the unemployment rate.
100% Spot on Mr. Kudlow. There is not a single sentence, concept or opinion in this piece that I could argue with if I tried. You are calling it exactly how I see it, that is a first for us. Cheers, here's to you sir!
To the extent there has been some private job creation, Kudlow is right to credit the change in the House. Beyond the extension of the Bush tax cuts, a GOP majority meant there would be no massive new legislative assaults on business activity, which guarantees at least some level of stability. However, I doubt very seriously that it will either last or be enough to help Obama in 2012. For one thing, while the jobless percentage is lower, so is the total workforce. More people continue to drop out, settle for part time or run out of benefits, which is skewing the number. I think Gallop's survey is closer to the mark, with unemployment at 10% and under-employment near 20. The number of new private jobs being created remains anemic, and the soaring cost of gasoline is going to be a dead anchor on growth in coming months, as will the slow implementation of Obamacare. Plus, with inflation and the cost of living accelerating (and it would be much higher if fuel and food were not off the table), consumers' disposable income is already shrinking along with business capital. Assuming the Fed does not plan on turning us into Brazil, interest rates will also have to rise to call back all the funny money being used to support the deficits. Unless the laws of economics have been suspended by some Messianic act of the Chosen One we are inevitably headed for stagflation; and as Jimmy Carter could tell you, that is a high tide to buck.
This is pure magical thinking. For Republicans, merely invoking the words "tax cut" will somehow create jobs, raise revenue, and cure male pattern baldness -- instantaneously.
"GE loopholes" is right! Just as important as tax cuts is that we start unwinding crony capitalism and corporate welfare. The very people who are most vocal against business lobbying and influence don't understand that overinvolvement of government in business simply invites it, which leads to co-opting and unholy alliances that twist regulation into a monopolistic weapon against small businesses and consumers.
For starters, if people were more aware of the connection between such activity and the undue interference with the functioning of their home environment in so many irritating ways, they might demand legislation to undo it.
Kudlow proposes that the tax cuts are the reason for the increase in jobs for March. Of course he doesn't offer any evidence to support that claim, just partisan rhetoric. If you know Mr. Kudlow's personal history than this article begines to makes more sense.
Remember 94?
Clinton's popularity was in the gutter when the Democrats held Congress. The economy took off after the Republican landslide and Clinton declared the era of big government over.
It seems to me that if the slow economy was somehow GWB's fault, then the sudden reverse should also still be his fault. It would be inconsistent to blame Bush for everything that goes wrong on Obama's watch but take credit when something goes right. Or does this mean that Obama has finally vanquished the Bush effect? In which case, who will be to blame if the unemployment figure goes up again?
I hope the unemployment figure continues to decline regardless of who gets the credit, because that is the kind of decline that is good for the country. I'm just wondering about the timeline for attribution. Do all Presidents get credit/blame for what happens in the first two years (or 2.5 or 3 or whatever) after they leave office? Is the timeline for the economy significantly different from the timeline for foreign policy, or can we expect the Middle Eastern nations to soon have V8 moments and say, "Doh! He's not George Bush! Now we can be pals with America."
I'm sure every President of either party tries to blame the bad on his predecessor and take credit for the good. I just want to know, going forward, when does Obama own the whole game.
He certainly needs a lot of vacations, and isn't a remarkably better President for taking them, leading me to think he's like someone who runs the 100-yard dash but takes a rest stop every 5 yards -- not the guy you want to put in the Olympics. But maybe all this time off is so others have to make the big decisions and he can claim he was ill-advised.
I keep trying to find a loophole for why he is not the most incompetent President ever, but the best I can come up with is that he is supremely competent but has a negative agenda. That's worse.
Regardless if the tax cuts helped or not (certainly didn't hurt) the 8.8% jobless rate is very deceiving. Almost 2 million people have GIVEN UP looking for work and are not being counted. And many of the new jobs are temp jobs, paying below average with no benefits. But the Obama-worshipping media are happy to report that his economic plan (?) is working. I knew that things would get better when the GOP took the House and gained enough Senate seats to stop the Obama job-killing agenda. That said, Obama's minions in EPA, OSHA, DHS and other of the countless agencies are busy writing idiotic regulations that will stifle growth and keep companies busy just trying to read and comply with them. And just wait till ObamaCare kicks in...
IrregularBowels: The relationship between low taxes and higher economic growth rates has been well known for about 50 years. If you have evidence that shows that basic economics has been overthrown, please present it.
relaxok: The jobs created by the Bush tax cuts occured back when Bush was president. Perhaps had you been paying attention at the time, you would have noticed.
From the perspective of a 'man on the street' and business owner for 20 years, I see absolutely no improvement whatsoever. Go ahead Obama - lie til you are blue in the face-8.8% yeah, might as well say 0% unemployment - both numbers being equally fictitious. This is the Carter era all over with a shade of evil.
I was paying attention. I don't buy it. The GWBush years were not years of job growth, beyond the post-9/11 trough and comeback. Certainly you can't point to his tax cuts and say they resulted in great things. They just didn't.
Also, corporations _do not_ hire people just because they're doing better financially - that REDUCES profit. They only hire people when they need to.. productivity gains = fewer employees needed. And they've gotten very used to employees having to do the work of two people in the downturn.
Lower taxes on corporations do not necessarily mean new jobs added.
I find it constantly amusing that the collectivists who believe they can influence every aspect of human behavior in ways they believe desirable by writing a tax code that would stretch from here to the moon simultaneously deny that raising or lowering rates has any effect whatsoever.
Those who point out that lowering rates and allowing people to gain more from their own labor always leads to more goods, services and production have history and empirical evidence on their side. Nor would we deny that manipulating the tax code in other ways does indeed influence people's actions and decisions, often in an irrational manner. We would only argue that no one has the ability to predict all the unintended consequences of those interventions, and that what one persons sees as good another might see as not so much. Your idea of heaven might be far different from mine.
The difference is that I do not believe I, or anyone else, should have the power to use gvt. coercion to construct a particular type of Utopia, while the left sees it as its ultimate mission.
As others have pointed out, following the Bush rate reductions --which despite protestations from the left were weighted far too heavily in favor of lower income earners -- we enjoyed one of the longest periods of steady job growth and expansion in recent history. That is plain, incontrovertible, supportable fact. Arguing that the world is not round does not make it flat.
Which brings up something else which has always amused me. The ideological left as a rule shrinks from religion -- and in the case of actual communists, suppresses it -- while at the same time adhering to economic and social notions so thoroughly discredited that only someone who clings to them in blind faith can continue to defend them. In that respect, collectivism is a religion, and as the civil libertarians would tell us if they were consistent, it has no place as a governing philosophy.
Here's my private sector solution to the unemployment problem:
I've written a proposal that uses entrepreneurship on a massive scale to tackle the ongoing high unemployment problem, which has left millions and millions of Americans grasping at the last vestiges of the American Dream. Long-term unemployment is at record levels and the pace of the tepid "recovery" from the Great Recession will require years to return the country to full employment. In the mean time, government coffers are depleted while straining to address the extreme hardship, and tax revenues are greatly diminished because so many jobless folks cannot pay taxes.
My proposal describes an entrepreneurial mechanism through which we can fund a massive number of new business ventures (to create a massive number of new jobs) by tapping the financial power of Wall Street. It is a private-sector proactive approach to remedy the high unemployment problem. Titled "A Modest Proposal to Save the American Economy: Entrepreneurial Blitzkrieg as Job Creation Vehicle," the proposal has been published online at Salem-News.com (and various other places):
The "Modest Proposal" is perhaps a bit cynical, proposing to hand a new form of financial nitroglycerin to the same folks who crashed the economy in 2008, or perhaps a bit Robin Hood, with its ideal of empowering the American proletariat via new business creation. Nonetheless, the approach described in the proposal uses existing financial industry architecture to transfer enormous sums of funding from those who have it (Wall Street) to those who need it (Main Street) – without requiring government tax incentives or subsidies. This is an entrepreneurial mechanism that perhaps even Ayn Rand (gasp!) would embrace.
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