Tuesday, July 26, 2011

The Obama administration is hopelessly
out of touch with reality

Commentary by James H. Shott

As good an example as any to demonstrate that Washington, DC is disconnected from reality is what White House Press Secretary Jay Carney said at Thursday’s news conference following the news that initial unemployment claims for the week ending July 16 came in at 418,000, higher than the predicted 408,000. Mr. Carney said “the economy is vastly improved from what it was when Barack Obama was sworn into office.” Seriously!

A review of some of the relevant numbers shows the depths of Mr. Carney’s fantasy:
• Unemployment is up from 7.3 percent to 9.2 percent today.
• The federal debt was $10.7 trillion and is now $14.5 trillion, 35 percent higher.
• The budget deficit is more than three times higher: $438 billion then, $1.4 trillion this year.
• Gasoline has risen from $1.67 a gallon to about $3.60, more than double.

Vastly improved? But there’s more.

The Heritage Foundation’s James Sherk wrote last week that “[p]rivate-sector job creation initially recovered from the recession at a normal rate, leading to predictions last year of a ‘Recovery Summer.’ Since April 2010, however, net private-sector job creation has stalled. Within two months of the passage of Obamacare, the job market stopped improving. This suggests that businesses are not exaggerating when they tell pollsters that the new health care law is holding back hiring. The law significantly raises business costs and creates considerable uncertainty about the future.”

Mr. Sherk, Senior Policy Analyst in Labor Economics, adds this: “In a recent survey, 33 percent of business owners said the health care law was either their greatest or second-greatest obstacle to new hiring,” and quotes Dennis Lockhart, the President of the Federal Reserve Bank of Atlanta, who commented, “We’ve frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

At a time when you expect national leaders to do what is needed to enable the private sector to create jobs the Obama administration instead maintains anti-business policies, such as at first an official, and now unofficial, moratorium on oil drilling projects, which hold great promise for aiding economic recovery.

A study by IHS Cambridge Energy Research Associates and IHS Global Insight shows that from 2005 to 2010 there were on average, in April of each year, 59 Gulf of Mexico drilling plans pending prior to the moratorium, while after the moratorium the number increased by 90 percent to 112 each April. The waiting period was 36 days pre-moratorium, but 95 percent longer post-moratorium at 131 days.

During the same period 372 plans were accepted and 545 permits were approved pre-moratorium, but after the moratorium only 54 plans were accepted and 203 permits were issued, down 86 percent and 63 percent respectively.

Were the government to approve these projects, the study says nearly 230,000 jobs would be created, GDP would increase by $44 billion, almost $12 billion in tax and royalty revenue would accrue to the federal treasury, and the US would send $15 million less to foreign governments by the end of next year.

The National Labor Relations Board recently took action against The Boeing Company’s opening of a new 1,000-worker plant in South Carolina that will produce a new airliner, after a labor union in a Boeing plant in Washington State filed a complaint.

And just last Thursday the NLRB announced proposed rules that will shorten the time period between the filing of a petition for a union-representation election and the actual election. Employers condemn this rule change as government taking the side of unions in the struggle between management and labor organizations.

When they are attempting to organize a company’s workers, unions do not inform management they are talking with their employees, and organizing efforts not infrequently go on for weeks or months without the employer’s knowledge. They only become aware of the unionization effort when the petition is filed, and then have only 38 to 40 days to prepare and present their arguments against unionization to their employees. The NLRB rule change gives employers only about 10 days to respond, hamstringing their ability to effectively present their case.

Over the last 50 years private sector union membership has dwindled from 35 percent to 6.9 percent, as workers see fewer and fewer advantages in union membership. And today 22 of the 50 states have Right-to-Work laws securing the right of employees to decide whether or not to join or financially support a union.

Yet, the Obama administration has clearly sided with labor unions and against employers on two recent occasions.

The administration also ignores the opportunities for job creation, for domestic oil production that will increase energy security, and for increases in tax and royalty revenue by refusing to act on Gulf drilling projects, and it squandered valuable time on a health care overhaul that most Americans opposed and that stifles job creation.

If your goal was to design a set of policies that would prevent economic recovery, it would be difficult to develop a plan that is more effective than the Obama administration’s current policies.

Cross-posted from Observations

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