As in every Democratic jobs bill, this one contains more spending for federal highway funding, among other things. The $150 billion jobs bill waiting in the wings calls for still more government spending for welfare and safety-net programs such as Medicaid and a one-year extension of COBRA health benefits and unemployment compensation -- not a good sign that Democrats think this recession will end anytime soon.
The $154 billion House version of this bill is filled with more spending, too, on infrastructure programs and public works, and for assistance for the poor.
What is tragically missing from the Democrats' jobs bills are the kind of pro-growth, pro-job tax cuts to help boost the bottom line for businesses still struggling to survive in a down economy -- for small businesses, in particular. They do not need, nor can many use, tax credits for hiring. They need to keep more of their earnings to survive and to grow before they can begin hiring again. And government can help by reducing their tax rates.
No-nonsense economist Peter Morici of the University of Maryland's School of Business succinctly diagnoses the problem with the Obama economy: "To add jobs, businesses need customers and capital. No customers, no capital, no jobs."
Capital formation, derived from profits and investment, are completely missing from the administration's vocabulary and its economic policies. Democrats on Capitol Hill never utter these words, nor include incentives for them in their bills.
Instead, the Democrats' jobs bill and Obama's economics are all about redistribution of wealth. But dividing the nation's economic pie into smaller slices will not produce growth, only stagnation, and fewer jobs and even fewer employers. And that's what we are seeing now and the promise of more redistribution to come when the Bush tax cuts are allowed to expire at the end of this year.
"The American economy is at sea," Morici says, "without a rudder or compass."
Until we implement policies to unlock risk capital, through lower capital-gains taxes, boost business investment through lower corporate tax rates, and cut individual tax rates, especially for small businesses, the American economy will not reach its true potential for growth, prosperity and jobs.
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