Perhaps the reason for President Obama’s flat and energy-less speech Thursday night — TV cameras panning the convention floor actually showed delegates falling asleep — was that he already knew Friday’s jobs numbers were going to be a disaster. The August unemployment report completely punctured his argument that if you just give him four more years, his policies will fix the economy.
Of course, reading through the speech, I didn’t see the word “jobs” mentioned once. In fact, though I could be wrong, I didn’t see the word “growth” mentioned once.
What I did see were constant references to government. Obama has taken to calling it “citizenship.” But it’s the same old, same old. Whether it’s more money for the teachers’ unions, or more Solyndra-like green energy, or more for infrastructure, it translates to more government spending and dependency in a second Obama term, all to somehow be financed with tax hikes on the rich.
Unfortunately, as former President Clinton mentioned in his convention speech, the arithmetic doesn’t add up.
Taxing successful, upper-end earners, investors, and small-business owners will generate less than half the revenue Team Obama expects. Maybe far less than half, since taxing capital gets you less capital, lower investment, fewer jobs, and slower growth. This will lead to a huge revenue shortfall, all while spending as a share of GDP continues to rise, perhaps to 25 or 26 percent.
Despite the president’s argument, ever-larger government is the problem. It interferes with private-sector growth. Obama has never understood this. During his speech he mocked tax cuts and deregulation, not understanding that permanent tax incentives and easier regulatory burdens free the economy to produce more growth.
Taxing rich people in order to spend more on food stamps, welfare, disability insurance, unemployment insurance, and other forms of government dependency does not add up to anything other than larger budget deficits at slower economic-growth rates. Obama is paying people not to work. But it’s a losing economic strategy.
And that’s the problem with the jobs numbers. At less than 2 percent growth, we should expect anemic employment. It’s exactly what we’re getting. There were only 96,000 new nonfarm payrolls in August, way below Wall Street expectations. The prior two months were revised lower by a net 41,000.
And while the unemployment rate slipped to 8.1 percent, it declined for all the wrong reasons: 368,000 people left the civilian labor force. The small-business household survey dropped 119,000, the second consecutive large decline. Wages and the private workweek were flat. And the labor participation rate slipped to 63.5 percent from 63.7 percent.
If you count the unemployed, underemployed, and discouraged workers, as well as those who’ve left the labor force altogether, more than 20 million job seekers have evaporated. They’ve given up hope.
