Misinformed Democrats Prescribe Wrong Remedy for a Sick Economy
The Obama administration and Democratic controlled Congress remain misinformed on how to fix the nation’s unemployment problem. In our current economic crisis we can no longer afford to be led by politicians who implement policies that do more harm than good.
Contrary to the liberal belief, the unemployment rate in our country remains high because we are not creating enough jobs -- not because workers are being laid off. Unemployment has increased over the past three years primarily because job creation in the private sector has dropped. The following data from James Sherk's Heritage study illustrate this point:
- According to the Bureau of Labor Statistics, in the last quarter of 2007, businesses created 7.7 million jobs and discarded 7.4 million. If these levels stayed the same through 2009 employers would have created 7.1 million more jobs and eliminated 3.9 million fewer than what actually happened.
- The absence of new jobs accounts for 65 percent of the current recession’s lower employment.
- Compared to the current recession, in the 2001 recession employers shed 3.1 million more jobs. However, more importantly, the total level of employment has fallen during the current recession because businesses have created 8.6 million fewer new jobs than in 2001.
Simply put, the reason why there is a shortage of new jobs is because businesses do not have incentives to invest. Given the unstable economic environment, employers are considering it too risky to start new projects.
The mistake that the current administration is making is assuming that spending more will encourage businesses to invest. However, the exact opposite is true. By attempting to solve the unemployment problem by creating new government jobs, the administration is funding a fantasy. We must urge Congress to address the root of this problem.
Congress should look at the larger picture -- they should be implementing policies that will encourage private investment. For example, according to the Heritage Foundation, a decrease in the corporate tax rate from 35 to 25 percent would create 2 million jobs annually for the next decade. These types of economically responsible policies will lead businesses to expand and create more jobs.
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