What Recovery Summer?

Heritage Foundation ^ | August 6th, 2010 | J.D. Foster

[Son House]

The Obama Administration announced “Recovery Summer” in June to highlight the expected gains in jobs and economic strength resulting from Obama’s stimulus.. Well, maybe next summer.

Initial estimates from the Department of Labor (DOL) suggest the economy shed a whopping 131,000 jobs in July while employment for the prior two months was revised down by 97,000 jobs. The unemployment rate held steady in August at 9.5 percent despite a drop in employment, because the number of people in the workforce also declined as workers appear to be giving up in the face of persistent high unemployment.

To an important extent, the wild swings in employment in recent months are due to the decennial census that led to a steady but temporary rise in government employment, a spike upward in government employment in April, and now two consecutive months of downward plunges, resulting in 454,000 fewer government jobs. In the private sector, job growth increased smartly in April and May but has since dropped to a very anemic three-month average growth rate of about 51,000 jobs.

This data confirms once again that the $862 billion Obama stimulus legislation—as well as all the subsequent budget-busting legislation Congress has enacted under the rubric of “jobs” bills—has failed, as expected.

The weak jobs data also mean the Obama jobs deficit—the difference between current employment and the jobs Obama promised to create by the end of 2010—now stands at 7.6 million workers. That’s 7.6 million fellow citizens who were promised jobs if Obama was elected and his economic program instituted and are still out of work. Unfortunately, continued weakness in the economy indicates they will continue to be out of work for months to come, perhaps as long as Obama adheres to his ideology rather than opting for proven solutions.

Obama Failing to Make Good on Jobs Promises

The President’s original target for jobs creation set during the campaign in the fall of 2008 was 2.5 million jobs. But as employment fell at the end of 2008, he increased the employment target by 1 million to 3.5 million jobs. At the time, employment stood at about 135.1 million, according to the DOL’s most commonly used measure. This establishes the Obama jobs target for December 2010 at 138.6 million. It also establishes a basic trajectory for employment that the economy would need to approximate to hit that target.

According to the latest jobs report, total U.S. employment stood at 130.2 million in July, which means the cumulative Obama jobs deficit stands at 7.6 million.

Accompanying his jobs promise, the President also emphasized accountability and measuring his presidency by results. By his own official forecast and by his own standard, the Obama jobs deficit attests to the failure of his policies.

Why Has the Obama Stimulus Failed?

The centerpiece of Obama’s short-term stimulus program was $862 billion in poorly targeted tax cuts and ineffectual spending increases he signed into law in February 2009, since supplemented by a number of smaller budget-busting “jobs” bills, including the most recent, a $26 billion state aid package. Obama had one big shot at really helping the economy and he took it, holding nothing back. As short-term economic stimulus, it was doomed from the outset because it was based on the erroneous assumption that deficit spending can increase total demand in a slack economy.

The theory underlying Obama’s stimulus was that the economy was weak because total demand was too low. The suggested solution is then to increase demand by increasing government spending, exploding the deficit in the process.

This theory of demand manipulation through deficit spending ignores the simplest of realities: Government spending must be financed. So to finance deficit spending, government must borrow from private markets, thereby reducing private demand by the same amount as deficit spending increases public demand. In effect, the theory says that if I take a dollar from my right pocket and put it in my left, then I’m a dollar richer. No wonder it always fails.

Obama Tax Hike Weakening Job Creation

The federal government cannot stimulate the economy in the short term by increased borrowing and shuffling demand across the economy through wasteful deficit spending, but government can stimulate the economy by improving incentives and the general economic environment. Unfortunately, Obama’s promised tax hike is already draining the vitality from the economy and job creation.

Businesses invest when they are confident enough to take risks in pursuit of opportunity. Individuals and businesses across the nation see tremendous opportunities for starting new businesses, investing, hiring new workers, expanding into new markets. Many are holding back, however, due to concerns about the economy, while others are holding back due to concerns about the threatening policies from Washington, most especially the tax hikes Obama promised and Congress intends to deliver.

For private sector job creation to accelerate to bring down the unemployment rate and the Obama jobs deficit, step one is for Washington’s job destruction machine to take a long vacation. Facing such a weak economy, the intentions of Obama and his congressional allies to raise tax rates on small businesses, on capital gains and dividends, and through the death tax go well beyond ideology to economic policy malpractice. Obama should call on the Congress to forego all tax hikes—especially those on work effort, small businesses, savers, and investors—least until the economy has created enough jobs to return the country to full employment.

[Son House]

"jobs deficit", wonder if that will catch on like 'jobs saved or created'?

[Son House]

Recovery Summer

[Farmer Dean]

988,000 jobless claims in the last 2 weeks.That’s some jobs deficit right there.

[ErnBatavia]

Our county just yesterday reported current unemployment at 15.3 percent....this is Riverside County, second largest by size in California, and high on the list population-wise.

[dufekin]

This is “Recovery Summer.” The economic depression is “recovering this summer” the downward momentum that it lacked during the past year of stagnation. And Obama promised to “save or create” 3.5 million jobs, not to maintain existing job levels and add a net of 3.5 million more jobs. To fulfill his promise, he need only keep total employment at or above 3.5 million throughout his two terms. Yeah, that means an unemployment rate somewhat under 97%, but that’s all he promised.

[Clintonfatigued]

I’ve been wondering where the recovery is, myself.

[silentknight]

Come on Freepers. Really? Why do we use the government numbers. We know they are wrong.

You can pretty much double whatever number they tell you.

http://www.shadowstats.com/alternate_data

Real numbers.

The government numbers are a joke and we all know it.

[Chode]

[Willie Green]

I’ve been wondering where the recovery is, myself.

Thanks to Dubya's "free trade" agreements, most of the recovery occurs offshore where all the wealth creating jobs were outsourced.
The only lasting benefits that Americans receive are from those few, modest investments that we're making to our transportation infrastructure.

We really need to implement a 10~15% revenue tariff on ALL imported goods, while lowering other forms of domestic taxation.
That would have an immediate effect of replenishing our Treasury while also providing incentive to bring wealth creating jobs back to America.
And we should focus those jobs on creating energy efficient infrastructure like nuclear power and passenger rail systems so our domestic economy remains competitive in the 21st Century.

[exDemMom]

According to the latest jobs report, total U.S. employment stood at 130.2 million in July, which means the cumulative Obama jobs deficit stands at 7.6 million.

Why, look at that! Obama saved 130.2 million jobs!

[algernonpj]

Thanks to Dubya's "free trade" agreements, most of the recovery occurs offshore where all the wealth creating jobs were outsourced. The only lasting benefits that Americans receive are from those few, modest investments that we're making to our transportation infrastructure. We really need to implement a 10~15% revenue tariff on ALL imported goods, while lowering other forms of domestic taxation. That would have an immediate effect of replenishing our Treasury while also providing incentive to bring wealth creating jobs back to America. And we should focus those jobs on creating energy efficient infrastructure like nuclear power and passenger rail systems so our domestic economy remains competitive in the 21st Century.

When the globalists said there would be winners and losers, they forgot to mention that the winners would be their global corporations,and the losers would be the middle class of the US.

A portion of those 125,000 new legal workers (a combination of green cards and guest workers)that enter the US each month, are the result of those lovely 'free trade' agreements that contained provisions that overrode our immigration law.

The effect of 'guest workers' on technical fields has been especially devastating from both an economic and national security perspective.

[AlphaOneAlpha]

It would appear that Recovery Summer should be re-named Relapse Summer by those two economic giants Obama and Biden.

[Clintonfatigued]

You make a very interesting point. 15% might be too much given the state of the economy, but your overall idea is sound. I’m sure the Founding Fathers, who weren’t supporters of globalism, would approve.

[Son House]

Thanks to Dubya's "free trade" agreements

There were NAFTA and GATT, I'm remembering they were both under Clinton#1, but you'll have to refresh me on any "free trade" agreements Bush made?

[algernonpj]

"Thanks to Dubya's "free trade" agreements"

There were NAFTA and GATT, I'm remembering they were both under Clinton#1, but you'll have to refresh me on any "free trade" agreements Bush made?

I had a better list, which seems to have gone missing. So here's a quick re-creation:
2001 Jordan FTA
2004 (CAFTA-DR) Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua) and the Dominican Republic)
2004 Chile FTA
2004 Singapore FTA
2005 Australia FTA
2006 Bahrain Free Trade Agreement (FTA)
2006 Colomba FTA
2006 Morocco FTA
2007 Peru FTA
2009 Oman FTA

In addition there are 'informal' free trade agreements under to aegis of the Office of the U.S. Trade Representative (USTR) (part of the Executive Office of the President). The head of USTR is the U.S. Trade Representative, a Cabinet member who serves as the president’s principal trade advisor, negotiator, and spokesperson on trade issues.

Trade policies with China, India, Japan to name a few are transacted through USTR.

[Son House]

Thanks for that list. I have a co-worker, who will argue about anything, once use Bush’s ‘trade agreements’ as the problem for the bad economy, so if I seemed skeptical, it was because he was using it as a distraction to the tax and regulation topic, because he couldn’t compete with what little I could articulate as my understanding