Analysis/Comment Dr Peter Morici: What President Obama needs to say and do
By Professor Peter Morici
Sep 8, 2011 - 3:27 AM
President Barack Obama talks with Governor Rick Perry to express his concern for citizens of Texas impacted by the unprecedented fires, during a phone call in the Oval Office, Sept. 7, 2011.
Dr Peter Morici: What President
Obama needs to say and do; America is in crisis. The new normal is not good
enough. The unemployed can’t find jobs, the old can’t retire and those in
between live in constant fear of being tapped on the shoulder and trust into the
Property values are lower than a snake’s belly, stocks are diving and gold - -
the “fear asset” - - seems the only sound investment.
Thursday the President addresses Congress and is expected to propose ideas that
only maintain the status quo, or perhaps do worse.
Infrastructure spending, payroll tax holidays, and unemployment benefits will
only replace monies now running out from the $800bn stimulus package and
subsequent initiatives. Job training is the biggest folly—the economy is not
creating many decent openings for trainees to fill.
New tax breaks to encourage hiring and investment won’t work, because domestic
sales are not growing fast enough to occupy new hires at most businesses.
Americans are spending and businesses are investing a lot more than two years
ago, but too much of what they spend is going into higher priced imported oil
and more consumer goods from China.
The $600bn trade deficit oil and China create a tax on domestic demand too heavy
for the economy to bear. Simply, dollars that go abroad for gasoline and coffee
makers that don’t return to buy US exports destroy millions of jobs.
If the trade deficit were cut in half, the economy would grow by some $500bn and
add 5m new jobs.
Developing US oil and gas, where environmental risks can be managed better than
abroad, could slash oil imports in half.
Finally labeling Chinese currency manipulation protectionism, and levying a tax
on the conversion of dollars into yuan until China stops its currency market
manipulation, could slice the trade deficit by some $300bn.
However, oil and China are not the end of our problems.
The marketplace needs regulations that work, not merely that add to the costs of
doing business and creating jobs.
The Dodd-Frank financial reforms add costly bureaucracy but Americans are still
abused by credit card companies, and banks continue trading and have doubled CEO
salaries. The only things that have really changed are banks won’t lend to small
businesses and savers can’t earn much interest on CDs.
Obama care has raised the cost of health to businesses and co-payments on
prescriptions. Things have improved for some - - drug companies are earning
bigger profits and paying CEOs more.
GM and Chrysler and the UAW are rescued but now GM will outsource the core of
future hybrid and electric vehicles - - and all electronic accessories in its
autos - - to Korea’s LG. Chrysler is hawking Italy’s Fiat 500. We’ll get a
lot of growth and jobs out of those.
The President needs to tell us he will open up American oil and gas reserves to
drilling, build out the use of natural gas for vehicles in big cities and
heating in rural areas, finally stand up to China, and genuinely clear out all
the useless regulations that make no one better off.
Democrats get a lot of support from banks and pharmaceutical executives, unions
and America’s biggest outsourcers - - GM, GE and technology companies.
It would take Trumanesque courage to stand up to those vested interests and the
counter-productive ideas of the professional left at Harvard, Princeton and
among Democratic party activists.
The time is long past due for President Obama to demonstrate he has what it
takes to do the job.
Obama Jobs Plan Leaks: CNBC's John Harwood has details on the President's long-awaited jobs plan to be unveiled Thursday night:
Professor, Robert H. Smith School of Business, University of Maryland,