Stop The Madness That's Killing Jobs
INVESTOR'S BUSINESS DAILY
Posted 7/2/2009
Stimulus: More grim news - 467,000 jobs lost in June, with unemployment
hitting a 26-year high of 9.5%. Some people are rightly starting to wonder:
Where's that stimulus we were promised?
The stock market's reaction on Thursday said it all - with the major indexes
plunging 2.4% to 2.9% on the news of a continued job hemorrhage. Despite
some economic green shoots here and there, no one's sure when jobs will
start growing again.
At this point in a normal downturn lasting 11 months, the economy should be
booming - with big jumps in GDP and 300,000 new jobs each month coming
mostly from the private sector.
But 18 months into this downturn, we're still losing jobs - with 2.7 million
gone in the private sector just since January, when the Democrats took full
control of the government.
Shrinking GDP has crushed investment. First quarter gross private domestic
investment - a proxy for business investment - plunged 20%, or nearly $450
billion, annually. The outlook is grim.
Worse, the June jobs data mark a milestone of sorts: Our unemployment rate
equals that of the no-growth Eurozone nations.
Why is this job decline happening? The private sector - the real engine of
economic and job growth - won't hire because it's scared of what it sees
coming out of Washington.
On the horizon, as far as the eye can see, are higher taxes, uncontrolled
spending and layers upon layers of new regulations.
Who would hire new workers faced with that?
Also, the federal government is meddling in the private sector as never
before - in essence, nationalizing two of the three major carmakers with
$200 billion in subsidies and capital infusions, turning our banking system
into a fourth branch of government through the $700 billion TARP program,
spending $200 billion to take over Fannie Mae and Freddie Mac and put them
back in the business of lending to people who can't pay their loans - which
is how we got into trouble in the first place.
And that's only what's been done in the last half year or so. What really
scares private businesses is what's in the pipeline.
. Health insurance reform: Estimates for reforming our medical care range
from $1 trillion to $3.6 trillion, with much of the bill footed by
businesses. All to take care of 46 million uninsured.
But 10 million of those aren't citizens. And according to former CBO chief
June O'Neill, 43% of the total could afford to buy coverage but don't. So
the problem is much smaller than people think.
As for current plans to take over our health care system, they'll barely
help. According to Congress' own think tank, spending $1 trillion will only
remove 16 million from the 46 million uninsured.
. Cap and trade: A major reshaping of our nation's energy policy will
include massive new taxes, mostly on businesses, and cause our economy to
crater. Most depressingly, despite taxing businesses and consumers to the
hilt, the Waxman-Markey climate stabilization act will not remove one ounce
of carbon from our atmosphere over the next decade.
It's nothing but a huge scam that will bankrupt any business that relies
heavily on energy, boosting fuel prices by 22 cents a gallon and socking the
average family with an $1,800 a year tax hike.
As Robert Zubrin of the Foundation for Defense of Democracies wrote last
week, "(Waxman-Markey) proposes a massive and highly regressive tax on the
U.S. economy, and could potentially cause not only extensive business
failures, unemployment and privation within our own borders, but starvation
among poorer populations elsewhere."
. Stimulus II: As if the first $787 billion tranche of "stimulus" wasn't
enough, some in the Democratic Party are suggesting a second stimulus bill.
Are they joking? The first stimulus has failed spectacularly. Personal
incomes rose briefly after "stimulus" checks were handed out, but have since
resumed their decline.
Meanwhile, hundreds of billions of dollars went to strapped state
governments. But according to the National Governors' Association, states
are still expected to show $183 billion in red ink in the next two years.
Stimulus clearly hasn't worked. Why try another?
Taken together, all these new programs would mean sky-high new taxes, more
regulations and the biggest expansion of government since FDR's New Deal.
That's not a good thing. Unemployment during the New Deal averaged 17%, and
government meddling turned what should have been a garden-variety downturn
into a 27% collapse in GDP - the Great Depression.
Washington seems desperate to duplicate that failure.
For some time we've heard we need to have "hope" for "change" to come. But
hope is fast disappearing, and polls show that Americans reject the change
the government has in mind for medical insurance and energy. The grand
experiment of government control is failing, and people want their economy
back.
As for more jobs, it may be a while. Shortly before the new administration
opened for business in January, Americans were told by the incoming
administration's advisers that without the stimulus, unemployment - then at
7.2% - would peak at 9% in 2010. If the stimulus was passed, they added, the
peak would be 8%.
Well, it passed - and today unemployment is 9.5% and likely to go higher. A
question arises: Given the obvious failure of the stimulus to stimulate
anything, why not dismantle the whole thing?
This isn't so crazy. The Congressional Budget Office estimates that the
current stimulus plans will blow a $9.3 trillion hole in the nation's budget
by 2019. That will boost taxes on us and our children for decades to come.
Won't it also boost the economy? Guess again. "The projection for nominal
GDP has decreased (since the end of 2008) by more than $7 trillion, or 3.9%,
over (10 years)," says the CBO.
In other words, all this spending and taxing will crater the economy - and
the estimate doesn't include the spending planned for medical insurance
reform and cap and trade.
Nor does it include the dizzying array of new taxes the White House and
Congress are considering. They range from a European-style value-added tax,
which helped turn the EU into a stagnant mess with virtually no job
creation, to new taxes on health care, energy, incomes and a slew of other
things.
In the coming weeks, we will tell you how we got into this mess - hint:
Government played a key role - and how we can get out of it. It will take
huge cuts in spending, a willingness to let bad businesses go bust, and
broad tax cuts to get our economy moving again.
This, by the way, worked in the 1920s, it worked in the 1960s, it worked in
the 1980s. It even worked after 9/11, and it'll work again.
America needs jobs, but its businesses can't create them as long as they
remain under the thumb of a high-taxing, runaway-spending, overregulating,
entrepreneur-smothering Big Government. |
