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Townhall...
Obama Tunes Out, and
Business Goes on Hiring Strike
By Michael Barone
6/6/2011
Last week, I noted that various forms of the word “unexpected” almost
inevitably appeared in news stories about unfavorable economic
developments.
You can find them again in stories about Friday’s shocking news, that
only 54,000 net new jobs were created in the month of May and that
unemployment rose to 9.1 percent.
But with news that bad, maybe bad economic numbers will no longer be
“unexpected.” You can only expect a robust economic recovery for so
long before you figure out, as Herbert Hoover eventually did, that it
is not around the corner.
Exogenous factors explain some part of the current economic stagnation.
The earthquake and tsunami in Japan caused a slowdown in manufacturing.
Horrendous tornados did not help. Nor did bad weather, though only a
few still bitterly cling to the theory that it’s caused by manmade
global warming.
But poor public policy is surely one reason why the American economy
has not rebounded from recession as it has in the past. And political
posturing has also played a major role.
Barack Obama and the Democratic congressional supermajorities of
2009-10 raised federal spending from 21 percent to 25 percent of gross
domestic product. Their stimulus package stopped layoffs of public
employees for a while, even as private sector payrolls plummeted.
And the Obama Democrats piled further burdens on would-be employers in
the private sector. Obamacare and the Dodd-Frank financial regulation
bill are scheduled to be followed by thousands of regulations that will
impose impossible-to-estimate costs on the economy.
That seems to have led to a hiring freeze. The Obama Democrats can
reasonably claim not to be responsible for the huge number of layoffs
that occurred in the months following the financial crisis of fall
2008. And Treasury Secretary Timothy Geithner and Federal Reserve
Chairman Ben Bernanke did manage to help stabilize financial markets.
But while the number of layoffs is now vastly less than in the first
half of 2009, the number of new hires has not increased appreciably.
Many more people have been unemployed for longer periods than in
previous recessions, and many more have stopped looking for work
altogether.
It’s hard to avoid the conclusion that the threat of tax increases and
increased regulatory burdens have produced something in the nature of a
hiring strike.
And then there is the political posturing. On April 13, Barack Obama
delivered a ballyhooed speech at George Washington University. The man
who conservatives as well as liberal pundits told us was a combination
of Edmund Burke and Reinhold Niebuhr was widely expected to present a
serious plan to address the budget deficits and entitlement spending.
Instead, the man who can call on talented career professionals at the
Office of Management and Budget to produce detailed blueprints gave us
something in the nature of a few numbers scrawled on a paper napkin.
The man depicted as pragmatic and free of ideological cant indulged in
cheap political rhetoric, accusing Republicans, including House Budget
Committee Chairman Paul Ryan, who was in the audience, of pushing old
ladies in wheelchairs down the hill and starving autistic children.
The signal was clear. Obama had already ignored his own deficit
reduction commission in preparing his annual budget, which was later
rejected 97-0 in the Senate. Now he was signaling that the time for
governing was over and that he was entering campaign mode 19 months
before the November 2012 election.
People took notice, especially those people who decide whether to hire
or not. Goldman Sachs’ Current Activity Indicator stood at 4.2 percent
in March. In April -- in the middle of which came Obama’s GW speech --
it was 1.6 percent. For May, it is 1.0 percent.
“That is a major drop in no time at all,” wrote Business Insider’s Joe
Weisenthal.
After April 13, Obama Democrats went into campaign mode. They staged a
poll-driven Senate vote to increase taxes on oil companies.
They launched a Mediscare campaign against Ryan’s budget resolution
that all but four House Republicans had voted for. That seemed to pay
off with a special election victory in the New York 26th congressional
district.
The message to job creators was clear. Hire at your own risk. Higher
taxes, more burdensome regulation and crony capitalism may be here for
some time to come.
One possible upside is that economic bad news may no longer be
“unexpected.” Another is that voters may figure out what is going on.
Read it at Townhall
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