Obama's Mixed Economic Signals Won't Create Jobs

Washington needs more certainty on its policies if it really wants to slow unemployment.

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Don Nickles was a U.S. senator for 24 years, serving as assistant Republican leader and on the Senate Budget and Finance committees. He is a founding partner of the Nickles Group, which provides legislative and policy consulting services on issues including taxes, energy, and healthcare for clients ranging from Fortune 500 companies to nonprofit coalitions. 

Last week's unemployment report reflected a slight improvement in the overall jobless figure from the previous several months, but did not inspire a lot of optimism. The number of Americans falling into categories of "long-term unemployed" and "discouraged workers" again ticked upward. As former Treasury Secretary Henry Paulson astutely noted, one thing that will help is more certainty coming out of Washington.

Much has been made of the president's intention to shift his message to "jobs." But the mixed signals contained within the administration proposals are doing nothing to bolster employer confidence. 

For example, the president suggests some good tax incentives such as extended bonus depreciation and expensing for small business investment. On the other hand, his new budget--adjusted to include the House-passed climate change bill he supports--increases taxes by $2.9 trillion over the next 10 years. A huge portion of that massive tax hike will be borne by small business owners, leaving little extra money to hire new workers and killing the incentive to grow or expand business. 

Meanwhile, as the president rolls out new proposals labeled economic stimulus, the bureaucrats in his agencies plot regulatory nightmares that will kill jobs. There is no better example than the Environmental Protection Agency, which is rushing to produce a rule this spring that will regulate greenhouse gases via the Clean Air Act. I helped write the Clean Air Act, and can tell you with certainty it was never intended to regulate carbon dioxide, yet that's exactly what the president's EPA wants to do, and it will be a huge drag on economic growth and job creation. 

There is no amount of stimulus proposal or passionate speeches about job creation that could overcome that kind of massive burden on the economy. And these mixed signals are having an impact. As a recent study by the National Federation of Independent Business shows, small business owners identify "political climate" second only to economic conditions as the top reason for keeping orders low and employment stagnant last year. 

Business owners need to hear ideas from Washington that will gird the foundations of our economy, not foist more weighty bureaucracy and taxation on top of it. There are many things Congress could do quickly and easily to help. 

Congress should immediately extend the business tax extenders that expired in December, preferably for two years or more. Businesses need to be able to rely on incentives like the active financial services exception, the R&D tax credit, and leasehold improvement incentives in order to plan, hire, and expand; and individual taxpayers who deduct state and local sales taxes shouldn't have to worry whether that deduction will be extended. These are well-established current policies, and Congress should extend them right away. 

Second, the strings should be clipped from the money Congress approved last year for infrastructure and other investments. The projects flowing from those funds were hamstrung by limiting them to bids by unionized companies, eliminating over 80 percent of the workforce from consideration. Requiring Davis-Bacon and project labor agreements is a nice payback for unions but wastes billions of dollars and costs countless jobs. 

On the regulatory front, rather than growing job-killing bureaucracy, there are many things the president could do to promote job creation that don't cost a dime. For example, Louisiana Sen. David Vitter has a "no-cost" stimulus plan that would accelerate domestic oil and gas exploration, expedite permitting of new nuclear plants, and suspend environmental roadblocks that are stopping the creation of new jobs.