Obama Economy Not Looking Up

Donald Lambro
Posted: Feb 08, 2011 5:27 PM

WASHINGTON -- There are plenty of reasons to be dubious about President Obama's forced fence-mending efforts with the business community as he begins his 2012 campaign for re-election. His stout defense of a mountain of job-killing business regulations Monday before what was described as a "polite, subdued audience" at the U.S. Chamber of Commerce signaled that business has well-deserved doubts about him, too.

"I want to be clear: Even as we make America the best place on earth to do business, businesses also have a responsibility to America," Obama lectured corporate executives by paraphrasing President John F. Kennedy?s famous self-sacrificing plea to think first about what they can do for their country.

"As we work with you to make America a better place to do business, ask yourselves what you can do for America. Ask yourselves what you can do to hire American workers to support the American economy, and to invest in this nation," Obama said. But Obama forgets that Kennedy called for cutting higher, punitive tax rates across the board, for high- and low-income brackets alike, to "get the economy moving again." Kennedy's proposals led to a burst of business growth, increased job creation and a balanced budget to boot at the end of the 1960s as a result of higher tax revenues from stronger economic growth. Kennedy was a pro-growth, free trade, lower tax rate Democrat who eschewed playing the class warfare card that Democrats and Obama have played relentlessly since they have come to power.

Obama relentlessly bashed business executives, the rich (anyone earning more than $250,000), and "millionaires and billionaires." He pushed for higher tax rates on all of them. He opposed free trade agreements. He has effectively regulated every nook and cranny of the American economy. Kennedy did none of these, saying instead that "a rising tide lifts all boats."

Now, with the economy still showing dangerous signs of weakness and his own re-election prospects in precarious territory, he is calling for cutting the 35 percent top corporate tax rate, passing trade deals with South Korea, Columbia and Panama, and weeding out needless regulations that impede growth and new job creation.

Obama needs the Republicans more than they need him to get any of these proposals through Congress, and Democrats see his flip-flop proposals as a betrayal of the liberal agenda he pushed in 2009 and 2010. The GOP has taken control of the House, added six seats in the Senate, and is now poised to strengthen its forces in the House and take control of the Senate in 2012.

The Obama economy, particularly on the employment front, looks shaky for Obama and his party this year and next. The economy added only 36,000 jobs in January, amid bleak forecasts that we will not see anything even near full employment for years to come.

The liberal news media played up the fact that the unemployment rate fell from 9.4 percent to 9 percent, but that was the result of more and more workers giving up looking for jobs and dropping out of the workforce. The labor force fell by 504,000 and thus were subtracted from the number of available workers, which in turn drove down the jobless rate.

"Another lousy jobs report," said University of Maryland business economist Peter Morici. "Despite all the administration's claims, things are getting worse, not better. Folks are giving up looking."

"The economy must add 13 million private-sector jobs by the end of 2013 to bring unemployment down to 6 percent. Obama's policies are not creating conditions for businesses to hire 360,000 workers each month, net of layoffs" he said in his weekly economic analysis.

Obama pleaded with business leaders to begin spending the $2 trillion in capital reserves they have set aside to survive yet another economic downturn, but that the president wants them to spend on new hiring. But business leaders are doubtful Obama will deliver on the tax cuts, trade expansion, deregulation and other incentives he says he now supports.

"Not every regulation is bad; not every regulation is burdensome on business," Obama said Monday. "I think the underlying issue is where are we are three, six, nine months from now," Aric Newhouse, lobbyist for the National Association of Manufacturers, told the Washington Post. "There's been a lot of good signals from this president in the past couple of weeks. The question is: Does that translate into concrete policy actions?"

The job-creating opportunities have all but disappeared under Obama?s economic policies. Industries find they can boost profit margins by cutting costs and keeping payrolls down. Housing sales remain sluggish because subprime mortgage foreclosure proceedings have been stalled by government-driven delays.

The administration's hostility to new venture capital formation is suffocating new small-business creation, the fountain of most new job production. Two years of inaction on trade expansion have frozen the United States out of emerging markets.

"When Washington gets realistic about the costs and disadvantages its policies impose ... U.S. companies will start creating jobs in America again," Morici said. "In the meantime, they will employ minimal labor here, go abroad and send profits home.