EDITORIAL: Zero tolerance for job creation

Administration schemes ensure unemployment lines remain long

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“The White House doesn’t create jobs,” President Obama’s spokesman, Jay Carney, said last week. He’s more right than he knows. The policies the administration and Congress put into place have a profound effect on job creation - a profoundly negative one.

Gimmicks like tax credits for hiring veterans and another short-term extension of the payroll tax cut aren’t going to jump-start the sagging economy or do anything to get the unemployment rate below even 9 percent, let alone anything approaching the 5 or 6 percent levels that would be considered full employment.

While it’s true the unemployment rate dipped by a 10th of a percent last month, the total number of people either employed or looking for a job dropped to 63.9 percent. That’s a record low. An extraordinarily high proportion of the unemployed - more than 44 percent - were considered long-term unemployed. These are people who will find it increasingly hard to find another job.

The unemployment rate among veterans is higher than in the general population at 13.3 percent. That’s mostly because the recession has thumped the industries where veterans often seek employment, such as mining, construction, manufacturing, transportation and utilities. The other dirty secret is that this recession has hit men disproportionately harder than women, and it’s not surprising to see that reflected in veterans’ unemployment rates. Also, many veterans are young men in their 20s, a demographic group that finds itself in worse shape than most. Worse, a significant proportion of veterans are disabled, and this group faces notoriously high unemployment rates even in good times.

Mr. Obama’s idea of a solution is to propose a one-time $2,400 tax credit that would go to an employer hiring a veteran (increasing to $4,800 if the veteran has been unemployed for six months or longer). This patronizing, top-down scheme is a perfect example of how out of touch this administration can be. Hiring a worker is a long-term decision. It is an expensive decision, which potentially can cost the employer hundreds of thousands of dollars. It’s extremely unlikely that a one-time credit will do much to influence a hiring decision other than result in a zero-sum game in which a veteran is hired while a nonveteran stays in the unemployment line. An employer isn’t going to hire two workers instead of one just to get a tiny one-time tax credit.

The most insulting aspect of the plan is that it plays into leftist, Vietnam-era stereotypes of former members of the military. Veterans are well-trained, disciplined and highly employable, but only if the economic climate is conducive to investment, expansion and new hiring. Right now, that simply isn’t so. Standard & Poor’s downgraded the U.S. debt rating, Moody’s slapped a negative rating on the outlook for the United States, and Fitch has warned it might do the same when it completes its assessment later this month. Mr. Obama, far from offering any plan to bring runaway spending under control, keeps offering more top-down solutions that create even more regulatory uncertainty.

The White House does not create jobs, but it does put into place conditions that make it more difficult for others to create jobs. It’s time for the administration to get out of the way.

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