The Obama administration's failure to address our nation's gut-wrenching unemployment stems from a fundamental mistake about how jobs are created in the first place. We are now in the third year of policies predicated on the assumption that government spending creates jobs. We have squandered three years and trillions of dollars of the nation's wealth on such policies, and they have not worked because they cannot work. The sad but incontrovertible fact is that, ultimately, government cannot inject a single dollar into the economy until it first has taken that same dollar out of the economy.
True, we can see the job that is "saved or created" when the government spends that dollar on Paul, but what we can't see as clearly are the jobs that are destroyed or prevented from forming because government has first taken that dollar from Peter. We see those millions of lost jobs in a chronic unemployment rate and a stagnating economy.
Government can transfer jobs from the productive sector to the government sector by taking money from one and giving it to the other. That's at the heart of the president's plan to spend billions of dollars to hire more public employees. But these temporary government jobs come at a steep price: Every dollar spent sustaining one of these jobs is a dollar taken from the same capital pool that otherwise would have been available to productive businesses to invest in creating permanent jobs.
Government also can transfer jobs from one business to another by taking capital from one and giving it to the other. That's how the administration created the Solyndra fiasco: It put a half-billion dollars at risk to create 1,100 jobs at the cost of $450,000 per job. Today, that money is gone and so are the jobs. Who pays for these losses? Other businesses and their employees - meaning fewer jobs created.
What government can do very effectively is create the conditions in which jobs either multiply or disappear.
When we place additional taxes on productivity, jobs disappear. The president says he only wants to tax millionaires and billionaires, but the tax increases in his "jobs" plan actually hammer more than 75 percent of net small-business income - at a time when we're counting on these small businesses to create two-thirds of the new jobs that our people desperately need. That is insane.
When we place additional regulations on productivity, jobs disappear. That's what we're watching in real time: thousands of pages of new regulations from Obamacare, Dodd-Frank and the EPA stifling American job creation.
It's no secret why business isn't expanding - just ask a businessman. They're scared to death of the additional taxes and regulations they may be facing in the next few years and are pulling back to see what happens. Ask bankers why they're not lending, and you'll hear the same answer.
House Republicans have laid out a comprehensive plan to revive the economy through the same policies that worked under Ronald Reagan in the early 1980s, John F. Kennedy in the early 1960s, Harry Truman in the mid-1940s and Warren Harding in the early 1920s.
For example, the Congressional Budget Office estimates that Obamacare by itself will cost the economy a net loss of 800,000 jobs. A few weeks ago, the House Natural Resources Committee received testimony that just by getting government out of the way and opening up American energy resources to development, the economy could generate 700,000 jobs and $660 billion of direct revenue to national and state treasuries. Together, that's 1.5 million permanent jobs.
Now imagine doing that across all sectors of the economy. That's precisely what House Republicans have proposed. The fact that the president doesn't recognize this as a jobs plan suggests that he simply doesn't understand how an economy actually creates jobs in the first place.
When Reagan inherited an even worse economy from Jimmy Carter, he reduced the tax and regulatory burdens that were crushing productivity - just as Republicans propose to do today.
In a recent article in the Wall Street Journal, former Sen. Phil Gramm estimated that if the economy under Mr. Obama had tracked the same as it did under Reagan, 15.7 million more Americans would be working today and per capita income would be $4,000 higher than it is today - $16,000 for an average family of four.
Freedom works. It is time that we put it back to work.
Rep. Tom McClintock is a California Republican.
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