You have to give business executives credit for their gall. They held a “jobs summit” yesterday demanding that President Obama cut taxes and pare back government regulations. If he does those things, they’ll create more jobs. Led by the U.S. Chamber of Commerce, they accuse the Obama administration of creating an anti-business climate that has dampened job creation.
What sheer and utter nonsense!
The eight years of George W. Bush gave us a perfect study of the consequences of a government policy that cut taxes and pared back regulations. Bush cut taxes sharply, mostly benefitting the rich. And he put people in charge of government regulations who didn’t believe in government regulations. As a result, we have had mines to collapse; an oil rig to explode, sink and spew oil; toys with lead paint; cribs that kill babies, and on and on.
But what about jobs? Cutting taxes and loosening regulations led to more jobs, right? Absolutely not.
For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different.
The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.
It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism — there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.
There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.
Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 — and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.
And the net worth of American households — the value of their houses, retirement funds and other assets minus debts — has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.
“This was the first business cycle where a working-age household ended up worse at the end of it than the beginning, and this in spite of substantial growth in productivity, which should have been able to improve everyone’s well-being,” said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank.
Obama’s policies haven’t yet managed to do enough to bring the unemployment rate down. But between his actions, Congressional moves such as the stimulus package and aggressive intervention by the Federal Reserve, the economy has stopped its dangerous slide toward the abyss.As Matt Miller put in yesterday’s WaPo:
The Dow closed at 7,949 the day Obama was sworn in. This week it’s above 10,300. The economy shed 779,000 jobs in January 2009. Eighteen months later we’re fretting because the private sector “only” added 83,000 jobs in June. Back then, the banking system was on the verge of collapse. Now banks are set to report solid earnings.
Are we fully out of the woods? No. Does Obama deserve all the credit for the progress we’ve made? No again. But he deserves his share. And business leaders can’t deny that compared to where we were, today’s problems are great problems to have.
Carping CEOs may mean well. But too many confuse Obama’s necessary “crisis management” with “creeping socialism.”
Businesses aren’t creating jobs because of “excess capacity.” In other words, they don’t have any customers for their goods and services. That’s because customers are broke — either out of work or trying to pay off their debts from the spending binge of the last decade.
Here’s the truth of the matter, no matter what the Chamber of Commerce says:
Some analysts said it may be hard to create policy that compels companies to use some of their cash to hire workers. “CEOs don’t like taking risks. They kind of move in packs,” said Zachary Karabell, president of River Twice Research.
“There’s not a whole lot that you could do to entice companies to hire,” he added. “You could cut taxes on them, but they’re not going to hire just because they have the extra cash, because they already have the extra cash.”