If we’ve learned nothing else from the miserable experience of the past three years we have learned that massive government borrowing and spending creates debt, not jobs.
The Labor Department released it’s monthly Jobs report on April 1. The chart, tracks the results of the response by Presidents Bush and Obama to the current, deep recession Vs President Reagan’s response to an even worse recession 30 years ago.
In March employers added 216,000 jobs and the unemployment rate ticked down from 8.9% to 8.8%. The White House and friendly media hailed these statistics as “good news.” And compared to the past three years it was.
March was the best month of the Obama Administration – except for last spring when the government artificially inflated the numbers for a couple of months by hiring 600,000 temporary, part time census workers. But compared to past recoveries from recession, and compared to the kind of job growth America needs, March was anemic. Austan Goolsbee, chairman of President Obama’s Council of Economic Advisors came forward Friday morning with some positive spin:
…we are seeing signs that the initiatives put in place by this Administration…are creating the conditions for sustained growth and job creation.”
As the chart shows their largest initiative, the “stimulus,” enacted with frantic urgency on Obama’s 24th day in office – based on the promise that borrowing and spending $814 billion would create 3.7 million additional jobs by the end of 2010 – utterly failed. Instead, there were 2.6 million fewer jobs.
As the chart shows the number of jobs declined relentlessly as Obama and the Democratic Congress enacted a tsunami of spending and government intervention into the private sector. In December, 2010 they finally agreed to postpone the threatened tax increase on small business owners and investors for two years.
…private sector payrolls increased by 230,000 in March, marking 13 consecutive months of private employment growth.
Why would Goolsbee, representing an Administration that clearly considers government more important emphasize private sector growth? Because one of the Administration’s key initiatives, massive federal subsidies to preserve public sector jobs in State and local governments has failed. Since October state and local governments have laid off 141,000 employees.
More from Goolsbee:
The unemployment rate fell for the fourth straight month to 8.8 percent. The full percentage point drop in the unemployment rate over the past four months is the largest such decline since 1984…
The largest since 1984? What was happening in 1984?
In 1984 Americans were reaping the benefits of President Reagan’s successful response to a severe recession, tax cuts and deregulation. Compare this year with 1984:
- Over these past four months that Goolsbee is so proud of, job growth averaged 158,000.
- In 1984 employers added an average of 322,000 jobs per month.
- Because of population growth today’s workforce is 35% larger than in 1984. Thus, to match the 1984 rate of job growth today’s employers would have to add 436,000 jobs every month.
As the chart shows, under the Bush-Obama policies of government bail outs, massive deficit spending, new regulations, and threatened tax increases we’re still 7.3 million jobs below the previous employment peak in December, 2007.
But, by this time in the Reagan recovery, November, 1984, there were 4.4 million more jobs than at the previous employment peak, just before the 1980s recession began. Reagan rode his successful economic recovery to a reelection blowout that month, winning 49 states and the most electoral votes of any Presidential candidate in US history.
If job growth continues at the pace of the past four months, the best four months of his term so far, Obama will run for reelection in November, 2012 with fewer jobs than on the day he was sworn in, after spending trillions on bailouts and so-called “stimulus” largely justified by promises of job creation and prosperity.
The Bottom Line
Government doesn’t create jobs but, as President Reagan demonstrated, it can help create an economic environment that encourages investment in job creating enterprises. Or, as President Obama has demonstrated, it can discourage private sector risk-taking, causing employers to invest in fewer jobs.