Obama's Jobs Speech Rerun and the Need for a Bolder Agenda

Pundits are noticing the eerie parallels between Obama’s Jobs Speech and President Carter’s Malaise speech – almost three years into his first and only term, Carter gave the infamous ‘malaise’ speech to reboot his Presidency, dogged by both domestic economic challenges and foreign policy setbacks. The dour speech did more to gell the mood of the country than fix it. We figured out then that the problem we had was not a crisis in confidence so much as a crisis in leadership. America regained our confidence when we regained good leadership under Reagan.

So what can Obama say that would break the spell of our shaken and weak economy and get more jobs created? As he looks into his bag of BigGovtJobMaking tricks, he finds there is nothing left not done. After $1 trillion stimulus bills and $5 trillion in debt, every Keynesian button – expect “more of the same” – has been pushed. Already the White House is tamping down the expectations on the ‘Jobs Speech’, as it become noticed that he will say very little that is new. It’s all been done before. Courtesy of IBD:

Obama’s real goal at this point is a desperate one: the one job he most wants to save is his own. Some economy watchers are already saying its too late; GDP growth, if we are lucky enough to avoid a double dip, will be perhaps 1.5-2.5% on average now until election day, leaving unemployment not much lower than the 9.1% rate of today. The total number of jobs on election day 2012 will be perhaps 1 million LESS THAN ON ELECTION DAY 2008. No President since Hoover has had such a bad record.

Proposing yet another Government gimmick giveaway program, green jobs, purple jobs, whatever jobs, via government subsidies, will not cut it. These are tiny band-aids, and how will “More cowbell” of deficit spending stimulus fix the problem when it hasn’t done much so far? Now, if he had a magical epiphany that caused him to shed his leftwing ideological predilections, he MIGHT come up with a real and different economic plan, that had this in it:

  1. 18 month Federal regulatory moratorium. Repeal/halt all EPA regulation on CO2.
  2. Tax reform (a la Coburn and Simpson Bowles) to cut rates and close loopholes,  make permanent the Bush tax levels and/or make permanent adjustments that are not tax increases.
  3. Payroll tax relief that is permanent and wedded to social security and entitlement reform.
  4. Long-range plan to balance the budget and cap the debt, to keep and upgrade our credit worthiness.
  5. Obamacare repeal. Repeal the taxes, the job-killing mandates, and the subsidies that are unaffordable.
  6. Pass all pending free-trade deals.
  7. Deregulate healthcare to lower costs – allow prescription drug imports, allow purchase of health insurance across state lines, etc.
  8. Repeal/reform Frank-Dodd and Sarbanes-Oxley, in ways that will revive venture capital, IPOs and capital markets and avoid the too-big-to-fail taxpayers-on-the-hook moral hazard.
  9. Focus on reviving US manufacturing, get corporate tax laws changed to encourage repatriation of capital. Pay for lower taxes on production with consideration of 5% BTT (business transfer tax) on imports.

When you consider the big-ness of the above agenda, consider the ultimate smallness of spending even $100 billion or more on ‘stimulus’; deficit spending like this is ineffective and has delivered jobs at exorbitant costs (around $300,000 per created job). Would Obama propose this conservative market-oriented agenda? Hardly. This reverses much of his regulatory overreach and tax-and-spend agenda. But failing to move in this direction will be his undoing. He has already passed, implemented and tried his agenda – it failed. Either he reverses and changes course, or he’s a goner.

The Republicans will have a serious responsibility to step up and propose a serious and credible alternative plan, hopefully using some ideas as above, with the key principle that long-term economic growth, not short-term gimmicks, needs to be our policy objective. To that end, we need to avoid the distortions of temporary tax holidays at this time.  That may have been appropriate to get us through the 2008-2009 crisis, but we now face a different dynamic. We need to end the problem of ‘uncertainty’ by advocating for regulatory reform, and end to new regulations, and the need for more permanent solutions – permanent tax reform, permanent entitlement and spending reform that gets us to balance, and permanent changes to encourage production and wealth creation in the US.

Republicans have the opportunity to get their bolder ideas out there and offer something different and better.  I certainly hope that if Obama does embrace some of the above items,  whether tax reform, regulatory relief or other items, the Republicans leave the door open for compromise. We will need a new leader in Nov 2012, but our country can’t wait until then for some economic relief, and another Obama stimulus ‘rerun’ won’t cut it. We need serious private-sector job creation and we need it now. As the proverb has it: Fortune favors the bold. Dear Republicans:  Be bold.