What Obama Must Say in Jobs Speech

Friday, 02 Sep 2011 01:51 PM

By Frank Donatelli

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President Barack Obama is poised to give a national speech next week on his plan to create jobs. One would say, "It's about time" given the fact that the unemployment rate has not been so high for such a sustained period of time since the Great Depression.

In his two and one half years in office, he has focused more on expanding the size and scope of the federal government than private-sector job creation. The question is whether his new focus will finally result in job growth.

According to news reports, the president will call for a program that emphasizes tax credits for new hires, enhanced infrastructure spending, and yet another extension of unemployment benefits.

Properly developed, some of these ideas have merit but the key fact about the speech will not be what he says, but what he won't say.

Tax credits for new hires have merit in some cases such as hiring unskilled workers or the otherwise hardcore unemployed. The credit reduces a firm's marginal costs allowing the worker to gradually become more productive. A credit is unlikely to employ the more skilled workers who have been laid off because of poor business conditions.

Infrastructure spending definitely has merit, but only if states have a major involvement to determine worthwhile projects. Obama's plan will also undoubtedly require paying union wage which will inflate costs up to 30 percent.

Yet another extension of unemployment benefits from the current 99 weeks is a bad idea that will just delay the necessary transition for workers to new and more productive jobs.

If the news reports are accurate, then what won't the president say? He won't swear off tax increases. Employers are still uncertain of their tax burden going forward. American companies have nearly $2 trillion on their balance sheets in foreign profits that could be used to create jobs here in America.

A cut in the corporate tax rate could change that. Even worse, the president still is determined to increase taxes on small businesses which create the largest number of new jobs.

The president didn't pledge real regulatory reform. New rules and actions that burden job creation continue unabated. New regs burdening the healthcare industry (Obamacare) and financial services (Dodd-Frank) move forward.

The EPA continues to retard all aspects of energy development. The Justice Department just this week announced a new action against AT&T and the telecom industry.

Obama's regulators also just announced they are suing a number of large banks for statements and actions arising out of the financial crisis a few years ago, an action guaranteed to make home loans less available and affordable.

If he sued other agencies of his own government for misleading statements and bad actions, he could silence his whole administration.

The main impediment to job creation continues to be uncertainty, especially cost uncertainty for businesses over labor, energy, healthcare, general regulatory costs, and taxes.

Sadly, the president still refuses to address this unsettling and chaotic economic environment that his policies have created.

Frank Donatelli is Chairman of GOPAC, the center for educating and electing a new generation of Republican leaders.

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