President Obama Talks Jobs

June 30th, 2011 at 12:24 am

President Obama gave a press conference today and elaborated a number of jobs ideas.  Since I’ve been focusing on that part of the agenda for a while, here’s what I heard, with some commentary.

Things the Administration Can Do

“[Review] government regulations so that we can fix any rules in place that are an unnecessary burden on businesses.”

Businesses always complain about regs—no question they create an expense.  Barring law suits, it would be a lot cheaper for food producers and restaurants, e.g., not to worry about food safety.  But burdens like that are necessary.  It’s not easy to come up with unnecessary ones, and even if you did, I doubt you’d end up generating a lot of jobs by getting rid of them (though we should do so, of course, and Cass Sunstein at OMB has been on that case for a while).

There is a way, however, to get more jobs traction in this space.  Don’t get rid of the regs–streamline them.  It often takes too long, many months instead of a few weeks, to complete the environment or safety reviews, for example, that need to occur before a project can get started.  That’s maybe something we could live with at 5% unemployment, but not at 9%.

Speeding up the necessary regulatory process would do a lot more for jobs than getting rid of unnecessary regs.

“Get small businesses and start-ups the financing they need to grow and expand.”

There’s been a lot of this already, including a $30 billion dollar program to incentivize banks to lend to small businesses.  My take is that this helped a little but there’s unlikely much of a bang for the buck here.  It’s true that small businesses still face some credit constraints, but their bigger problem is not enough people coming through their doors…i.e., demand.

Make sure workers have the “right skills and training for manufacturing jobs in companies all across America — jobs that companies are looking to fill.”

Again, sure.  But don’t expect supply-side solutions to do much for what’s fundamentally a demand problem.  From what I can tell, there really aren’t a lot of “jobs that companies are looking to fill.”

Things Congress Can Do

“…send me a bill that would make it easier for entrepreneurs to patent a new product or idea.”

Again, let’s do it…I’m for it.  But not an obvious jobs plan.

“…send me a bill that puts construction workers back on the job rebuilding roads and bridges –- not by having government fund and pick every project, but by providing loans to private companies and states and local governments on the basis of merit and not politics.”

Good one.  This is a plea to fund the infrastructure bank idea that the President has wanted to pass for a while.  There’s a move afoot to use some of the initial revenue gains from another tax repatriation holiday for the overseas profits of American multinationals (“initial” is the key word—this plan is big revenue loser).  Don’t go there!

“…advance a set of trade agreements that would allow American businesses to sell more of their goods and services to countries in Asia and South America -– agreements that would support tens of thousands of American jobs while helping those adversely affected by trade.”

I’ll have to get back to this one.  For now, suffice it to say that both sides exaggerate the job impacts of trade deals.  One thing for sure: our trade deals have never led to the net export boom their advocates predict.  More open trade has in fact meant larger trade deficits for us.  And that has little to do with trade deals, anyway.

“And right now, we could give middle-class families the security of knowing that the tax cut I signed in December will be there for one more year.”

Extend the middle class tax cuts.  Everyone should see that one coming.  The question is, do we hold the line and let the sun finally set on the high-end tax cuts ?  That line broke last December.  It would be very good for our fiscal health to not break it again.

The President also continued to talk about extending the payroll tax holiday, perhaps as part of the debt deal.

All told, I was happy to see the President make a solid, unequivocal call for targeting the jobs deficit along with the budget deficit. This is a drumbeat he needs to keep up, and I promise to do my part to help keep the rhythm going.

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14 comments in reply to "President Obama Talks Jobs"

  1. John says:

    You’re right – all of these ideas come from a supply-side perspective; not a single one from a demand side.

    The Manchurian president.

  2. foosion says:

    All of which is more than outweighed by:

    “Of course, one of the most important and urgent things we can do for the economy is something that both parties are working on right now –- and that’s reducing our nation’s deficit.”

    Adopting this framing is one of Obama’s biggest mistakes.

    An infrastructure bank might help, but direct federal spending and direct aid to states are the real answer. As far as I can tell, the problem at the state level isn’t access to borrowing, it’s the need to balance their budgets.

    Tax cuts – raising the tax rate on high income and spending the money now is better than leaving tax rates low and then cutting spending in an effort to balance the budget, given marginal propensities to save, etc.

    You appear to agree that the other proposals don’t do much.

    Targeting jobs isn’t enough, actually doing something is needed.

  3. Tyler says:

    FDR, 1936: “Never before in all our history [has the Right] been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”

  4. Mary says:

    These are all entirely reasonable positions. I’m a little curious about this.

    “Get small businesses and start-ups the financing they need to grow and expand.”

    Not to refer everything back to this site (I am intrigued by it right now), but there was this anecdote/post: – artisanal shops. They are actually more prevalent than maybe many people think. I do my grocery shopping at a health food store, and they tend to carry these goods: soaps, socks, candies, honey, bags, scarves, stuff like that. You can also find them online. They often don’t have a lot of employees, but they provide a particular good.

    The problem is that their production costs tend to be higher, in part, because they use better quality ingredients, and when people are hurting for money, they cut these kinds of goods out opting for the cheaper versions of necessary products (I’m thinking back to the third speaker on your panel, how she had to start shopping at Walmart….)

    So small businesses can end up losing to big businesses with their big scale during recessions not necessarily because people don’t want the former’s products, but because they can’t afford them. Not only is this bad for the economy, it means that people are consuming inferior products and the variety of the products diminish.

    More generally, I think that for most people there is a bit of a trade off: less and better quality, or more and worse quality, and Americans tend to opt for the latter. I think that if people are serious about keeping jobs in America, they also have to be serious about their consumption habits.

    Anyway, I wish I had some great ideas on job creation, but I don’t. It seems like a really tough problem. In my opinion, it’s not just recovering from the recession (which is a bit of a chicken and egg problem); there is also a cultural component that doesn’t help the situation.

    • Michael says:

      Actually, it’s an insanely trivial problem. Right now, we can borrow at 3%, and we have a $2 trillion infrastructure deficit. I defy you to repair $2 trillion in already extant infrastructure without creating jobs.

  5. Scot says:

    Patents increase jobs? I never knew that. I thought patents reduced output and converted consumer surplus to producer surplus. I thought that reduced output implied a requirement for less labor. I must have missed something when I took economics.

  6. Jim Pharo says:

    I thought the President’s remarks were really just tragic. A massive program of tweaking, pushing peas around, and generally milling about hoping for a deus ex machina.

    I know the President is bright and his heart is in the right place, but sadly he’s been “captured” as fully and as early as any modern President. He (like you) seem to think that we just need another round of stimulus, or some more tax hikes, plus some super-creative styling of regulatory reform, when the only medicine that will work is the same medicine that worked last time: a job offer to every American who wants one (and even some who don’t).

    Until the government is prepared to open an office in every city and town in the US into which any American can walk and get a job, this is all just kubuki-theatre.

    It’s all quite tragic because I believe that Obama had a small chance of actually reversing our downward spiral, and has blown that chance, so that a decade or more of needless pain and suffering is now inevitable.

  7. Auros says:

    “Speeding up the necessary regulatory process would do a lot more for jobs than getting rid of unnecessary regs.”

    The most obvious way to speed up regulatory approvals would be to HIRE MORE INSPECTORS, and pay them for overtime to get caught up on the backlog. It also might let us be more thorough — currently there are so few inspectors for food facilities that it’s often YEARS between inspections. If places knew they had to count on getting inspected every 6-12 months, they might be less lax, and we might not have problems like the contaminated peanut products from a year or two back…

  8. Carol says:

    The middle class tax cut? Is he talking about the payroll tax suspension (hopefully suspended rather than repealed)? If so, I thought that was for 1 year only.

    • Michael says:

      Nah, he’s talking about the extension of the Bush tax cuts for the wealthy, which also included a tiny reacharound for the middle class.

  9. David R says:

    From the Post

    “The President also continued to talk about extending the payroll tax holiday, perhaps as part of the debt deal.

    All told, I was happy to see the President make a solid, unequivocal call for targeting the jobs deficit along with the budget deficit. This is a drumbeat he needs to keep up”

    1. No, the Payroll tax is an incredibly ineffective method to create jobs. Those who support it need to explain the economic logic and reasoning behind it. Just saying something does not make it true.

    2. No, policy targeting both the job deficit and the budget deficit cannot be done. Any policy to improve one in the short term must come at the expense of the other. Why won’t economists simply tell that simple truth. We are smart people, but not smart enough to figure out a policy that reduces the job deficit and at the same time reduces the budget deficit. To pretent we can just makes people want to pat us on the head, chuckle and move on.

  10. PeonInChief says:

    Middle class tax cut? Aside from the Making Work Pay credit and the SS tax cut, most middle class families haven’t gotten squat. Indeed couples with a taxable income between $17K and $57K pay the same rate with or without the tax cuts. Since this is probably the majority of households (the median income is about $50K), the “tax cut” is an illusion.

  11. Michael says:

    That is a speech from a man who believes that America is in irrevocable decline and it is his job to administer that decline such that it is slightly less awful for those enduring it.

  12. Misaki says:

    “All told, I was happy to see the President make a solid, unequivocal call for targeting the jobs deficit along with the budget deficit.”

    Yes, tho it would be more encouraging if he was advocating an actual effective solution, such as this one: