Former President Bill Clinton’s long-shot win in his 1992 campaign for the presidency was focused on the theme put forth by Louisiana’s James Carville: “It’s the economy, stupid!” Eighteen years later—in the second year of the first term of Barack Obama—those words still ring true. An economy that feeds families and educates their children is more important than who wins in political elections, but that dominant economic factor often decides those winners and losers.
Here are some sobering facts about today’s economy. The current recession—which no credible economist claims has ended—removed over 8 million jobs from the U.S. economy. Some of those jobs will return. Some won’t and will have to be replaced by new start-ups and expansions. According to recently revised government figures, November was the first month since the recession began that the number of jobs actually increased—by a paltry 4,000. Unfortunately, that infinitesimal gain was engulfed by the revision downward of the October job totals by 16,000 and the announcement that another 85,000 jobs were lost in December.
The official unemployment rate remained steady at 10.0 percent, according to the latest government statistics, but that figure is somewhat misleading. Some 660,000 individuals simply gave up looking for work and aren’t counted in that figure. When the drop-outs and part-time workers who had or want full-time jobs are counted, the “underemployment” rate in December was actually 17.3 percent.
In order to replace the 8 million jobs lost since this recession began, two things have to happen: job losses would have to stop entirely and an average of 200,000 jobs per month would have to be added to the workplace for the next 40 months. No credible economist will predict that those labor market dynamics will occur.
Enter the politics.
President Obama’s popularity is dropping. He will not be on the ballot in the mid-term elections next November, and if he were, he would certainly not be the buoyant force that lifted all Democratic boats in the fall of 2008. The independent voters not affiliated with either of the major political parties are moving away from the President and his party’s majorities in Congress. Several factors are influencing that movement, including an exploding federal deficit and health care legislation that is unpopular with a significant majority of the voters. But the economy will still be the key dynamic in defining the political outcomes of both the 2010 and 2012 elections.
Logic would indicate that President Obama and the Democratic Congressional majorities would base their agenda on proposals that would do nothing to stifle private sector job growth and everything to enhance it. Unfortunately, that is not the direction they are taking. The businesses—large and small—that create and maintain jobs cannot stand uncertainty, excessive regulations, and taxation rates and other government imposed cost factors that retard their profitability and diminish their competitive edge. The agenda being pushed in Congress and in the federal regulatory agencies does all of that and more.
Higher payroll taxes and health care costs, more government paperwork and red tape, higher energy costs, and greater government intervention in the marketplace and in labor-management relations will do anything but spur new job creation. The President and most of his followers in Congress aren’t stupid and should know this. Even more than in 1992, the economy will be the critical issue in the 2010 and 2012 elections. Supporting an agenda that further harms it would be a terminal political mistake.
Dan Juneau is the President of the Louisiana Association of Business and Industry.