Employers stopped adding jobs last month; the government also reported that the unemployment rate remained at 9.1%. This was the weakest job report since September 2010. The Obama administration has estimated that unemployment will average 9% next year, when Obama will run for re-election. The rate was 7.8% when Obama took office. Hiring is falling across many different sectors. The economy needs to add roughly 250,000 jobs a month to bring down the unemployment rate.
I wondered several years ago when jobs were being outsourced at a rapid rate from the United States, where was the government then? Manufacturing jobs were being sent to India and China faster than ever before. Apparently, the government is not only slow to react but it waits until things are in a crisis. The editorial that I recently read stated that “we don’t make anything any longer in the United States.” This may not be entirely true but it is very close to the truth. Just walk through any department store and pick up a shirt, a tie, a jacket, etc. – all made overseas. Even the silverware in a restaurant is made in China.
Why is Obama going to have a hard time? Let’s talk about the status of the health care overhaul. Twenty-five lawsuits challenging the constitutionality of the Patient Protection and Affordability Act are working their way through federal courts around the country. These cases contest many aspects of the law beyond the mandatory requirement that most American carry health insurance. Eventually most legal experts predict that one of more of these cases will be decided by the U.S. Supreme Court. Until then, everyone waits including employers.
How about comprehensive immigration reform? Opponents of legalization legislation doubt that Obama will take on immigration reform when the economic pain is so great for Americans during these periods of high unemployment. Meanwhile we again wait to see who will make the next move. Mr. Obama is aware that the immigration system is broken and many of his opponents argue that immigrants take jobs from Americans. Despite the deep recession, there is no evidence of any wholesale exodus of illegal immigrant workers from the United States.
How about Social Security? If you are 26 years old today and expect to begin receiving Social Security benefits at age 62, you may be in for a surprise. In 2041, benefits for retirees may be reduced by 27% and continue to be cut back each year thereafter. According to a recent report, the program faces massive annual deficits in just 10 years. Medicare expenditures are predicted to increase 75% by 2030. One of the major problems is that when Social Security income exceeds its expenses, the surpluses go to finance B-2 bombers, farm subsidies, savings and loan bailouts, and other general fund expenditures. In return for borrowing these funds, the Treasury adds more special bonds to the Social Security Trust Fund. In other words, money goes out, debt in the form of paper goes in.
I suspect that the upcoming push for jobs is a day late and a dollar short. With $14+ trillion dollars in debt, the federal government does not have any funds to draw from without increasing the already staggering debt. The only thing that might make sense is a tax credit to employers who add jobs in the coming months. If we can get enough people back to work, the cost of the tax credits might be offset by revenue generated by the taxes of the new workers. Mr. Obama is in trouble to put it bluntly. His job is on the line. He cannot wait until next year to make something happen. His situation is similar to that of turning an aircraft carrier around. It takes about 5 miles to do it. Mr. Obama needs a workable jobs plan now or he will be watching things turn on him in November.