What to Do About Jobs
October 2, 2009
Heritage Foundation
Unemployment rose to 9.8 percent last month, the government reported today. This is the highest level since June 1983 and comes after President Obama and his Congressional allies enacted massive spending bills intended to prevent this very scenario.
“So what went wrong?” The Heritage Foundation’s Conn Carroll asks. “Simply put, Obama’s experts relied on some fundamentally unsound assumptions and now our nation is paying the price in lost jobs and record deficits.” He cites a new Harvard study demonstrating that there is no “multiplier effect” for government spending. This was one of the main justifications for the “stimulus.”
The right way to boost the economy, Carroll argues, is “by improving incentives and the general economic environment.” As Heritage labor economist James Sherk argues, the government needs to step back and allow entrepreneurs and investors to flourish. For example, lawmakers could curb the capital gains tax, which would reduce the penalty on investment, and commit to spending restraint, which would alleviate the “threat of higher interest rates and higher inflation.”
But President Obama and his Congressional allies seem set on expanding the size of government, raising taxes and increasing regulatory burdens. None of these policies is conducive to economic growth.