While the jobs plan President Obama proposed last week contains some ideas that American business supports, it falls short. It focuses too much on government spending and temporary tax breaks and too little on the trade, energy, tax, regulatory and entitlement reforms that will jolt our economy and job market back to life.
The proposed payroll tax cut would likely offer a measure of relief for some small and medium-size businesses. Eligible enterprises that were already planning to add employees will welcome the hiring tax credits offered in the plan. Yet one-year, one-time tax changes will not create new jobs in significant numbers--and unfortunately, neither will the plan as a whole. It fails to adequately address the fundamental challenge facing our economy--too little growth--or the business reality that keeps companies from expanding payrolls--too few customers.
And this week we have learned that the administration won't cut one dime of spending to offset the $447 billion cost of the jobs bill. Instead, successful small businesses, productive industries and those Americans most capable of investing in growth will foot the bill through major tax increases. Any jobs that might have been supported by other measures in the plan would be more than wiped out by these tax hikes. This doesn't make economic sense.
So what should we do instead? The president touched on some of the needed steps to spur growth, boost demand and trigger hiring, but he failed to go far enough and overlooked some important opportunities.
He was right to call for passage of the long-pending free trade agreements with South Korea, Colombia and Panama. But the United States should also be vigorously negotiating new trade and investment agreements around the world. The White House should administratively complete the task of modernizing arcane export-control rules. Reaching the 95% of the world's consumers who live outside our borders is the best way to find new customers for our businesses and create new jobs.
Additionally, if the U.S. restored its share of global travel and tourism to what it was in 2000, we could create 1.3 million American jobs. Standing in the way are interminable visa procedures, maddening airport hassles and a growing perception around the world that the U.S. does not welcome international visitors. The president and Congress can change that.
Mr. Obama was right to call on Congress to support investments in infrastructure. But rather than focus on one-shot infusions of money for favored projects (much like the 2009 stimulus program), the president should urge Congress to enact a multiyear reauthorization of the nation's core surface transportation, aviation and water resources programs with full funding. By providing predictable funding streams, removing regulatory roadblocks and establishing supportive legal frameworks, we could also unlock up to $250 billion in private infrastructure capital and create huge numbers of new jobs.
We need affordable energy--and our nation could have plenty of it, and the jobs that come with it, by responsibly developing the enormous resources beneath our lands and off our shores. Producing more American energy would be a boon to our economy, our workers, our national security and our government tax coffers. The administration has yet to seize this extraordinary opportunity. It should.
Finally, Mr. Obama touched only briefly on tax, regulatory and entitlement reforms. These reforms should be the centerpiece of an American jobs plan--not mere footnotes.
Instead of piecemeal tax breaks, for example, Congress and the president should negotiate and pass comprehensive pro-growth tax reform that lowers individual and corporate rates and broadens the tax base.
And while the administration has recently taken some steps to rein in regulations, it does not fully appreciate the negative impact that its new regulatory rulemakings--in health care, labor, capital markets and environmental policy--are having on business confidence, expansion and jobs. Congress must reaffirm its oversight role, and the president should issue executive orders to reform the federal environmental permitting process for new infrastructure and energy projects, and to declare a time-out on new major discretionary regulations.
Without meaningful entitlement reform, an ever-increasing share of the government's budget and the nation's wealth will be eaten away by runaway costs and unsustainable obligations. No economy can grow or create jobs at its full potential when faced with such massive and expanding claims on its capital, credit and other resources.
Business likes bottom lines. Here's mine: Rather than tinker around the edges with temporary tax cuts and more government spending, the administration and Congress should embrace a bolder and more effective plan to open markets, attract new investments in infrastructure, develop American energy, and create powerful growth incentives by reforming taxes, regulations and entitlements. Start doing these things and America's private sector can get on with the job of putting America back to work.
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