The GOP’s ‘Joan Rivers’ spending cuts aren’t enough

Joanne Butler Contributor
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Late last week the House Republican Study Committee rolled out its political equivalent of Joan Rivers — something old that’s been “freshened up” many times. In this case, it’s the RSC’s list of spending cuts, which was unveiled with great fanfare despite containing nothing new of interest. What’s troubling is it indicates that some Republicans prefer to spend precious legislative time on their pet peeves instead of focusing on the nation’s top issue: jobs.

Now I’m a firm believer in cutting government spending, but it’s difficult to draw a straight line from eliminating a wasteful government program to creating a private-sector job. As in: reducing government spending will reduce the federal deficit, which will free up capital for businesses to expand and then the magical elves will… (Okay, I made up that last part.)

Or to put it another way, if we got rid of the Legal Services Corporation (a perennial candidate for the axe), how many private-sector jobs would be created — and when? The answer is nobody really knows. There are too many dots to connect.

Thrifty Indiana Governor Mitch Daniels has his “whack-to-jack” ratio (comparing savings from cutting a program to the political hassle involved); I’d like to propose a variant, a “whack-to-jobs” ratio. If Congress takes action to cut a program, redirect spending, change a regulation, etc., how many jobs will be created as a result? How about prioritizing those actions that will create more private-sector jobs now?

For example, many federal laws apply to businesses with 50 or more employees, which discourages small businesses from expanding.

Let’s say Emma has a consulting business with 49 employees. She’d like to expand her staff, but her HR manager reports that at 50 employees, Emma would have to deal with the complex requirements of laws like the Family Medical Leave Act (FMLA), which would apply not only to her fiftieth hire, but to the other 49 as well. Emma is unsure if her business could absorb the increased overhead costs, so she decides to keep her payroll below 50.

In today’s economic environment, we can expect this scenario is being repeated thousands of times every day — resulting in jobs not created, and people remaining unemployed.

A high-unemployment period is exactly the right time for Congress to revisit rules such as the 50-employee FMLA limit. A labor econometrician could calculate quickly the number of jobs that would be created if the limit were raised to 75, 100, or higher. It would also spark a healthy debate between conservatives and liberals on the appropriate levels of workforce rules in a radically changed economy.

Best of all, there would be a simple, unambiguous connection between congressional action (e.g., raising the FMLA limit to 100 employees) and increased employment.

Last November, Americans voted for change in the U.S. House because of our high unemployment rate. They expect House Republicans to take swift, concrete action to improve our economy and get us back to work. Republicans need to resist the temptation to dust off old shibboleths, and concentrate on that “whack-to-jobs” ratio. The clock is ticking. America is waiting.

Joanne Butler is a senior economics fellow at the Caesar Rodney Institute of Delaware. You can email her at joanne-butler@comcast.net.