In a radio address in November 2008, President-elect Barack Obama promised that when he took office he would provide “a new direction, new ideas, and new reforms that will create jobs and fuel long-term economic growth.”
Nearly three years after Obama took office, the unemployment rate has been rising instead of falling. Yet Obama is once again promising that in his address to Congress on Thursday, he will provide “new ideas” that will create jobs.
News reports and Obama’s comments in Detroit on Labor Day suggest he will propose a program that emphasizes tax credits for new hires, enhanced infrastructure spending, and yet another extension of unemployment benefits.
These ideas are temporary gimmicks along the lines of Obama’s failed stimulus plan and cash-for-clunkers. The stimulus plan temporarily boosted mainly government employment at a cost of at least $228,000 per job, according to data released by the Congressional Budget Office.
The cash-for-clunkers program cost $3 billion and “boosted auto sales by 360,000 during the two months it was in place,” according to a study NPR cited by the University of California at Berkeley and the University of Chicago. “But in the seven months that followed, sales were down by 360,000 compared to what they would have been without the program.”
Obama’s tax credit plan for new hires mirrors one President Jimmy Carter implemented in 1977. Under that program, the unemployment rate dipped by 1.5 percent but then continued to rise. In today’s dollars, the program cost $26 billion. An estimated two-thirds of those hired would have been hired anyway.
Obama’s new ideas last week brought us a report of zero job growth for August, the worst payroll numbers since September 2010. His new ideas have given us an unemployment rate for black youths that has jumped to 49.4 percent.
Obama’s ideas are like eating candy on an empty stomach: It gives you a momentary rush of energy, but two hours later, you feel sleepy, tired, and even hungrier than before.
In contrast, the old ideas implemented by President Ronald Reagan worked.
As the Joint Economic Committee reported in April 2000, “In 1981, newly elected President Ronald Reagan refocused fiscal policy on the long run. He proposed, and Congress passed, sharp cuts in marginal tax rates. The cuts increased incentives to work and stimulated growth. These were fundamental policy changes that provided the foundation for the Great Expansion that began in December 1982.”
As a result of the tax cuts that fueled economic growth, federal revenues between 1980 and 1990 went from just over $517 million to more than $1 trillion.
Whereas Obama has promised government action that is “bold and swift,” Reagan said: “The permanent recovery in employment, production, and investment we seek won’t come in a sharp, short spurt.”
While Obama is turning to tax credits and subsidies, Reagan said: “Quick fixes and artificial stimulants repeatedly applied over decades are what brought us the inflationary disorders that we’ve now paid such a heavy price to cure.”
The oldest idea of all is that government — like individuals — should live within its means. In what amounts to a fraud on the American people, Obama is claiming he favors cutting federal spending even as he has increased the federal debt as a percentage of GDP from 53.5 percent in 2009 to 72 percent and proposes new ways to spend money the government doesn’t have.
The only new idea that will boost employment and avoid further long-term debt downgrades is the election of a president who will reverse everything Obama has been doing and restore employers’ confidence in America.
That includes banishing excessive regulation that stifles entrepreneurship and costly programs like Obama’s healthcare plan. It includes an end to bashing business in general and Republicans in particular and drastically cutting government spending.
As noted in my story "The Real Problem With Government Spending
," even federal employees acknowledge that the federal government has become so bloated that 1 in 2 employees could be cut without reducing output.
Democrats attack Republican proposals for fixing the economy and creating jobs along the lines of Reagan’s policies as “old ideas.” But very often, old ideas are the best ideas.
Ronald Kessler is chief Washington correspondent of Newsmax.com. He is a New York Times best-selling author of books on the Secret Service, FBI, and CIA. His latest, "The Secrets of the FBI," has just been published. View his previous reports and get his dispatches sent to you free via email. Go Here Now.
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