Obama Jobs Plan Won't Make America More Competitive

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- Lately the President has been emphasizing that wealth creation occurs through private sector job creation, so it was surprising that in his presentation on the American Jobs Act, he gave so much emphasis to job creation by the government.

Part of the rationale is that the President believes the government has a role to play in improving the competitiveness of the United States. I'm sure he knows that there is a global jobs competition right now and the competiveness of the U.S. continues to slide. On Sept. 7, the World Economic Forum produced its 2010-2011 Competitiveness Report which provides a global ranking of national competitiveness. The U.S. has slipped again. This time to fifth place. In 2010 it was ranked fourth, 2009 second, and in 2008 the U.S. was ranked the most competitive country in the world.

The President emphasized that the Jobs Act will be focused on improving America's infrastructure. Creating infrastructure is labor intensive and a good temporary job generator. It won't, however, do much for competitiveness. According to the report, the U.S.'s infrastructure ranks 16th. This isn't stellar but there are six categories and 73 sub-areas where the country scored much worse. On the list of problems that businesses noted as causing problems for doing more business, infrastructure came in 11th out of 16.

The U.S. macroeconomic environment ranked 90th. The rankings on two of this category's sub-areas are sobering. Of the 142 countries evaluated the U.S. scored 139th on the nation's budget balance and 132nd on its government debt. It makes the nation's infrastructure problems seem trivial. The President did mention that he planned to present a much more aggressive plan for cutting costs in a week, so some help may be on the way.

The U.S. ranked 39th on the category called government institutions. One reason for this poor ranking is increasing bureaucracy and red tape and distrust of government. The President did note that there is a project underway to eliminate regulations that are not required for the health, safety or security of America. They have already identified 500 reforms that he said will save billions over the next few years.

With a 94.1% high school enrollment rate the U.S. ranked 50th. High school graduation rates at 72% though are much worse and 10 points lower than the OECD average.

There is no doubt that the American education system needs help. Today 85% of those unemployed have a high school education or less. According to McKinsey it is likely that 6 million people without high school diplomas will be unemployable in 2020.

The education problem though isn't a money problem. Between the ages of six and fifteen the U.S. spends $91,700 per student. This is more than any OECD country but Switzerland but the U.S. still scored below 12 OECD counties on the Program for International Student Assessment (PISA). Poland with an average expenditure of $31,295 has a graduation rate of 92% and its PISA score is similar to the U.S..

The U.S. does rank much higher on tertiary education enrollment. It came in 6th. The problem with this is that at nearly 50%, the U.S. has the highest college drop out rate.

The Jobs Act has two provisions to remedy problems with education. There is $25 billion allocated to school repairs and the President is putting "thousands of teachers" back to work. This generated a round of applause, but it's not going to fix the country's education problems. This is too bad because improving the educational system would help the competitiveness of the private sector by giving them skilled workers to fill needed jobs.

It was good to hear the President stump for passing the trade agreements with Colombia, Panama and South Korea that are presently stalled in Congress. This would increase America's free trade agreement coverage from 4.2% of the world to 5.6%. It's not quite the 30-50% coverage that China, the European Union, and Mexico have been aggressively pursuing, and it doesn't really take advantage of Treasury Secretary Geithner's remark that "growth in emerging markets remains quite strong." It is though a small acknowledgement that of the $27.3 trillion that the IMF expects in economic growth through 2016, 87% will occur outside the U.S..

The price for the total Jobs Act package is $447 billion, but it was made clear that every proposal would be paid for. This task was delegated to the Super Committee and Congress. In addition to those $1.2 trillion in spending cuts they need to identify they now have another $447 billion. Cutting government programs to fund other government programs sounds like a formula that can kill and create jobs at the same time.

I know that small businesses, the engines of job creation in America, were concerned that the President might pass them by, but he did not. There are provisions for tax relief and tax credits for hiring. I told a few small business people about the credits for hiring. They seemed pleased. I asked if that meant they would hire more people. They said no, that will only happen when demand increases.

This is where the Jobs Act really seemed to fall short. It seems like another measure to buy time for the private sector to figure out how to generate wealth. The problem with this is that the big engines of the private sector are already generating wealth. They just aren't doing it here. Maybe if the country was more competitive in the areas where it really counts they would change their investment strategies.

Who knows what the final Jobs Act will look like, but the government could do a lot better job of supporting the private sector in its role of wealth and job creation.