Speaker of the House John Boehner, House Majority Leader Eric Cantor and their fellow House Republicans should claim credit for this jobs recovery. It never would have happened had they not stopped the counter-productive fiscal policies of the Obama Administration -- starting with blocking the job killing increase in personal income tax rates that otherwise would have taken place on January 1, 2011, and then last fall refusing to vote for yet another round of wasteful “stimulus” spending and money losing investments in “green jobs.”
Remember last August when the Administration charged that the House Republican show-down over increasing the federal government’s debt limit without meaningful spending reductions threatened the recovery and Vice President Joe Biden called opponents of an increase in the debt limit “terrorists”? And then how the President last fall demanded House Republicans pass “now” $400 billion in new stimulus spending, relabeled a “jobs bill,” or be held accountable for the coming slow-down in economic growth?
Well, here is what putting a stop to Obamanomics has produced: The strongest six months of employment growth since the President took office.
According to the February employment report released last Friday, non-farm payrolls have increased by 1.2 million jobs since last August. By contrast, between the beginning of Obamanomics with the passage of his stimulus bill in March 2009 and August, employment fell by 1.3 million. That’s right, just saying “no” to bad policies has in six months recovered nearly all of the jobs that had been lost in the prior 2.5 years.
In addition, the official unemployment rate in February was 8.3%, down from 9.1% in August while the U-6 measure of unemployment, which includes frustrated job seekers and those who are being forced to work part time has fallen to a still high 14.9%, compared to 16.2% in August. Both measures of unemployment are now at their lowest level since the Obama administration launched its trillion dollar increase in government spending and investments in “green jobs.”
February’s 227,000 gain in non-farm payrolls made it the third consecutive month in which non-employment growth has exceeded 200,000, the amount generally considered necessary to bring down the unemployment rate. It was also the second consecutive month in which the work-force grew, and the second month since last July in which the civilian labor force participation rate increased.
The improving jobs picture is consistent with a growing body of academic research that demonstrates increased government spending reduces, rather than increases, economic growth. Summarizing the research in his December, 2010 Wall Street Journal article Stanford Professor Michael Boskin wrote:
"But economic theory, history and statistical studies reveal that more taxes and spending are more likely to harm than help the economy. Those who demand spending control and oppose tax hikes hold the intellectual high ground."
The massive increase in federal spending under Obamanomics, for example, appears to have sucked the job creating strength out of the rest of the economy. Between February 2009 and August, 2011, federal employment increased by 52,000. But, total government employment fell by more than half a million employees as state and local governments, faced with the failure of the stimulus program to produce growth, were forced to cut payrolls in order to balance their budgets.
During that same period, private sector employment fell by 834,000. And, lest you think that all that “investment” in infrastructure and shovel ready jobs worked, employment in the construction sector alone fell by more than 900,000.
Meanwhile, the non-provable claim by the advocates of Obamanomics, that the increased spending saved jobs, is belied by what has happened since the policy was stopped. Since August, federal employment has fallen by 26,000, but the rate of layoffs in state and local government has slowed by half. And, private sector employment has surged 1.3 million workers.
But, there is much left to be done. The rapid growth in the regulatory burden under President Obama, and the Administration’s weak dollar/high oil price monetary policy are on-going impediments to full employment, especially among minorities and those without college educations. The unemployment rate for blacks stands at 14.1%, nearly double the unemployment rate for whites, and those without a college education are more than twice as likely to be unemployed as those with a diploma.
Moreover, when compared to the results produced by Reaganomics -- a combination of a strong dollar, across the board reductions in marginal tax rates, deregulation, and slowing the growth in non-defense spending -- Obamanomics has produced 15 million fewer jobs. To close that gaping jobs gap will require the same policy mix that worked not only under President Reagan, but also under President Kennedy and to a significant extent, during the last six years of the Clinton Administration.
The first step is for the leadership of the House Republicans to regain their footing by taking credit for the economic success of their policies. As my fellow Forbes.com columnist, Ralph Benko wrote at the time of the show-down over the debt limit increase, the public discrediting of the left’s Narrative -- that the federal government’s “management of the economy,” including massive increases in deficit spending, are central to our prosperity -- undercuts the very legitimacy of the Progressive movement. More than anything else, the experience of the last six months demonstrates yet again the natural ability of the private sector to recover once government gets out of the way.
The next step is for the Republican Party to fashion a positive growth message focused on increasing the liberty and security of the American people by shrinking the size and scope of government. Channelling Reaganomics, that includes stabilizing the value of the dollar as the first step toward a 21st century gold standard, reforming the corporate and personal income tax codes with lower tax rates and fewer deductions, cutting back the regulatory state, and stopping the growth in federal spending.
By so doing, Republicans can offer the American people a modern narrative of constitutional, limited government committed to liberating our natural ability to create a better life for ourselves, our families and our communities.
