The president is full of it when he talks about creating or saving jobs. During his State of the Union address Wednesday night, he said, "Now, because of the steps we took, there are about 2 million Americans working right now who would otherwise be unemployed. ... Economists on the left and the right say this bill has helped save jobs and avert disaster. ... That is why jobs must be our No. 1 focus in 2010, and that's why I'm calling for a new jobs bill tonight." This is pure fiction. Job losses under President Obama's watch have increased steadily without remission.
The unemployment rate is stuck at 10 percent. If calculations include Americans who aren't in the labor force because they stopped looking for work or were forced to take part-time jobs, the unemployment rate has been above 17 percent since September. The Obama administration promised that the incredibly costly stimulus package would keep unemployment down to 8.1 percent, but the result of so much spending has been more job losses - and Americans are angry.
Mr. Obama used the State of the Union to push a second stimulus package. But with massive deficits mounting and stimulus cash going to everything from unknown ZIP codes to $1.57 million to search for fossils in Argentina, it's painfully obvious that a second stimulus would simply throw more money down the drain. Contrary to Mr. Obama's bizarre assertion that all economists support his orgiastic spending, basic economic data suggest the stimulus actually increased unemployment and delayed recovery.
The president claimed the first stimulus package already "created or saved" more than half of the 3.5 million jobs it was vowed to rescue. But it's hard to see where those jobs are when examining the numbers in the Department of Labor's household survey, which is used to measure the official unemployment rate. The number of people with a job fell by 589,000 in December. On top of that job loss, the number of people no longer in the labor force grew by an astounding 843,000 from November to December.
Since February, when the stimulus package was passed, the number of people not in the labor force has grown by 3.2 million. The number for December represents 26 percent of the entire increase. This is important because these millions of people are not included in the official unemployment rate. The crisis of unemployed Americans getting discouraged and giving up looking for work is ballooning. Of course, they have good reasons to be discouraged. Since February, the total number of jobs has fallen by 4 million.
The simplest way to measure whether Mr. Obama's policies have helped the labor market is to look at the change in the number of people unemployed and the change in those who have left the labor force. Obama economic mismanagement has created a disaster, with those losing their jobs and those no longer looking going up in a virtually straight line last year. (See the chart below.) In the opposite scenario, during a period of economic expansion when the number of unemployed would fall and more people would enter the labor force, there would be a downward sloping line. But as this figure indicates, any slower increase in the number of new people being unemployed is completely offset by the increasing speed that people are completely leaving the labor force.
The growth in the U.S. unemployment rate continues to outpace the rest of the world. Since February, the average unemployment rate for the European Union has grown by 1.2 percentage points. By contrast, the U.S. unemployment rate has grown by 1.9 percentage points - a 58 percent greater increase. Nor does the rate look particularly strong compared with what economists were predicting at the beginning of last year. Back in mid-January 2009, business economists and forecasters surveyed by the Wall Street Journal expected the December unemployment rate to be at 8.6 percent.
A new CNN poll shows that nearly three out of four Americans think the stimulus money has been wasted. The problem is worse than that; the so-called stimulus actually has increased unemployment and delayed the recovery that economists were predicting last year. Mr. Obama's claim that stimulus spending has saved jobs is based on bogus economics. Stephen Bronars, a labor economist at the University of Texas at Austin, pointed out to us that the stimulus doesn't create new spending. "This money would have been spent someplace else [if the government hadn't spent it]," he explained. The government is merely moving jobs from some firms to others and from some sectors to others, and in the process it causes extra temporary unemployment as workers are moved around.
Mr. Obama's top-down manhandling of the economy is based on the assumption that government knows best, and that private businesses would be in better shape if they did what the bureaucracy tells them to do. Even the tax breaks the president proposes are flawed because they attempt to micromanage business decisions rather than lowering marginal tax rates for companies. This is because the president thinks he knows more about where companies should be investing than their executives. Government is more inept and inefficient than private industry. Increased federal intervention into business operations is no way to decrease the jobless rate.
Employment has been in a free fall since Mr. Obama entered the White House. This is not what he promised in return for almost $1 trillion in stimulus spending. The country cannot afford another anti-stimulant stimulus package. Congress needs to put its foot down before the president wastes even more money and puts our children and grandchildren even deeper into debt.