Jobs at the heart of both Obama, Romney pitches
10/27/2012 8:13 PM
05/16/2014 8:07 PM
Which candidate would create more jobs as president?
Independent analyses from Macroeconomic Advisers and Moody’s Analytics predict a net gain of about 12 million U.S. jobs by 2016, no matter who is president.
Still, job creation dominates the campaign. The nation is slowly clawing out of the Great Recession but remains about 10 million jobs shy of the number needed to return to 2008 levels.
A president is only one puzzle piece in the economic picture. Other pieces include Congress, the Federal Reserve and the overall state of the national and world economies, along with the economic confidence of consumers and business owners.
It’s that confidence, as much as any statistic, that determines whether cash registers ring and employers add jobs.
“Presidents can have a modest effect on this by remaining optimistic, by acting as cheerleader,” said Frank Lenk, chief economist at the Mid-America Regional Council.
Here’s the landscape on which President Barack Obama and challenger Mitt Romney are talking about job creation:
In 2008, employers cut millions of jobs in the wake of the banking and housing market collapses. Obama took office at the job-loss pit in January 2009.
Net job losses continued throughout 2009, but at a slower pace than in 2008. Congress OK’d Obama’s economic stimulus plan which, along with short-term hiring to conduct the Census, boosted jobs into net-gain territory in early 2010. But the stimulus bump was temporary. Net job losses returned for four months in 2010.
Since mid-2010, net employment gains (public and private sectors combined) have been steady. Not great — just steady. The private sector has added jobs for 31 consecutive months.
Yet, a job-market malaise persists. Many well-paying, full-time, middle-class jobs have been replaced by part-time and contract work. Real household income has stagnated. About 12 million Americans are out of work and job hunting. A nearly equal number tell surveyors they’d prefer full-time over the part-time work they have.
Employers aren’t racing to add staff. They’re worried about the election’s outcome, the possible end of Bush-era tax cuts, planned cuts in federal spending, the future of health care reform and high fuel costs.
Here’s how the two candidates say they’d fix that.
Romney embraces supply-side remedies for job creation, principally lower taxes for businesses and increased exports. He says he will work with Congress to:
• Cut taxes on corporations and entrepreneurs as a means to free up money for hiring.
• Encourage energy jobs by reducing regulatory burdens on businesses and by fast-tracking permits and approvals for exploration and development of North American oil and gas reserves.
Repeal the Affordable Care Act (aka Obamacare), repeal the Dodd-Frank Wall Street regulation reform and amend the Sarbanes-Oxley Act that demanded more transparency of publicly traded companies, all with the goal of reducing businesses’ costs of regulation compliance.
• Consolidate dozens of federal workforce training programs into one program at a single agency, designed to more efficiently create a quality workforce that employers need.
• Expand free-trade agreements to improve foreign markets for U.S. goods and declare China a “currency manipulator,” imposing duties to make Chinese goods more expensive.
• Support states’ right-to-work laws — which put an end to union-only shops — and amend the National Labor Relations Act to “protect the right of business owners to allocate their capital as they see fit.”
Free-market economists generally support Romney’s platform.
Obama believes in job creation through demand-side economics — with lower taxes to put more money in consumers’ pockets — and more spending by government. His plan for job growth was the American Jobs Act, introduced last year, to:
• Cut payroll taxes in half for 98 percent of U.S. businesses to free up money for hiring.
Provide a payroll tax holiday to businesses totaling $50 million in new jobs or increased wages of current workers.
• Give tax credits for hiring military veterans and long-term unemployed workers.
• Put government funds into upgrading public schools and public infrastructure — roads, bridges, rails, waterways and air traffic control systems — and join in public-private partnerships to rehabilitate homes, businesses and communities.
• Allow unemployment benefits for workers whose employers let them engage in work-sharing schedules as alternatives to layoffs.
• Subsidize jobs and training for low-income youths and adults. A related plan, included in the 2013 fiscal year budget, would create a community college fund to train workers to fill manufacturing, clean-energy and technology jobs.
The act, opposed by Republicans, did not pass. Economists estimated it might have created 1.9 million to 2.6 million jobs.
Obama also would encourage U.S. job creation by eliminating tax breaks for companies that outsource jobs overseas.
The “Sage of Omaha,” Warren Buffett, is blunt: Jobs grow when there’s greater demand for goods and services.
“That spending could come from businesses since corporations have record profits and can access lines of credit at record-low interest rates,” Lenk said. Or, he said, the spending could come from government. Or it could come from consumers who have the jobs, the income and the security to buy houses, cars and other things.
After the election, the two parties will continue wrangling over job-creation philosophies. But history shows that job markets revive along with cyclical economies, regardless of whose presidential foot is on the accelerator.