7/4/10

The idiots in Washington

Following Nancy Pelosi's idiotic statement that unemployment benefits are the best source of job creation, and Obama's buffoonish claim that the June jobs report is 'evidence' that we are 'headed in the right direction', the Wall Street Journal came up with this rant:

President Obama hailed yesterday's jobs report for June as more evidence that "we're headed in the right direction," and with any more such good news the U.S. economy will soon be where Japan was in its lost growth decade of the 1990s. If we're lucky.

The reality is that this is another disappointing jobs report at a time in the recovery when new hiring ought to be picking up. Economic growth turned positive about a year ago, and normal recoveries become self-sustaining: Job creation follows the pickup in growth, which means rising income, which leads to more consumer spending, which leads to more business confidence and investment, and even more job creation.

This jobs recovery seems stuck in the Washington mud. The decline in the headline unemployment rate to 9.5% from 9.7% is welcome news, as is the continued gain in manufacturing (9,000 jobs, and 136,000 since last December). However, the labor force shrank again by some 652,000 following a 322,000 decline in May. The average hours worked per week fell to 34.1 from 34.2, when employers should be adding to worker shifts given the big gains in productivity.

After some healthy gains earlier this year, private hiring has been barely positive in the last two months, up 33,000 in May and 83,000 in June. (Census hiring of temporary workers fell by a net 225,000.) A useful rule of thumb is that roughly 150,000 new jobs are needed each month to keep up with normal growth in the labor market to accommodate young entrants and immigrants. To get the jobless rate down even to 8% will require 250,000 new jobs a month for the next three years.

Private employers appear to be in a holding pattern, waiting on hiring decisions until they see how much more the political class will raise their costs. A pair of recent reports by the Business Roundtable and the Manufacturers Alliance have warned about the destructive impact that higher taxes, trade restrictions and more regulation, among other policies, are having on job creation and new investment.

Meanwhile, Washington continues to believe its own advertising that government spending creates growth. Speaker Nancy Pelosi asserted this week that another extension of jobless benefits will cause more people to work, and Mr. Obama responded to a question in Wisconsin about job creation by saying that he wants to create a new tax break for Americans to weatherize their homes to reduce greenhouse gas emissions. Their worst critics couldn't make this up.

No, they couldn't.

They just don't, they really don't get it.