There was a moment in President Obama's speech to a joint session of Congress Thursday night when Candidate Obama returned to the limelight. Unfortunately, it was short-lived. Behind all the passion and eloquence that Obama was able to muster for one of the biggest speeches of his presidency, there was the same old stuff.
And Americans should expect the same old results.
While it's not quite accurate to say that Obama double-downed on the failed economic policies of his administration -- his $447 billion jobs proposal is half the 2009 stimulus -- there was absolutely nothing to suggest that Obama is prepared to change course. All the lofty rhetoric couldn't mask the president's continued commitment to Keynesian economics and willful ignorance of the needs of job creators.
The truth requires listening to those who create jobs. I represent more than 2,000 tech companies in my day job, but I also hear from lots of entrepreneurs and other business leaders. Since the early 2011 launch of my book, The Comeback: How Innovation will Restore the American Dream, I have traversed the country speaking to varied groups and after each talk I am surrounded by job creators with similar stories. The furniture maker in upstate New York; the couple with a landscape company, nursery and day care center in Michigan; the Virginia tech start up; the Oregon inventor and the Florida restaurant owner: they all are patriotic Americans who want to grow their businesses and help the economy. But none of them are hiring.
Why? For very good reasons, many related to the tough economic environment but many -- startlingly 0 -- related to policies of our government. I ask why no one, especially those in power, raises these subjects. More often than not, the answer is some version of the famous retort by Col. Nathan Jessep in the movie A Few Good Men: Because Americans "can't handle the truth."
Well, I think Americans can handle the truth, and I offer these unconventional views in the spirit that a healthy economy and jobs are vital to our future.
Our anti-discrimination laws hurt new jobs creation. Our nation has tens of thousands of underemployed lawyers eager to take on the cause of any fired worker. Anti-discrimination lawsuits and EEOC complaints are easy to file, costly and time-consuming to defend. Combine this with our inability to take responsibility for our own failures and we have a litigation cocktail which discourages hiring. Of course discrimination against individuals based on suspect classification is terrible, but the laws aren't helpful in encouraging new hires. We are not yet Europe, which makes every dismissal costly, but we can take advice from Laurence Parisot, the head of France's largest employers' union, Movement of the French Enterprises, who said, "We will hire more people if it's made easier to fire them."
Two-year unemployment compensation discourages jobs. According to an analysis by the Federal Reserve Bank of San Francisco, the Obama Administration's extension of unemployment benefits to 99 weeks increased the U.S. jobless rate as much as 0.8 percentage points. Or put another way, serious job seeking occurs when benefits are about to run out. As an employer, I have twice experienced job candidates asking to delay their start date until after unemployment payments end. I am not alone. In a recent article, The Wall Street Journal recently quoted an Alabama farmer looking to hire who was encountering "Americans who showed up to apply for jobs demanded that he pay them off the books so that they can continue to collect unemployment benefits." As I've argued before, one way to end this fraud is to tie long-term unemployment benefits to volunteer work.
The 2010 stimulus package did not boost the economy. The $787 billion stimulus package was divided into roughly three parts: a third to the states so they could avoid tough financial choices; a third to taxpayers in the form of barely noticeable reduction in taxes and a third for pork barrel projects, the so-called "shovel ready" boondoggles that replaced real infrastructure investment. What do we have to show for all this? An unemployment rate above 9 percent and anemic 2011 GDP growth. If the money had at least been invested in real capital infrastructure we would be better off. The same is true with the so-called "cash-for-clunkers" program, first-time homebuyers and other feel-good programs. Each one borrowed from our children so we can feel better today. Shameful!
Our political leadership's business antipathy and uncertainty on taxes, health care and spending discourage jobs creation. People running and owning businesses face political uncertainty in so many areas. They have no idea of how much and what type of taxes they will have to pay over the next few years. They face a new, far-reaching health care law that imposes new costs and may or may not be repealed by a new Congress or the Supreme Court. They fear a president who has no business background, few advisers with business experience, and who encourages an anti-business climate, higher taxes on wealth creators and class warfare. And they have the National Labor Relations Board telling companies in which states they can manufacture and seeking to make secret overnight unionization the status quo.
High corporate taxes and pro-union protectionism discourages jobs creation. At 35 percent, the U.S. has one of the highest corporate tax rate in the developed world, which forces businesses to invest abroad. The United States also has not passed a free trade agreement in six years. Although the president talks a good game on free trade, he and his Democratic allies keep adding new conditions to the Panama, Colombia and South Korea free trade agreements that have been stalled for years. This means our job-creating exporters pay more than our competitors.
Can Americans handle this truth? I think they can, but it will require leadership and responsibility from our elected leaders to do something about it. We need to stop with the little ideas, like lowering the tax withholding and even good ideas like Patent Reform, and go to the real issues -- even if they are uncomfortable. Challenge Americans to accept responsibility, sacrifice for their children and contribute to society. The status quo is leading us down the path of decline.
Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA), the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times bestselling book, "The Comeback: How Innovation Will Restore the American Dream."
Follow Gary Shapiro on Twitter: www.twitter.com/GaryShapiro
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Did the 2,000+ tech companies that you "represent" approve or sign-off on this political grandstanding? Do your views match the majority of the CEA? Who is paying you to commission these articles and what does it have to do with the Consumer Electronics Association?
Are you scribing these on the CEA's dime?
As someone that works in CE, I'm positive that Samsung, Sony, or even Panasonic don't necessary agree with your viewpoints, nor would they find it cute.
If you know everything, explain why Sony's TV division has been in the red since 2003. Even they are outsourcing to China and Korea.
And, of course, unions are bad, health care costs too high, etc. The biggest job killer in our country today is the republican party.
In just one instance, repeated many times over, take Termany as an example. They have free health care. So there is no Medicare portion of payroll taxes. They pay for their free healthcare through a sales tax (consumption tax, 19%, 7% for food), rather than a payroll tax (labor). They have no real capital gains tax to speak of (though it does exist). Income taxes are taken out of your paycheck and the average German does not even file a tax return.
As long as this country desires for domestic labor and capital to pay for all of the Federal social programs, we will be at a disadvantage compared to other countries who pay for their social programs through sales taxes.
Domestic sales taxes burden all products equally, regardless of where they are made. Domestic capital and labor taxes burden domestic production (capital and labor), making foreign products cheaper than they should be, because they are not burdened with US payroll or capital taxes.
Think globally.
3%-100% workers comp 100% being roofers and such in some parts of the country
7 paid hollidays, 1-3 weeks vacation
200-1000.00 per month in health care costs
if they have a company car 200.00 insurance 600 note 300 gas 200 maint.
3% match retirement
1. Discrimination - the problem isn't with the worker, but with the litigation. Place limits on what the attorney gets from a settlement and that will take the fizz out of your litigation cocktail. Discriminated workers need protection.
2. Shorten unemployment - workers who won't work commit fraud. Do you council your companies to report this? Also, a system that cuts off all support without the ability to get back on your feet discourages movement. Universal health care takes this out of the equation.
3. Government stimulus doesn't work - Shovel ready is a myth. Construction is no "quick fix", but a "near term" (1 - 2 years out) solution. The problem with the last round was that government pointed to a fallow, rocky field of infrastructure projects, shoved a sack of seeds at those meant to "fix it", folded their arms and said, "When's supper?"
Two years later and the construction industries have a well tilled field (jobs in the pipeline) and could make great use of another round of infrastructure investment.
4. Employers hire when they can make profit from the labor. Period. Taxes and regs figure into the equation, but are only a small variable. Those waiting for the "crystal ball" to clear will be waiting forever.
5. High corporate taxes are "sticker price". Eliminate the "discounts" and lower the sticker, sure, but you don't drop the price and THEN get rid of the discounts. Ask your 2,000 business customers.
1. I agree that tort reform should also target the incentives for attorneys. That could go a long way to end frivolous lawsuits (loser pays?) without limiting the rights of workers who've truly been discriminated against.
2. I think the main problem here is that the examples Gary sites are just the two people moronic enough to mention it. But there are Dept of Labor stats to back up the proposition that intense job hunting begins when benefits are about to run out. These indiscrete candidates just happen to talk about it openly. And what about instead of universal health care we were to open up the market for individual healthcare by leveling the playing field and removing corporate tax incentives for health coverage. Nobody ever quit a job and worried where they were going to get CAR insurance. ;-)
3. This was just great: "When's supper". Love it. Still, I'd rather the next round of stimulus come from private individuals, which it would if govt policies were inspiring confidence.
5. I think tax reform overall is desperately needed, and you make a valid point here as well.
Again, thanks for the thought-provoking commentary. Enjoyed it very much.
On the unemployment issue, this is not only a Fed Reserve finding, but also research undertaken by President Obama's new economic adviser.
“Challenge Americans to accept responsibility, sacrifice for their children and contribute to society. The status quo is leading us down the path of decline.” For you information most Americans who are not extremely wealthy have taken responsibility, sacrificed the most and contributed more to our society than you would give them credit for. The decline you speak of has been going on since the early 80’s driven by the irresponsibility and lack of sacrifice of the wealthiest of Americans. Corporate self-interest is the real “jobs killer”.
“Two-year unemployment compensation discourages jobs.” Total cr@p. I doubt the lure of a paltry weekly unemployment benefit that will expire would entice more than a small handful of the unemployed from taking a job.
The 2010 stimulus package did not boost the economy. If you make the assumption that the Recovery Act was supposed to “boost the economy” then you may be right. The Recovery Act in fact was meant to stabilize the economy and prevent further economic deterioration which it probably has done to some extent.
“Our political leadership's business antipathy and uncertainty on taxes, health care and spending discourage jobs creation.” I’m not going to hire because politicians and the government scare me? I’m pretty sure businesses would hire more workers if they believed there was profit to be made regardless.
Pick Me, Pick me!!!
I say Disinformation.
Automatically assumes that every unemployed person is abusing the system and jsut living high on the hog with that few hundred a week. Maybe after they get foreclosed, lose their car and move back in with mom and dad....
THe stimulus at the very least halted what was becoming a total meltdown and even worse stats. Then you could've had it both ways (say the stimulus failed and then say we didn't do enough if there was no stimulus). Sad...
People who own business' aren't facing political uncertainty, they are facing a lack of demand due to 3 decades of offshoring and free market ideology.
The ole 35% corporate taxes is the biggest lie I've heard yet... And your thought on union protectionism is a flat out joke.
What a sad article from a free market over country stooge...
What could be more American than our right to free association. Is there anywhere else in society where you would endorse forcing someone to join an organization whether or not they wanted to?
Further, it's a big planet with lots of places to build stuff. If the machinists union makes the US inhospitable to Boeing, Boeing's going to build their planes elsewhere. The plant that the President is visiting tomorrow in North Carolina to introduce his jobs bill just opened up a new production line in Costa Rica (I know, odd choice for a POTUS visit). It's a competitive world and there are lots of countries out there trying to lure capital and jobs away. Protectionism is a short-term band-aid, not a long-term strategy.