President Barack Obama has had his say on job creation.
In his speech to a joint session of Congress Thursday evening, Obama outlined a plan that is not all that different from the one he put in place in the beginning of his presidency. Relying heavily on new government spending, the president wants to use tax dollars to once again try and stimulate the U.S. economy.
[See a collection of political cartoons on the economy.]
It probably won't work any better than Stimulus I did. After spending close to $700 trillion on projects that were supposed to be "shovel ready" but weren't, the economy actually lost more than 3 million jobs. Stimulus II, the American Jobs Act is, at just under $500 billion, mercifully cheaper than its antecedent but is still grounded in largely outdated and disproven economic theories that will do little to bring unemployment down.
Writing Friday for National Review Online Douglas Holtz-Eakin, the former director of the non-partisan Congressional Budget Office said,
We got another speech with fundamentally mediocre substance. Indeed, even by late August Macroeconomic Advisers was warning that a similar package would generate under 40,000 new jobs per month between now and the end of 2012. This package is 'bigger' and would like get scored differently, but the bottom line would be the same...
We knew in advance that the president wanted to spend nearly another half trillion dollars and not move the dial on unemployment.
Indeed, the reaction by the financial markets has not been favorable. They understand that more of the same from policymakers—another stimulus—is going to produce more of the same results—unemployment somewhere north of nine percent.
[See an opinion slide show of 10 wasteful stimulus projects. ]
There are other ways to restart the engine of American job creation, as the Competitive Enterprise Institute suggests in its own plan, which it released hours after the president had finished.
CEI's Ten Point Plan to Create Jobs, the group said in a release, is focused on stimulating real market growth through deregulation and, unlike Obama's plan, will also cut government spending.
The plan, as follows, is an energetic effort to change the way the federal government does business and to remove barriers to economic growth that have been put in place over the last several years.
1. Repeal financial "reform" laws, such as Dodd-Frank and the Sarbanes-Oxley Act that are causing economic uncertainty and dissuading businesses from expanding, investing, and hiring for new projects.
• The 2010 Dodd-Frank financial reform bill has significantly increased costs for credit unions and community banks. The Sarbanes-Oxley Act of 2002 is still crippling the ability of smaller companies to raise capital by going public. Repealing these financial regulations would allow businesses to redirect time and resources toward expanding their enterprises and increasing their workforces. A 2011 SEC study found that the first-year costs of complying with the Sarbox's "internal control" mandates alone can total almost 80 percent of a smaller company's assets. Repealing these financial regulations would allow businesses to redirect time and resources toward expanding their enterprises and increasing their workforces.
2. Permanently withdraw proposed or recently finalized federal environmental regulations that are forcing existing power plants and energy-intensive industrial plants to close and blocking investment in new plants.
• Recent EPA regulations have caused a spike in compliance costs for energy companies and industrial manufacturers, forcing companies to scale back on jobs and production. The government should withdraw environmental regulations which impose excessive compliance burdens on business, including:
- Clean Air Act provisions regulating greenhouse gas emissions, cross-state pollution, cooling water intake, regional haze, the Utility MACT (Maximum Achieveable Control Technology), boiler MACT, and cement MACT;
- The Resource Conservation and Recovery Act's coal ash rule;
- The Utility MACT (Maximum Achievable Control Technology); and
- Fuel efficiency standards for heavy and medium duty trucks.
[Check out our new energy intelligence blog.]
3. Reform federal labor laws to stimulate hiring in the private sector.
• Several recent labor rulings and regulations have transferred undue influence to union lobbyists and interfered with private business practices. To encourage businesses to expand and invest in new projects, the government should
- Suspend Davis-Bacon contracting rules in areas affected by natural disasters to aid reconstruction. Follow this up with repeal of Davis-Bacon.
- Repeal the Obama executive order calling for project labor agreements (PLAs) on federal construction projects. PLAs stack contracting rules in favor of more expensive unionized companies.
- Stop the National Labor Relations Board's multi-front assault on business. The NLRB recently prosecuted Boeing, a private company, for locating a new plant in a right-to-work state. The government should end such NLRB interferences in the private sector, and should also pull back the board's efforts to enact electronic card check by regulation.
4. Unlock American natural resource production on federal lands and expedite environmental permitting of natural resource projects on federal, state, and private lands.
• America's natural resources are a largely untapped source of potentially hundreds of billions of dollars of economic activity. The government should
- Open federal offshore areas and federal lands in the Rocky Mountain West and in Alaska's North Slope to oil and gas production;
- Re-open federal lands that have been withdrawn from mineral entry and re-open the National Forests to timber production under the Multiple Use and Sustained Yield Act;
- Sell stranded federal lands with economic potential, including valuable unused parcels in urban areas;
- Expedite permitting of proposed mining and energy projects on federal, state, and private lands.
[Read the U.S. News debate: Should offshore drilling be expanded?]
5. Raise or eliminate the cap on credit unions lending to the small businesses of their members.
• In 1998, at the behest of certain bank lobbyists seeking protection from competition, Congress arbitrarily capped business lending by credit unions at 12 percent of their assets. This law is choking off a crucial source of capital to small businesses at a time that it's desperately needed. There is no safety and soundness reason for this cap, as business loans are not inherently more dangerous than mortgages and auto loans. Congress should pass the bipartisan Small Business Lending Enhancement Act raising the cap to 27.5 percent of assets, and ultimately get rid of the cap altogether.
6. Freeze antitrust regulation.
• The Department of Justice's ongoing lawsuit against the AT&T/T-Mobile merger is a perfect example of the potential damage antitrust actions can wreak on dynamic markets and infrastructure investment. From mobile broadband to Internet search to software, interfering in competitive market processes is hindering the evolution of entire sectors of the economy. Antitrust regulations are inherently anti-infrastructure and undermine large scale competitive shareholder responses that expand U.S GDP.
7. Modernize America's intellectual property laws to reflect the industries and technologies of the 21st century.
• U.S. copyright and patent laws are designed to foster innovation by spurring the creation of new inventions and expressive works. Unfortunately, our intellectual property laws often hinder these interests, shrouding innovative sectors in costly legal uncertainty. Congress could fuel job creation by reforming liability rules for so-called "orphan works," reducing copyright terms, clarifying and narrowing the scope of patentable subject matter, and reforming damage awards in IP infringement lawsuits.
8. End taxpayer subsidies for wasteful, inefficient "green" jobs.
• Huge sums of taxpayer dollars are currently being wasted in a government campaign to force the creation of an efficient, self-sustaining "clean technology" industry. Green companies like Evergreen Solar of Massachusetts have received millions in government subsidies and tax breaks, only to quickly fold and cut the very jobs they were paid to "create." Green firms should succeed or fail on their own merits – as long as they need to be propped up by government supports in order to survive, they will be unable to promise job security or real economic growth. To the extent that such sectors are propped up by taxpayers, they destroy existing jobs by artificially distorting energy markets.
[Read: Obama's Green Jobs Agenda Already Proven to be Ineffective]
9. Liberalize network and infrastructure industry regulation.
• Our great infrastructure firms are artificially segregated into regulatory silos (telephone, electricity, water, sewer, cable, railroad, airline, air traffic control). Deregulation would enable these firms to efficiently and creatively collaborate to build new power lines, fiber-optic networks, roads, bridges, airports, satellite systems, toll roads and more to bring capitalism and infrastructure wealth creation to the next level.
10. Streamline the visa process for highly-skilled immigrant workers in special occupations.
• Hundreds of thousands of U.S. citizens now work for successful companies launched by immigrants over the past two decades. As of 2008, one-third of all Silicon Valley companies were founded or co-founded by Indian or Chinese nationals who were able to legally work in the U.S. with an H-1B visa or green card. Allowing foreign entrepreneurs and innovators into this country benefits our economy and creates new jobs for Americans by opening new markets and spurring economic growth.
- Read Doug Heye: Obama's Jobs Plan is Just Stimulus Part 2
- Check out our editorial cartoons on President Obama.
- Read Rick Newman: What Obama Can and Can't Do to Create Jobs
Reader Comments Read all comments (26)
Richard Dothan of SC 7:37PM September 16, 2011
Bill Hedges of MO 8:57PM September 12, 2011
Alex of TX 2:21PM September 12, 2011