Creation of jobs unrelated to politics

Nearly every politician would like to be able to create jobs on command, but economists say that is perhaps the most elusive goal for those who control the government’s purse strings.

As President Bush found after pushing through nearly $2 trillion in tax cuts since 2001, it is relatively easy for the administration and Congress to foster faster growth by increasing the disposable incomes and spending power of consumers and businesses through tax cuts.

Mr. Bush’s $350 billion in tax rebates and accelerated rate reductions last year were credited with helping to boost growth to a near 20-year high of 8.2 percent in the summer quarter. They are expected to continue giving a lift to the economy this year.

But so far, the tax cuts have failed to produce the millions of jobs that Mr. Bush’s economic advisers — and many private forecasters — had predicted, based on historical data that shows such robust rates of growth are associated with growth in jobs.

The problem for Mr. Bush and anyone who would follow in his shoes is that the historical relationship between growth and jobs has broken down, at least temporarily.

Economists say hiring is being inhibited by a variety of factors, from high health insurance costs and flagging math and science training to the rise of revolutionary technologies like the Internet, broadband and digital communication, and newly competitive economies in Eastern Europe and Asia.

Mr. Bush frequently points out that his tax cuts and investment tax breaks for top income earners are designed not only to stimulate spending, but to boost the incomes of the small businesses that create most of the jobs in the United States.

“We can’t guarantee success, but we can have an environment so if somebody decides to take the risk, they can succeed and, therefore, end up employing people,” Mr. Bush said as he greeted owners of small businesses in Kentucky last week.

Mr. Bush in his travels showcases a smattering of jobs that have been created in response to his tax cuts, but so far the job gains amount to only a trickle of about 10,000 a month in the last year, according to the Labor Department.

The tax cuts have helped to reignite a long-sought recovery in business spending on equipment and other investments in the past year — a critical step in what most economists say is a slowly but steadily unfolding economic recovery.

A pickup in job creation should be next, says Federal Reserve Chairman Alan Greenspan and other experts. But so far, much of the tax savings appear to have been used to help boost corporate profits, which hit record levels in the last two years.

Taking a new tack

In light of the Bush administration’s frustrated attempt at stimulating job growth through broad tax cuts, Sen. John Kerry, Mr. Bush’s likely opponent in the fall presidential election, is offering a more targeted tax program.

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