What sweeping new initiative can the Federal government enact to create X number of jobs? This question – frequently asked by policymakers in Washington – helps illustrate why the quest for jobs remains painfully elusive.
The Federal government must get the macroeconomic fundamentals right, fostering a more conducive climate for the private sector to grow and create jobs. The Federal government can – but should not – try to endlessly micromanage the economy under the misguided belief that we ought to take money from the private sector (with higher taxes or more borrowing), strain it through Congress and the bureaucracy, and deploy it among government programs and government jobs. Centralizing power in Washington, expanding government’s reach into all sectors of our economy and more and more aspects of our lives, creates a more hostile environment for private sector job creation.
Deep skepticism should accompany government initiatives that come with a promised number of jobs. As part of the sales pitch, Speaker Nancy Pelosi argued that the health care overhaul was “about jobs”, and promised the law would create “4 million jobs – 400,000 jobs almost immediately.” In celebrating the passage of cap-and-trade in the House, the legislation’s author, Rep. Edward Markey noted, “This legislation will create jobs by the millions.” More famously, the stimulus legislation promised, according the White House, to save or create 3.5 million jobs by the end of this year and keep unemployment below 8%. Counterfactual arguments aside (i.e., ultimately, it’s hard to know exactly how the economy would have performed without fiscal stimulus), it is disappointingly clear that the stimulus failed to deliver on its promised results.
As I argued this past week, Americans rightfully demand “for government to play some positive role in their lives.” The question is not whether Congress should take action to address the economy, but what form such action should take. We remain in need of true patient-centered health-care reform, all-of-the-above energy solutions, transparent and effective financial regulations, and serious entitlement reform to strengthen our safety net. Legislative action is needed to restrain the explosive growth of government spending. Legislative action is needed to prevent massive tax hikes from hitting job creators at the end of the year. Last week, House Minority Leader John Boehner put forward a common-sense plan that does both: cuts spending and stops tax hikes. (Source: Washington Post)
Congressman Ryan does an excellent job of laying out the need to get the fundamentals right if there is going to be TRUE job creation and a TRUE economic recovery.
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