Jobless Report Is Death of Keynesianism
Employment: President Obama may have pulled "the car out of the ditch," but he left the jobs engine behind, judging from November's weak jobs report. Yet he remains wedded to a job-killing tax hike?
The Labor Department report confirms not only a jobless recovery, but the failure of Obama's neo-Keynesian economic policies. It's time to give them up, and gracefully negotiate with Republicans over more effective alternatives.
The president's stubborn pride is prolonging the agony of 15 million Americans still out of work (not including discouraged workers who no longer show up in the numbers).
Last month's anemic 39,000 payroll gain shocked economists who had expected 150,000. With hiring so weak, the jobless rate rose to 9.8%, marking the 19th straight month above 9% - the longest stretch on record.
The White House tried to put a happy face on the report, noting it showed private-sector gains for the 11th straight month. Only, the 50,000 gain in private jobs was down sharply from the 160,000 created in October and was the smallest gain since January. It was even smaller than November 2009's 75,000 gain.
Seventeen months into this recovery, private-sector job growth is decelerating when it should be galloping ahead. Despite rosier economic news, companies are still unwilling to boost hiring. Why? There's nothing incentivizing them to risk it.
Obama's answer is more social spending and gerrymandered tax credits, combined with a tax-rate hike on many small businesses - the very jobs engine still stuck in his famous "ditch."
Please, Mr. President, you and your economic team of born-again Keynesian central planners have had your chance.
Remember having to fire Christina Romer, among others, for forecasting your $800 billion stimulus bill would keep the jobless rate below 8%? Now, private economists are forecasting a 10% rate for next year. For the first time, the U.S. is facing Euro-style structural unemployment. This is no time to be raising taxes.
Yet, in a sign that ideology still trumps reality, Romer's replacement carries on the discredited tax-and-spend torch.
White House chief economist Austan Goolsbee remains opposed to renewing tax cuts for individuals earning $200,000 a year or more, demagogued by House Democrats who last week voted against it as a "millionaires' tax cut" and even "billionaires' tax cut."
"Why borrow $700 billion to pay for tax cuts that are not going to go into the economy immediately?" Goolsbee protested even in the wake of the depressing jobs report.
In fact, studies show cuts in individual tax rates encourage new business startups and new job creation. They fueled hiring in last decade's recovery as well as in the '80s. And they didn't have to be "paid for." Federal receipts soared as the tax base expanded.
An unrepentant Obama insists the lopsided election was a referendum on the economy and not a repudiation of his policies. He says voters were "not thinking clearly" when they voted for change.
Who's not thinking clearly, Mr. President?
