The Politics and Policy of Job Creation

The Politics and Policy of Job Creation

This week House and Senate leaders announced that Congress will do something to respond to rising unemployment before they adjourn for the year.  I don't know any economist — or anyone else, for that matter — who would argue that the current 10.2% unemployment rate and lack of job creation in this economic recovery is NOT a problem.  Quite the contrary – workers and their families are very concerned about the availability of jobs, and employers are concerned not only about being able to keep the workers they currently employ, but also being able to grow the workforce when practicable.

What will Congress' answer to the unemployment situation be?  Some of the suggestions have been out there a while: another extension of unemployment benefits, extending certain individual tax breaks, giving tax credits to small businesses, providing aid to state Medicaid programs, increased government investment in infrastructure projects, etc. And while there may be some merit and value to these suggestions, one has to wonder: what is the appropriate role for government to play in creating jobs?

The National Chamber Foundation and the American Enterprise Institute sponsored a forum this week which examined the "Challenges to Creating 20 Million New Jobs: What is the Proper Role of Government?" Some of the panelists' general comments:

  • You don't grow the economy by increasing taxes.
  • You don't grow the economy by increasing uncertainty (e.g., potential new government mandates on businesses).
  • Increased regulation, higher taxes, and higher costs (health care, energy) will make job creation more challenging in this recovery.
  • Job creation is most robust when the government limits its interference in the free market and allows the private sector to lead the way.
  • The American people are concerned about jobs, but they care more about freedom, opportunity and enterprise. 

Over the next few weeks, Congress should give serious thought to what government policies — if any — would actually result in jobs being created and unemployed Americans returning to work.  And while they're at it, they should also carefully consider the effects certain high profile legislation (e.g., health care reform, climate change, the so-called "Employee Free Choice Act") could have on job creation. 

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