“Jobs must be our Number One focus in 2010.”
–President Obama, State of the Union address, January 2010
As Democrats’ “Recovery Summer” comes to an inglorious end, it is worth examining the policies that have achieved an unemployment rate that has stood at or above 9.5 percent for 12 straight months coupled with a $2.2 trillion deficit. Given the track record of the economic meddling of the Democrats, Americans are rightly fearful that the country cannot withstand more of these destructive policies. Whether environmental regulation, financial reform, or health care restructuring, the sum total of Democrats’ efforts is decreased confidence in the economy and jobs lost. Economics 101 teaches that expanded capacity and growth (i.e. job creation) comes from increased investment by the private sector—not deficit spending by the government. Democrats instead borrow more dollars, raise taxes, and burden entrepreneurs. The results are not surprising.
Issues of Concern
Financial Re-Regulation—Kills Jobs: “Democrats and White House officials were euphoric about passage of the [Wall Street Reform and Consumer Protection Act],” according to the New York Times. This attitude may have seemed outlandish to members of the Business Roundtable (BRT), an organization of 170 companies that generate more than $6 trillion in revenues and employ 12 million people. One month before the July 2010 passage of the law, the BRT, in conjunction with the Business Council, sent a report to President Obama’s Director of the Office of Management and Budget warning that the law’s “margin requirement on Over-the-Counter derivatives could be expected to reduce capital spending by $5 billion to $6 billion per year, leading to a loss of 100,000 to 120,000 jobs.” This dour assessment supplemented George Mason University Professor Joshua Wright’s research indicating the law’s credit restrictions “would reduce net new job creation in the economy by 4.3 percent” (about 60,000 fewer jobs every year).
Environmental Regulation—Kills Jobs: The Obama administration has spared no energy exerting executive authority over the environment. This expansion of power is not without costs. The House Committee on Small Business heard testimony last month regarding the Environmental Protection Agency’s (EPA) proposed rule to regulate disposal and management of Coal Combustion Residuals, one of which, coal ash, is a critical component in the production of ready-mix concrete. The owner of Bross Construction, a small, family-owned business testified: “[T]he lowered costs of producing ready mix concrete allow us to invest scarce resources elsewhere, such as employee benefits, updated equipment and an expanded workforce.” Referring to the increased liability exposure from EPA’s needless designation of the ash as hazardous, Jeffrey Bross stated, “[T]his can translate into financial destruction for our business and our employees.” More damaging, however, is the administration’s deepwater drilling moratorium in the Gulf of Mexico, which administration officials estimated “would cost roughly 23,000 jobs, but went ahead with the ban,” according to the Wall Street Journal.
Health Care Reform—Kills Jobs: Only five months after Obamacare was signed into law, the fruits of Democrats’ labor are becoming apparent. Governmental efforts to remake the health care sector are having an immediate effect.
This list is not exhaustive, and the circumstances of the employers are not disparate. All three organizations attributed the decisions to “lower reimbursement from health plans and government programs” or “related legislative developments.”
Taxes—A Thought Experiment: The Joint Committee on Taxation estimates a $3.9 trillion tax hike is set to take effect on January 1, 2011, if Democrats do not pass legislation extending expiring tax cuts. In addition to reduced expensing limits and higher tax rates on dividends and capital gains, the increased individual income tax rates will directly impact the 75 percent of small businesses owners that file under individual rates (aka pass-through entities). Any guess what this change will do to employment prospects?