Morning Bell: The Obama Jobs Gap Grows Again

LiveJournal Tags: Morning Bell: The Obama Jobs Gap Grows Again

Another month, another 263,000 jobs lost under the Obama administration. According to Bureau of Labor and Statistics data released this morning, the United States economy has lost 3.6 million net jobs since President Barack Obama was sworn into office and the unemployment rate has risen from 7.6 % to 9.8%. It was not supposed to be this way. The experts in the Obama administration promised the American people that the President’s $787 billion stimulus package would create 4 million jobs by the end of 2010. According to the Obama administration’s expert plan, the stimulus was supposed to create or save enough jobs that the unemployment rate would only be 7.8% by this time. Instead unemployment rose last month and is now at a 26-year record high of 9.8%.

When the Obama administration first unveiled their stimulus plan in November they claimed it would create 2.5 million jobs by the end of 2010. At the time BLS reported that U.S. economy employed about 136.1 million jobs. But by January that number fell to 134.6 million jobs. Not so coincidentally, the Obama administration upped the job-creating magic of the stimulus to 4 million jobs by the end of 2010. Putting these numbers together, we can create an objective standard to judge both the President and his stimulus by: 136.1 million plus 2.5 million equals 138.6 million; and 134.6 million plus 4 million equals 138.6 million. So the objective, Obama administration created, BLS data verifiable, jobs accountability number is 138.6 million. Today’s BLS report shows that President Obama is 7.6 million jobs short of his promise to the American people.

To close the Obama Jobs Gap, the U.S. economy would have to go through the greatest 16-month average increase in employment in modern American history. During the peak of the Reagan boom in December of 1984, the U.S. economy added 373,000 jobs a month. Obama would need to create 477,000 jobs a month. That is not going to happen.

So what went wrong? Simply put, Obama’s experts relied on some fundamentally unsound assumptions and now our nation is paying the price in lost jobs and record deficits. Harvard economics professor Robert Barro and his student Charles Redlick released some preliminary conclusions of a study, yesterday, showing that the theoretical foundation of President Obama’s stimulus, the belief that government spending creates a “multiplier effect” that expands the gross domestic product by more than the government spending itself, is not supported by existing empirical evidence.

The Federal government can stimulate the economy in the short term, not by shuffling demand across the economy through wasteful deficit spending, but by improving incentives and the general economic environment. Individuals and businesses across the nation already see tremendous opportunities for starting new businesses, for investment, for hiring new workers, for expanding into new markets. However many are holding back due to existing excessive tax and regulatory burdens. Instead of making this situation better, the Obama administration and Congress seem intent on making it worse by enacting new taxes and regulations on energy and passing health care legislation that will tax businesses for creating jobs and encourage lower wages. It is exceedingly clear that President Obama is going to fall short of his jobs promise, the only question now is how large the Obama Jobs Gap will be.

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