Conservative Principles Now

President Obama announced a renewed focus on jobs in his State of the Union address.  His budget stated (PDF) “it is critical that we take steps to jump-start job creation”. He’s right, of course. He is also explicitly admitted the failure of last year’s $862 billion “jump-start” stimulus program.  On March 4, the House passed yet another admission of failure as it moved a $17.6 billion mini jobs bill built around an ineffective hiring tax credit and highway spending.  Why another bill?  Because even politicians cannot duck the data forever, such as today’s jobs report released by the Labor Department which means the Obama jobs deficit stands at 8.3 million workers.

According to the latest report (PDF), the U.S. economy shed another 36,000 jobs in February.  The unemployment rate stands at 9.7 percent, almost double the rate thought consistent with full employment.  Further, the only reason the unemployment rate isn’t higher still is that millions of Americans have left the workforce altogether as shown by a drop in the labor force participation rate to 64.8 percent from a peak in 2007 of 66.4 percent.

The economy’s continued poor performance means President Obama is falling further and further behind on his promise to create millions of new jobs.  Obama promised that if elected he would create 3.5 million jobs by the end of 2010 through new economic policies, beginning with the enactment of a massive economic stimulus package. Accompanying his jobs promise, the President also emphasized accountability and measuring his presidency by results. The result of the President’s jobs promise means total employment which in February stood at 129.5 million should be at least 137.8 million by the end of 2010, leaving the Obama jobs deficit at almost 8.3 million jobs.

Fortunately, the economy’s natural resilience spurred by powerful monetary stimulus from the Federal Reserve means the economy is growing again, albeit at a slow trend pace.  Consequently, job losses may persist for months to come.  Even the Administration’s rosy forecast for economic growth for the next two years leaves the unemployment rate around 10 percent through all of 2010 well into 2011.  By his own official forecast and by his own standard, the Obama jobs deficit attests that his policies have failed and will continue to fail.

The federal government can stimulate the economy in the short term not by increased spending and borrowing but rather by improving incentives and the general economic environment.  Businesses invest not when they are manipulated by Washington, but when they are confident enough to take risks in pursuit of opportunity.  Individuals and businesses across the nation see tremendous opportunities for starting new businesses, investment, hiring new workers, expanding into new markets. Understandably, many are holding back due to concerns about the economy.  However, many others are holding back due to concerns about the threatening policies from Washington while others are holding back because existing tax and regulatory burdens are already excessive.  For private sector job creation to “jumpstart” in the President’s words, the first step is to fire Washington’s job destruction machine.   The President and his allies need not repudiate their ideology, as helpful as that would be, but they do need to hit the pause button on their anti-growth policies.

According to Amanda Carpenter at The Washington Times, Office of Management and Budget Director Peter Orzag decided to change the way the Obama administration counts the number of jobs saved or created under the American Reinvestment and Recovery Act, otherwise known as the economic stimulus package. Instead of determining whether jobs are saved or created, the Obama administration will count “jobs funded.” Apparently, determining whether or not the government spending boondoggle is stimulating job creation is too much of a hassle.

This decision is a play taken straight out of the Department of Justice’s playbook during the Clinton Administration. In 1994, Congress created the Office of Community Oriented Policing Services (COPS) with the goal of adding 100,000 new police officers to America’s streets by 2000. In far too many cases, local police departments used federal funds to employ currently employed officers instead of hiring additional officers as required by law. Yet, COPS continued to claim that it was making steady progress toward its 100,000 additional officer goal. In response to criticisms of its counting methodology by the Government Accountability Office and Justice Department Inspector General, COPS changed from counting the number new officers hired to counting “officers funded.” This counting gimmick allowed COPS to misleadingly appear committed to adding 100,000 new cops, while it doled out billions of dollars regardless of whether new cops were hired.

Not only did the program fail to reduce crime, but research by the Heritage Foundation has demonstrated that COPS fell far short of its goal of actually adding 100,000 new police officers. No one should be surprised that the economic stimulus is a failure when the Obama administration has to rely on counting gimmicks.