Hope that President Barack Obama had come up with a brilliant means of creating jobs — something big enough to warrant a joint session of Congress — was dashed after Thursday’s salesman-like pitch for another round of massive stimulus spending. Obama cannot create jobs and is likely to cause more debt. Mitt Romney and Rick Perry cannot create jobs. Government cannot pass a law that will fix our economy by spending. It just can’t work. We’ve tried the Keynesian experiments for decades, and they have predictably created the mess we are in.
Jobs are created by the private sector and nothing Obama said will inspire anyone to get busy with activities that create jobs. If the Jobs Act becomes law, Americans will be even more likely to hunker down and guard their cash.
One big element of Obama’s proposed jobs act involves another year-long extension of unemployment benefits. Obama and his advisers reason that unemployment recipients will spend their jobless wages on goods and services, which will create demand in the economy. The demand will give companies reason to produce and hire. The money given to the long-term unemployed will come from others who could use it to consume or to hire if so inclined. It’s another shell game. There is no magical way to convert a redistribution scheme into economic growth. One cannot fill a well with water from the well itself.
Obama says the jobs act would create work by modernizing schools and spending $50 billion on bridges and roads. Again, it takes money out of the economy and puts it back in. Haven’t we tried this? Roads and bridges are to an economy what conveyor belts are to a factory. They facilitate production, but they don’t pay the bills. They must be funded during times of economic growth with the proceeds of prosperity — not during times of economic stagnation when little value is produced.
The plan calls for even more cuts to Social Security withholding taxes, which Obama hopes will give middle-class earners more disposable income, thus causing demand that will result in jobs. That would be great if the cuts could be long term. They cannot be long term because Social Security has obligations to baby boomers who are retiring in droves. If retirees are not paid, they won’t have money to spend and create demand that may create jobs. Again, it’s a redistribution ruse.
The tax cuts Obama proposed would run only through 2013 because government cannot afford them without drastic cuts that Obama won’t consider.
“A major plant started today would be completed roughly at the same time as the proposed tax cuts expire. These tax breaks will do nothing to create jobs today,” said Jeff Macke, founder and president of Macke Asset Management and host of Yahoo’s trading show “Breakout.”
It’s great that Obama sees tax cuts as a means of creating jobs. But only long-term. across-the-board tax breaks and eased regulations will cause Americans to risk capital on job-creating endeavors. They must be funded by limiting government in ways that remove barriers to success. Another shell game is the last thing we need.