Today, the Department of Labor reported that 570,000 Americans filed initial claims for jobless benefits last week. This follows news from ADP Employer Services on Wednesday that private employers cut 298,000 jobs last month. As bad as these numbers sound (and they are bad) the real threat facing our nation’s economy is that, as Gallup’s Chief Economist Dennis Jacobe puts it: “job creation in August is just not taking place in the U.S. economy.” Why is job creation more important than job loss numbers? Heritage fellow James Sherk explains:
The American economy is highly dynamic. Industries continually expand and contract while entrepreneurs create new companies and uncompetitive firms go out of business. Workers move between jobs frequently as this occurs. … Recent research shows that an increased likelihood of layoffs is not the main reason that unemployment rises during economic slumps. … The main reason unemployment rises during economic downturns is that job creation falls while the labor force continues to grow, making available jobs scarcer. As a result, many without work stay unemployed longer, driving up the unemployment rate.
If our economy is going to avoid double digit unemployment, the private sector is going to have to start hiring people again. Unfortunately, every agenda item emanating from the White House is will only hamper, not allow for, private sector job growth.
The Stimulus: President Obama’s $787 billion stimulus has been a boon for public sector unions and the economy of Washington, DC but it has completely failed to spur private sector job growth. The Wall Street Journal reports: “Dave Anderson, chief financial officer of Honeywell International Inc., said the stimulus package actually froze business activity at first as firms tried to figure out how they could benefit from the government spending. The $787 billion package ‘created actually a slowdown in order activity in terms of the flow that we would normally have anticipated.’”
Health Care: Our nation needs health care reform that lets Americans reduce their exploding health care costs. The best way to do this is to reform the tax code and remove regulations that are preventing a true health insurance market from functioning. But the President only wants to expand the status quo by building off the failed models of Medicare and Medicaid that got us into this mess in the first place. Worse, President Obama is set to fund his massive expansion of government-run health care on the backs of businesses. The employer mandates used to fund Obamacare will cost businesses at least $49 billion per year and put 5.2 million low-wage workers at risk of unemployment or reduced working hours. The prospect of fewer job opportunities in the future will put another 10.2 million workers at risk of slower wage growth and cuts in other benefits.
Cap and Trade: President Obama continues to try and sell his cap-and-trade plan as a job creation bill, but the more honest in his own party have admitted otherwise. During a committee hearing on cap-and-trade this year, Rep. John Dingell (D-MI) explained: “Nobody in this country realizes that cap-and-trade is a tax — and it’s a great big one.” According to a Center for Data Analysis study, the economic costs of the Waxman-Markey energy tax bill include net job losses approach 1.9 million in 2012 and could approach 2.5 million by 2035.
Higher Taxes: President Obama wants to raise taxes on U.S. companies by: 1) limiting the ability of American business to defer U.S. tax on their foreign income and 2) reducing the credit American businesses receive for foreign taxes paid. These higher taxes will be a big competitive disadvantage for American firms. Punishing U.S. companies for competing overseas will ultimately kill jobs here at home. For every worker employed by a U.S. subsidiary in a foreign country, 2.3 Americans are employed in the U.S. And a 10 percent increase in foreign investment by businesses has been associated with a 2.6 percent increase in investment in the businesses’ home countries.
Trillion Dollar Deficits: Last week, the Office of Management and Budget released numbers showing that under President Obama’s budget the public national debt–$5.8 trillion as of 2008–is projected to double by 2012 and nearly triple by 2019. Looking at these budget forecasts, investors are demanding higher interest rates to soak up the tremendous flows of debt coming out of the Treasury. This will mean higher interest rates for consumer loans, mortgage loans, business loans, etc. Sherk concludes:
American businesses and the American economy need time to recover and heal from this deep recession before facing new threats from massive government intervention in the economy. Presented with a more certain path forward, businesses will regain their optimism for the future, and will resume making the investments they need in order to expand and to compete in the global marketplace.
Quick Hits:
- The broadcast networks may be gearing up for the new fall season, but the White House is already in reruns. President Barack Obama’s prime time Congressional address slated for next Wednesday will be the sixth time he has commandeered network airtime in his eight month presidency.
- A set of proposed United Nations sex education guidelines promote access to legal abortion as a right.
- Supreme Court watchers believe that Justice John Paul Stevens’ decision to hire only one law clerk for the 2010 term signals that he may be planning to step down next summer.
- The White House admitted yesterday that they helped the Department of Education draft plans instructing teachers nationwide to assign students a paper on how to “help the president.”
- According to USA Today, environmentalists and others supporting global warming legislation are outspending the measure’s opponents in the television advertising skirmish underway in advance of Senate action this month.
Relying heavily on the slots and roulette tables to bring in revenue, it’s no surprise this recession hit Nevada’s economy especially hard:
The Silver State’s unemployment rose to 12.5 percent in July, while joblessness in especially hard-hit Las Vegas surged to 13.1 percent. It’s the highest jobless rate both statewide and locally since the state Department of Employment, Training and Rehabilitation began tracking data in 1976.
Bill Anderson, chief economist with the employment department, said Nevada remains mired in the longest, deepest recession since World War II, and recent labor-market trends don’t hint at any improvement. Joblessness in Nevada jumped 1.9 percentage points from April to June, the biggest three-month spike on record. Nevada shed nearly 28,000 jobs in the three-month period, including 15,000 jobs from June to July alone.”
One way for Nevada to make up some ground would be to reengage the nuclear industry. Yucca Mountain, the most studied geologic nuclear materials repository in the world, would generate over 2700 jobs during peak operations. It is not just those jobs that are at stake. According to a report done by the Department of Energy, stopping Yucca will kill 4700 jobs in the region influenced by the project. Unfortunately, this is precisely what Congress and the Obama Administration is about to do. Darren Goode of CongressDaily reports,
“House and Senate Democrats are well on their way to helping the Obama administration kill Nevada’s Yucca Mountain nuclear waste repository. Both chambers have approved FY10 Energy and Water Appropriations bills that match the administration’s $197 million request to let the Energy Department officially keep the project open on paper for a year while funding Energy Secretary Chu’s blue ribbon panel to develop an alternative plan for storing and managing nuclear waste.”
But Yucca Mountain is just the beginning of the story when it comes to opportunity lost for Nevada. The state potentially holds significant leverage because of Yucca Mountain. Instead of rejecting the spent fuel repository, Nevada could have set itself up as the nuclear technology capital of the U.S. at a time when countries across the globe are looking to nuclear technology to meet their energy and environmental goals. Such a strategy could result in thousands of high paying, highly skilled jobs at the exact time that Nevada could use them.
While no one can predict exactly what sorts of facilities would be built, there are plenty of examples to go by. For example, where better to build a nuclear fuel recycling facility then next to a spent fuel repository? Building a recycling plant, according to some estimates, would create 5000 jobs. As the U.S. builds more plants, it is certainly going to need more fuel, so how about an enrichment facility? One such plant in New Mexico will employ some 321 workers.
And with these new opportunities, the residents of Nevada will need plenty of clean, affordable power, so how about some nuclear power plants? At over a 1000 workers per plant, depending on the number of reactors, we are talking real, long-term jobs. Furthermore, there are research and development facilities that could be built to support innovation in the nuclear industry.
Nevada could be the nuclear capital of the world – if its politicians allow it so.