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Can Washington Find the Jobs?
Looking forward.


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Richard Vedder
The best thing the politicians can do to heal the economy is extend the recess — the economy will improve if the disruptive policies of Washington are put on moratorium –say to early next year. Let’s give all the politicians an undeserved but economically much needed extended vacation. In the first month of the Obama presidency, they gave us a destructive and costly stimulus package, in the last month they destroyed well over a trillion dollars in wealth by making a mess of the debt issue, and in between they gave us such turkeys as Obamacare and Dodd-Frank.

One little thing they can do when they get back to D.C. is to not extend unemployment benefits: The 99-week benefit period probably adds two to three points to the unemployment rate.

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The key to a return to fiscal sanity is finding a presidential candidate who can articulate that short-term pain (reduced entitlements, higher interest rates, etc.) is a necessary prerequisite to resuming long-term growth. What this means is we need a charismatic, articulate, slightly unorthodox new political face on the scene. Obama’s negatives show he is eminently beatable, but it is harder to turn painful policy prescriptions into a message of economic salvation than to do what Obama will promise — more of the same, blaming the GOP for any of our problems.

— Richard Vedder is an adjunct scholar at the American Enterprise Institute.


William Voegeli

Where are the jobs? According to the Bureau of Labor Statistics, they’re in the private sector. Total seasonally adjusted private-sector employment increased by 1.8 million between July 2010 and July 2011. That’s not a hiring surge, but it’s respectable growth. Over the same period, however, government jobs have decreased by 547,000 and the population has grown, which means overall employment is treading water. Some argue that the declining public-sector employment means we need a second stimulus, so states and municipalities can stop the layoffs and start the hiring. That would be exactly the wrong approach, however.

“The overriding problem that most wealthy nations face,” according to The New Republic, “is they have promised far more in public sector spending than they are currently willing to pay for in taxes.” One of those promises in America has been for public-sector job security, fringe benefits, and pensions that run far ahead of what state and local tax bases can support. New York City, for example, paid $1.5 billion to meet its pension obligations in 2002, or 6 percent of its budget, and expects to pay $8.5 billion, or 18 percent of its budget, in 2012. Pittsburgh’s pension system is so underfunded that the state government is threatening to take it over, which would force the city to increase its pension contribution to more than one fourth of its annual budget, a change that would result in extensive layoffs of current city workers.

When states and cities eliminate truly redundant public-sector jobs, that’s a temporary loss for the job market but a long-term and necessary gain for the economy. When jobs disappear that diminish the quality and quantity of essential public services, however, that’s bad for both the job market and the nation, generally speaking. Eliminating some public workers’ jobs so that other public workers will see their benefits, job security, and pensions held harmless is indefensible. Some 16,000 public pensions in California, for example, exceed $100,000 per year.

Rationalizing employee compensation would allow governments to hire and retain the personnel they need at a price their taxpayers can afford. Most American union workers are now government workers. The situation won’t get better until older workers relinquish parts of their unsustainably generous benefits packages for the sake of younger workers threatened with layoffs. Solidarity forever.

— William Voegeli, a contributing editor of The Claremont Review of Books, is the author of Never Enough: America’s Limitless Welfare State and a visiting scholar at Claremont McKenna College’s Salvatori Center.



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