Top Down Stimulus Vs Bottom UP Stimulus

Lets put the monthly jobs numbers in context, as a progress report comparing the Bush-Obama, government driven bailouts, spending and regulation to the Reagan recovery plan based on reduced taxes and reduced regulation to unleash the private sector.

When the May Jobs report was released a month ago it showed 431,000 more jobs than in April, a huge number that would normally indicate strong economic growth ahead.  President Obama jumped in front of the cameras to proclaim that “our economy is getting stronger by the day.”

But the details contradicted the headline number.  It turned out that 91% of the new jobs logged in May were temporary, part-time, Census jobs.  The private sector added only 33,000 jobs.

The June jobs report, released Friday, shows the Census-driven boost has turned into a Census-driven decrease.  The total number of jobs declined by 125,000 due largely to the Census winding down and laying off temporary workers.  So, this month the President focused not on the total number of jobs, but on Private sector jobs.  Private employers did manage to add 83,000 jobs in June.  In a brief speech the President noted this increase and added:

Our economy has created about 600,000 private sector jobs this year.  Make no mistake, we are headed in the right direction…

The precise number is 593,000 or about 99 thousand per month over the past six months.  This is about 50,000 fewer jobs per month than the growth in the working age population.  Here are the stories behind the charts above that track private sector jobs:

Seventeen months ago President Obama inherited a deep recession.  His response has been to:

• Expand the bailout program begun under the Bush administration;
• Schedule massive income tax increases on small business and investors to begin in 2011
• Enshrine as explicit government policy the theory that some companies and financial institutions are deemed too-big-to-fail and will always be rescued from the consequences of their own negligence, especially if their workforce is unionized;
• Enact the so-called “stimulus” in February, 2009, nearly $800 Billion in extra borrowing and spending, hyped with the promise that it would, in Obama’s words “immediately jumpstart job creation;”
• Subsidize blue-sky energy schemes that are too expensive and unreliable to survive in the competitive marketplace;
• Enact a government take-over of health care and health insurance that will increase costs and, ultimately, ration care.
• Introduce legislation that would cause an artificial, government imposed energy shortage and add a new tax on all energy consumption by businesses and households.

Like President Obama, President Reagan inherited a deep recession as he took office in 1981. By some measures it was worse than the current downturn.  Reagan’s economic program, based on his commitment to liberty, was the opposite of Obama’s:

• Reduce regulation and government intervention in the private economy;
• Cut taxes to leave capital in the hands of those who had earned it and were best equipped to invest in job creating enterprises;
• Unshackle the creative and productive energies of The People from the burden of imperious  government.

The upper chart shows the job market began a faltering recovery.  There are still 2.6 million fewer private sector jobs than when the stimulus was enacted in 16 months ago.

The results in the lower chart speak for themselves.  Reagan’s policies turned the job market around after 17 months of losses. The Reagan economy created an average of 233,000 jobs per month, for 90 straight months.