By: Andrew Puzder
9/24/2012 03:55 PM
Editor’s Note: This analysis the first in a five-part series on Democrats’ mythical sound bites by Andrew Puzder, an economic adviser to Mitt Romney and CEO of CKE Restaurants, which employs about 21,000 workers.
President Obama has been attempting to blame Republicans in Congress for the failure of his economic policies to lower our nation’s chronic unemployment. Faced with the extremely negative August jobs report the day after his convention acceptance speech, the president stated that: “If Republicans are serious about getting rid of joblessness, they can create one million new jobs if Congress passes the jobs plan I sent them.”
Sound bite: It’s the Republicans’ fault.
This is one of a number of mythical sound bites the president and his surrogates repeat glibly and often despite the lack of any factual basis. As I will outline below, during the first two years of his term, President Obama proposed (and when Democrats were in complete control, actually passed) various pieces of legislation that failed to improve our economy but did succeed in increasing government regulation, driving costs higher for businesses, lowering incentives to work and increasing dependency.
To anyone with any business acumen, it was axiomatic that these policies would result in anemic growth and high unemployment. The electorate recognized this in the mid-term elections when it resoundingly gave Republicans control of the House of Representatives.
In response, the president first failed to adapt his policies to political and economic reality and then doubled down by offering more big government, increased dependency, incentive-killing legislation such as his “jobs bill.”
It is simply preposterous for the president to now complain because Republicans refuse to pass legislation that would codify the failed policies Democrats passed during the first half of his term when such policies patently failed and the electorate wisely rejected them. In short, sometimes bi-partisanship is severely overrated.
President Obama’s suffering economy
Perhaps the president has concluded that because the election is rapidly approaching, it’s too late for actual policy and better to just blame the Republicans. With 43 straight months of 8 percent or higher unemployment, more than 23 million Americans struggling to find work, 47 million Americans on food stamps, our national debt over $16 trillion following the President’s four $1-trillion-plus annual budget deficits, and an anemic 1.7 percent in second quarter GDP growth, the president better hope he can find someone to blame — and quickly.
Add to this scenario a drop of $4,000 in annual income per American household since President Obama took office while gas prices have doubled and health care premiums have climbed over $2,300 per family and you have an economic record that is an unmitigated disaster. Given the President’s economic policies, this should hardly surprise anyone outside the White House.
Three destructive Obama administration policies
First, there’s the legislation Democrats passed under President Obama to fix our economy during the nearly two years they had control of the presidency, the House and a filibuster-proof majority in the Senate. There’s the failed trillion-dollar stimulus that was supposed to keep unemployment below 8 percent and reduce it to 5.4 percent by now but did little other than increase our debt. The Job Impact of the American Recovery and Reinvestment Act.
Then there’s the ironically titled Patient Protection and Affordable Care Act (Obamacare) that was to reduce health care costs but has resulted only in cost increases that are set to continue in an upward spiral.
Finally, there’s the Dodd-Frank Wall Street Reform and Consumer Protection Act that essentially enshrined “too big to fail.” Its voluminous rules are some of the most convoluted and confusing our capital markets have ever seen burying community banks in regulations, stifling business and hurting consumers.
Obama’s free rein for two years—now it’s Republicans’ fault? Really?
Basically, for nearly two years, President Obama got whatever legislation he wanted. He signed massive legislative initiatives none of which has helped the economy recover. To the contrary, they have hurt the recovery. Now it’s the Republican’s fault that his policies have failed? Really?
A central theme of the “It’s the Republican’s fault” myth is that Republicans are refusing to act to improve the economy so as to hurt President Obama. How can we expect our post-partisan President Obama to succeed when those evil Republicans refuse to help him? After hearing the horrifically bad August jobs report, Senate Majority leader Harry Reid stated that: “The best way to speed up our recovery is for Republicans to stop their knee-jerk obstruction of every effort Democrats put forward and start working across the aisle to find common ground.”
Jobs bills stuck in Democratic Senate
The reality is that the House, the one branch of government the Republicans actually control, has passed 38, yes 38, separate jobs bills over the past 20 months. All of these bills are stuck in the Democratic-controlled Senate. You can easily track the progress of The House Republican Plan for America’s Job Creators and learn more about the 38 bills Republicans in the House have already passed that actually would help entrepreneurs do what they do best: Create the jobs, wealth and prosperity that benefit all Americans. Here’s the link. There is no similar link for the Democrat controlled Senate as they have passed no job-creating bills.
Surely, a president or a senate majority leader willing to work “across the aisle to find common ground” could find something to support in these 38 bills. Apparently, all 38 attempts to work across the aisle with Senate Democrats were insufficient.
But what about the president’s so called “jobs bill”? Would it actually create a million new jobs as he claims? As I explained in a recent Human Events article, the president’s jobs bill fails to do the one thing that might realistically result in job growth: Release the dynamic energy of our free enterprise system by getting government out of the way of job creators and letting them, well, create jobs. Rather than working with or encouraging the private sector, the president’s “jobs bill” resorts to the three things he seems to trust: Government, government and more government.
Obama aims to create government jobs
He proposes lowering unemployment by hiring government employees and investing in government infrastructure projects (shovel ready?). His “jobs bill” is nothing more than a second stimulus. Of course, he ignores that each of his proposed “job creating” government initiatives requires tax revenue and that tax revenue requires a self-sustaining cycle of private sector job creation. On the economy, this president consistently puts the proverbial government cart before the tax revenue horse.
Keeping teachers and other public employees on the job is certainly important; but it will not create a self-sustaining cycle of job creation. Public employee salaries are bills the private sector must pay by creating jobs and generating tax revenue. That’s how public employees are paid and public projects are financed. Public employees are not paid by the revenues they generate as the taxes they pay are of necessity less than their salaries and benefits. Otherwise, who would take the jobs? On a net basis, government employees are tax consumers rather than taxpayers.
Why private sector job growth matters
It is the private sector that must generate the tax revenue necessary to pay these public employees. Without private sector jobs there are no funds to pay any public employees or to fund infrastructure projects. Transferring federal tax dollars to states so that, for one more year, they can retain employees they are unable to afford absent state tax increases, will not create a self-sustaining cycle of job creation no matter how necessary the state employees may be. One would think the president’s experience with his first failed stimulus plan would have taught him this.
Second, while investing in infrastructure is certainly something the government should do and something we need, building roads and bridges will only create short-term jobs. It will not generate the self-sustaining cycle of private sector job creation we need for economic growth. We need roads and bridges so people with jobs who can afford to buy cars can use the roads and bridges to get to their jobs or so that goods can get to markets. In the long term, it isn’t the roads and bridges that create the jobs; it is private sector jobs that create the need for roads and bridges as well as the funds to build them.
Until the president understands how our free enterprise system actually works, the likelihood of any “jobs bill” he proposes actually working is de minimis. The government is incapable of creating the jobs we need. It can, however, facilitate the private sector doing so by encouraging rather than constantly attacking and placing barriers before private sector job creators. Republicans should be praised for refusing to pass a second stimulus packaged as a “jobs bill” that essentially spends billions of dollars for a short-term fix with an even lower probability of long-term success than the president’s first stimulus. However, since this “jobs bill” failed to pass, it is possible for Democrats to enshrine it in a sound bite myth.
Time to look at reality
It’s time to ignore the myths and look at reality. While he may be well intentioned and sincere, President Obama simply lacks the intuitive understanding and experience to effectively deal with the economic issues our nation is facing. His government-centric approach simply is not working and is never going to work. It creates a dependency culture with regulatory and tax policies that are antithetical to growth. History is replete with examples of such approaches failing. Most recently, Europe tried it. Europe failed.
This is the antithesis of the policies Gov. Romney would pursue as president. Gov. Romney’s policy as president would be to promote personal freedom and independence, encourage the private sector, make regulation more prudent and less intrusive and eliminate crony capitalism.
Our choice is clear. We are either going to be a free enterprise-based society or a government-centered, government-dependent society. The difference between the two candidates is that simple. We need a president who understands the American free enterprise system and what we need to do to get it back on track. Luckily, in Mitt Romney we have such a candidate. Hopefully, we will give him the opportunity to lead us beyond the myths come November.
Andrew Puzder is CEO of CKE Restaurants, Inc., which employs about 21,000 people at Carl’s Jr. and Hardee’s restaurants. He is co-author of “Job Creation: How it Really Works and Why the Government doesn’t Understand it.” He is an Economic Adviser to presidential candidate Mitt Romney.
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