Obama and Jobs

After this month's resolution of the debt-ceiling crisis, Washington's new focus is on jobs, unemployment and what Congress and the Obama administration can do to reassure the American public, restore economic growth, and get people back to work.

The current period is characterized by persistent and far-reaching uncertainty. Markets are uncertain (look at the extreme volatility here and around the world), consumers are uncertain (look at their sluggish spending), businesses are uncertain (they are sitting on huge amounts of cash and are not investing -- either in equipment and infrastructure, or human capital), and government policymaking is uncertain (the prolonged hassling that led to the debt-ceiling resolution and, now, the uncertainty about what will happen with this new select committee by Thanksgiving).

What I'm hearing from business leaders is that this is now the period when they are making their capital-allocation and human-capital decisions for 2012. With this much uncertainty, they tend to be hesitant, conservative. If this is the case, we can expect both economic growth and hiring to be very slow between now and the end of 2012.

President Obama is seen as delegating major issues and not leading until the very end. His effectiveness will improve if he can learn to be a conviction President -- like Ronald Reagan or FDR, both of who excelled at crafting narratives for the American public. These narratives were important in explaining what the country has been through and where it is going. People quickly see through platitudes and pep talks.

Economics is, fundamentally, about psychology, and the president can play a significant role in altering the nation's psychology. Our political and economic leaders, therefore, need to change the psychology of expectations in a way that promotes greater certainty about the future.

So here are some specific suggestions that might change the current economic dynamic:

1. An unprecedented joint press conference with the president, treasury secretary and federal reserve chairman in which they explain clearly why the recovery from a financial crisis (as distinguished from the typical business-cycle downturn) takes longer and what they are each doing to promote a faster recovery.
2. Obama should explicitly embrace structural reform of the tax code. He headed this way with Boehner, but he should commit by September 6 to a plan outline that lowers rates, broadens the base, and simplifies the code in the way that Reagan and Senator Bill Bradley did in 1986. Waiting until November is not an option, especially since the select committee could deadlock and produce nothing except the automatic spending cuts.
3. Obama should announce all the "dumb rules" he is eliminating (as per his January 2011 Executive Order) and then, following the approach of President George H.W. Bush, impose an immediate regulatory moratorium on all federal regulations that might slow economic growth and hiring. That moratorium should remain in place until growth gets back to 3 percent and unemployment goes below 7.5 percent.
4. Stabilize the housing market, which is still in a deflationary spiral. Until that happens, the entire economy will remain sluggish. Obama should be working with every member of his administration, the Federal Reserve, and Congress who have ideas about this matter. We used to pressure the Japanese to have their banks get all of their nonperforming loans off their balance sheets. Have we followed our own advice?
5. Launch an "America Works!" initiative, possibly through the Commerce Department with high visibility and support from the White House. Encourage Americans to buy goods made in this country and highlight companies that are expanding their U.S. manufacturing and repatriating jobs that once went overseas. If Americans want more jobs in America, then we should buy from Americans. (Note: this is a matter of consumer preference and not protectionism.)
6. Highlight what is happening at DARPA -- the Defense Advanced Research Projects Agency. DARPA gave us the Internet. What is it doing now that could sound a positive note about our future and demonstrate why these types of basic research investments matter?
7. Obama should not give up on the "Grand Bargain" with House Speaker Boehner.
8. Prepare a legislative package for early September with the "low-hanging fruit" like the payroll tax cut, the infrastructure bank, etc. Such a bill will be helpful but, standing alone, will not be sufficient to alter current psychology.

Undoubtedly, many others will offer ideas in the weeks ahead. The key point is that our leaders must find ways to work together for the country's common good.

Former Education Secretary William J. Bennett used to say that in Washington, you're either on offense or on defense, and it's a whole lot better to be on offense. Congress has perhaps the lowest public approval in history, and President Obama's effectiveness and leadership are being questioned not just by Republicans but also by a growing number of Democrats. We need an all-out effort to put Americans back to work. Our leaders need to lead now; waiting for autumn is unacceptable.

Charles Kolb is president of the nonpartisan, business-led Committee for Economic Development in Washington, D.C. He served in the George H.W. Bush White House as Deputy Assistant to the President for Domestic Policy. The above views are solely the author's.

 

Comments

[wtaylorhi]

09:16 PM on 08/25/2011

I do agree with you that the govt needs to fix the mortgage crisis. It is still broken! He needs to use his power to help homeowners without alot of red tape involved. I think alot of the unemployment issues are due to companies outsourcing and too many immigrants (overpopulation) that has also contributed to this unemployment crisis. Americans need to start their own home based businesses and become more self employed.

[kenhamlett]

07:51 PM on 08/25/2011

It is an interesting article. The problem is that these are the kinds of things that should have been done by the President long ago, not toward the end of the third year of an economic and jobs crisis. Once lost, confidence is a difficult thing to rebuild. I sincerely hope that the President is going to return with some significant proposals for reviving the economy and creating jobs. But, only that will truly restore any confidence at this time.

[markgoode]

09:04 PM on 08/25/2011

F&F.

[Intelligenti Pauca]

01:45 PM on 08/25/2011

http://ecopolitology.org/2011/01/12/obama-created-more-jobs-in-2010-than-bush-did-in-8-years/

"Jobs are growing in the U.S. They've grown for 12 straight months under Obama's economic stimulus policies and, in 2010 alone, more jobs were added than in Bush's 8 years as president."

"Furthermore, the 0.4% drop in the unemployment rate in December from 9.8% to 9.4% "was the steepest one-month fall since 1998." Yes, 1998, when Clinton was president."

[wayne the pain]

11:49 AM on 08/25/2011

The president met yesterday with the CEO's of General Electric and American Express in his research for a jobs proposal! What about Krugman and Reich? He is looking for answers in all the wrong places! This poor man has a deep need to be with and please rich white men. He can't help himself he identifies with corporate America so much he can't do what is needed. He is fatally flawed and Democrats need to stop hoping he will do what he "appeared" to promise in the 08 campaign. Obama is a corporate bootlicker first, last, and always!

[Yolinda Beach]

11:00 AM on 08/25/2011

What a great new idea. You want jobs in the US then buy from US companies made in America! So innovative! I buy as much as possible made in USA, Just bought NB running shoes, believe it or not Made in USA.

[Allosaur2010]

10:56 AM on 08/25/2011

What the heck is wrong with protectionism?
Our greatest weapon is that we're the biggest market on the planet. Let's get our jobs back by making it difficult to market anything here not made by Americans.

I yield the floor if anyone wants to explain why that's a bad idea.

[den1953]

08:51 AM on 08/25/2011

The fact that the Republicans are not in favor of another stimulus plan might send Washington into another way around job creation, like elimination of this nations current tax system, at least a study of a new tax system that can be created to boost the economy. A consumption tax in place of the current income tax system and corporate taxes, it might just solve the gain of capital by corporations and give more money in Americans pockets to purchase more goods. In general it should create more jobs in theory it isn't perfect but by all means it would finally end the whole tax argument about who is scamming the system or who isn't paying taxes.......If the corporations want to continue to sit on there profits then tax the savings and give the businesses incentives to hire , maybe have a savings bond drive to help build the nations infrastructure, look Washington is fractured beyond repair without additional funds job stagnation is here to stay for years...........

[WitchyWoman]

08:46 AM on 08/25/2011

"Promises Promises...Why do I believe?"

http://youtu.be/HxaT19rQ-Do

[rootytoot]

08:39 AM on 08/25/2011

This fiscal train has left the station. THere is no good way out of this mess. Both parties for too long have spent and grown gov to this point. Europe is not done imploding, greece and others will default. If the US does not endure the short term pain of getting our fiscal house in order, we too will default. Our dollar is being devalued, were spending up to 70 percent of gdp. There is NO easy or painless way out of this. WHICH candidate is willing to speak the truth to the people? We know it isn't Obama.

[Helzapoppin]

08:27 AM on 08/25/2011

There was a time when one could argue economics was mostly about psychology. With 70% of all economic activity coming from consumer spending, the peace of mind of consumers could make or break an economy. It's becoming a different story now, however. Because it doesn't matter how consumers feel about the future - if they simply don't have the disposable income anymore (or any income in many cases), there's nothing to spend. Economic recovery must start with restoring the middle class. Period.

[ProudConservative]

07:32 AM on 08/25/2011

It's a sad day in America when our President has been exposed an ineffective. Even with his oratorical skills, few people are willing to listen or believe him anymore. His election was based on the fact of him being half-black and gives great speeches. No economic background, no leadership background, no bi-partisan background coupled with little political experience. It's time to elect someone with the necessary skills to lead our country.

[chloebe]

06:33 AM on 08/25/2011

We need a Democratic primary....

[JimR]

07:52 AM on 08/25/2011

If progressives want to challenge Obama, they should grow a spine and announce.

[stingjim]

11:10 AM on 08/25/2011

Yes, Barney Franks for President

[blackopns]

06:16 AM on 08/25/2011

The U.S. is in the 4th year of a 7 year economic downturn. The private sector will not expand/hire with an uncetain economic policy. Next, jobs will never return to the U.S. as they were 20 years ago. The corporations need workers....that is true. They do not necessarily need U.S. workers. The U.S. has educated (and continues to educate) enough foreign students that have returned to their countries to fill any labor needs. Corporations have moved MOST of their business outside of the U.S. and continue to make billions on cheaper labor worldwide. There is no incentive for corporations to return to the U.S. Their products are made and sold wordwide. Look at where your computer was made.....not in the U.S. that is for sure. The Federal government can not create LONG TERM jobs IE growth. That is done by the private sector. We will contiune to struggle economically through the next election. If Pres. Obama is reelected, the private busiiness sector will continue their belt tightening , hiring only as an absolute necessity, and contiune to ride out the U.S. economic uncertainty. Profits will contiune due to worldwide outside of the U.S.

[Dan Bates]

05:35 AM on 08/25/2011

The destruction of a free country continues...The only ones to benefit from Obama are his cronies and huge donors....another fact....

[doroda]

03:59 AM on 08/25/2011

Obama should fulfill his promises otherwise he will end up being a great talker and become very unpopular.he should go ahead and explain to people why the economic recovery is taking longer than usual.most leaders make great promises and quickly forget them once they are in power making hopeful people very mad.Obama is not alone in his unfulfilled promises in my countryhttp://www.tusijisunde.com/2011/good-morning-kenya-is-it-really-a-new-dawn/ people are still hoping that the government will improve its economic situation