Claims for new jobless benefits jumped by half-a-million last week. The unemployment rate hovers near 10 percent, and isn’t expected to decline any time soon. President Barack Obama reacted in knee-jerk fashion, by calling for more federal intervention in the economy.
“Small businesses and community banks that loan to small businesses have been lagging behind,” he said. “If we want this economy to create more jobs more quickly, we need to help them.” He wants to provide some $12 billion in tax breaks to small businesses and $30 billion to small banks.
Yet the federal spending is piling up, and seems to be doing little except running up the national debt.
Earlier this month, lawmakers returned from vacation for a day so they could pass a $26 billion measure that would supposedly “save” the jobs of 300,000 teachers. The joke’s on them: The New York Times reports that many school districts plan to bank the bailout money instead of hiring teachers back for this school year. Los Angeles, for example, “laid off 682 teachers and counselors and about 2,000 support workers this spring and was not sure it would be able to hire any of them back with the stimulus money,” the paper reports.
This particular batch of spending, we’re told, was paid for. Lawmakers have promised to trim tens of billions from food stamps in the year 2014. We’ll just have to hold our breath to see if those cuts actually happen.
All this comes on the heels of the $800 billion (and counting) “stimulus” bill. Obama promised that bill would keep unemployment below 8 percent. Oops. These days, Vice President Joe Biden’s been reduced to complaining that $800 billion simply wasn’t enough.
Yet if, in fact, federal spending can boost the economy, it ought to be in overdrive by now. It’s not. So what’s holding things back? It could be death by a thousand cuts. Or, to be more specific, death by thousands of pages of regulations.
This year alone, Obama has signed a massive health care bill and a financial regulation bill. Nobody knows exactly what’s contained in those thousands of pages -- not even the people who voted for them.
“We have to pass the bill so that you can find out what is in it, away from the fog of the controversy,” House Speaker Nancy Pelosi explained before the health care measure passed in March. On the financial front, “No one will know until this is actually in place how it works,” Sen. Christopher Dodd explained before the Senate passed his financial reform measure. How reassuring.
It’s no surprise to learn that Dodd’s bill contains measures that will make it more difficult to hire workers.
One provision “pushes all federally regulated financial firms that do business with the government and their subcontractors to hire more women and minorities,” the McClatchy news service reported recently. The only jobs this provision will create are federal jobs at a new Office of Minority and Women Inclusion to be included in each federal regulatory agency.
Meanwhile, a “largely overlooked provision of the law gives federal agencies expanded powers to write regulations dictating pay at financial firms,” The Washington Post adds. “How they choose to use these powers could have a major impact on whether banks pursue excessive risks.”
These are just a couple of the regulatory time bombs tucked into the financial bill. Rest assured many more will come to light in the years ahead. The same holds true for the 2,000-plus page health care bill. President Obama got angry at Rep. Eric Cantor, R-Vir., for bringing a copy of that bill to the health care summit in February.
But Cantor wasn’t bringing a “prop,” he was bringing a copy of the law we’ll all have to live under for years to come (unless it’s repealed). It’s unlikely that anyone has read and understands that entire measure. But we’ll be learning about expensive, job-killing aspects of it as they arise through the years ahead.
Over-regulation doesn’t work. Remember Sarbanes-Oxley, passed in the wake of the Enron scandal? It was supposed to protect Americans against financial shenanigans. But it didn’t prevent Bernie Madoff from looting customers for billions. Regulators at the Securities and Exchange Commission didn’t protect us, either, even though they should have known about Madoff.
“I gift-wrapped and delivered the largest Ponzi scheme in history to them and somehow they couldn’t be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority,” whistleblower Harry Markopolos told a House committee after Madoff’s fraud had been revealed. Markopolos had been warning about Madoff for years.
Uncertainty makes business leaders (and all of us) tentative. Our country can have heavy regulation, or it can have steady job growth. It’s time to choose which path to pursue.