Obama Tries to Make Job Creation Molehills Into Mountains

Our “the buck stops here” President explains why the buck doesn’t stop anywhere close to his office:

In remarks recorded on Wednesday on his campaign-style bus tour in Illinois and aired during his holiday in Martha’s Vineyard, Massachusetts, Obama said the stalled construction, trade and payroll tax bills could give a boost to the economy.

“The only thing preventing us from passing these bills is the refusal by some in Congress to put country ahead of party. That’s the problem right now. That’s what’s holding this country back,” the president said in his weekly radio address, which is also transmitted on the Internet.

Let’s see now – are those bills really that simple, and are they really what’s holding this country back?

Construction. The FAA bill has been stalled since April or so, because the GOP wanted to reverse the change to union formation:

The labor provision would overturn a National Mediation Board rule approved last year that allows airline and railroad employees to form a union by a simple majority of those voting. Under the old rule, workers who didn’t vote were treated as “no” votes.

Republicans complain that the new rule reverses 75 years of precedent to favor labor unions. Democrats and union officials say the change puts airline and railroad elections under the same rules required for unionizing all other companies.

So right away we can see that this isn’t a simple issue. We can also see that it is the Dems who are not passing the bill (and it is the President who threatened to veto it), because of this provision.

But enough with the finger pointing. How many jobs are at stake here? Well, they want to spend $11 billion on these construction projects, and they say that there are 70,000 jobs at risk. 70,000 isn’t all that many, particularly when you figure that it works out to almost $160K/job.

Trade. There are three trade bills that are stalled, plus a bill to reform the patent system.

• Patent Bill: They want to streamline the patent system and change to a first-to-file system. Good idea, but my prediction is that the economic impact will be miniscule.
• Trade Agreements: There are 3 trade agreements awaiting approval, with Columbia, Panama, and South Korea. I think we can safely ignore the economic impact of the Columbia and Panama agreements (we export 5X more stuff to Korea than to Columbia & Panama combined). The trade agreement is supposed to create 70,000 jobs, though many claim that it will simply make exporting of jobs easier. But let’s not worry about that, nor the fact that now some Dems are trying to block it, nor the issues with details of the bill, nor the fact that it is likely to increase the trade deficit. We’ll give the President full credit for 84,000 jobs (if we include Panama and Columbia).

Payroll Taxes. President Obama wants to extend the temporary payroll tax cuts that have thus far been completely ineffective. I think Paul Ryan concisely captures my views:

“I’m not a Keynesian, so I don’t think sugar-high economics works,” the Wisconsin Republican said at a policy discussion hosted by The Hill in June. “We’ve sort of proven this already, a number of times. Temporary tax rebates don’t work to create economic growth. Permanent tax changes do.”

Summary. So where does that leave us?

• FAA Bill: 70,000 jobs (at an exorbitant price)
• Patent Bill: Good idea, but job impact?
• Trade Agreements: As likely to have a negative job impact as a positive one, but we’ll go ahead and add 84,000 jobs
• Payroll Tax Cut Extension: Hasn’t worked so far.

So Congress is to blame for 154K jobs, or about 2% of what we’ve lost. There are legitimate reasons to debate all of these bills, and no compelling reason to rush potentially bad legislation through the approval process.

If Obama really wants to create jobs, he should stop trying to magnify the importance of these dinky little bits of legislation, and start addressing our fundamentals instead.