An unemployment rate of 10% has put the administration and its allies in Congress on the defensive. The president’s $787-billion stimulus was supposed to stem job losses and keep unemployment from reaching double digits. Predictably, there has been little or no benefit from the poorly designed stimulus. So back to the drawing board we go. The administration is proposing a second stimulus plan. Does this plan have any chance at success? It’s doubtful.
The problem here is that President Obama and his inner circle of economic advisors are short on relevant private-sector experience. The president spent most of his career as an academic, community organizer, and politician. He did work as an attorney for a short time, but I wouldn’t consider that relevant to creating jobs. Timothy Geithner, secretary of the Treasury, spent most of his entire career as a Washington bureaucrat. Larry Summers, director of the National Economic Council, worked in academia and Washington. Christina Romer, chair of the Council of Economic Advisors, is an academic. Peter Orszag, director of the Office of Management and Budget, spent his career in government and Washington think tanks. Fed chairman Ben Bernanke, a Bush appointee, but someone the president would be remiss not to consult on economic matters, is an academic. Probably not the first group of people you would look to for advice on creating jobs.
The president, his advisors, and Congress are overlooking a fundamental barrier to job creation-themselves. Businesses are not hiring because the president and the Congress are creating great uncertainty with their grand schemes for health care, cap and trade, card check, and future tax policy. Until the administration fully grasps this and fixes the problem, no amount of stimulus is going to create a sustainable recovery in employment. Anybody with experience in the private sector would have understood this from the start. It’s time to bring in some replacements.
Jeremy Jones, CFA
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