The first lesson every President learns is that in trying to please all his constituents he pleases no one, including himself.
President Obama sold the $800 billion Stimulus Plan to the American people as a strategy to create untold infrastructure jobs. If fact, President Obama said the stimulus plan would save or create 3.5 million jobs in the next two years and that he hoped to limit the unemployment rate to a peak of 8% this summer. In typical political bait and switch fashion his democratic Congress allocated 8% of the stimulus money to infrastructure projects. Instead of infrasturture jobs Congress gave us cornucopia of social programs that have been on their wish list for decades, leaving the President with egg on his face.
The unemployment rate has already reached 9.4% and will undoubtedly exceed 10% by the summer. The administration has been forced to drop its job creation rhetoric altogether and has been reduced to having Joe Biden make unsubstantiated claims that the stimulus package has saved 200,000 jobs in its first 100 days. Joe says this with a straight face knowing full well that there is no possible way to calculate jobs saved. Even if you could devise a method, the number is so small compared to the 154 million strong American labor force that it would amount to no more than a rounding error.
President Obama may have pleased innumerable factions in his left wing base by signing the stimulus plan with all it grandiose social programs but he will be left to stand alone and explain month after month through most of 2010 why we have double digit unemployment after Congress spent $800 billion on “his” stimulus plan. In private I am sure he regrets not having insisted that the heavily democratic Congress spend more than a paltry 8% on infrastructure projects. As an astute politician he also knows that his ability to blame all ills on his predecessor is coming to an end. The question he is undoubtedly asking himself is how long do you have to be President before have to take responsibility for being President?
President Obama will soon have to choose between signing the “Waxman-Markey global warming bill” and creating new jobs. A study by Charles River Associates concluded that if Obama signs off on the Congressional proposal to reduce CO2 emissions, it will have a serious impact on the availability and cost of energy. “By 2025, just 16 years from now, the cost of natural gas would rise 56%, electricity 44% and motor fuel 19%. Annual household purchasing power would annually decline by an average of $1,827. And America will lose 3.2 million jobs.” Obama can choose to placate his base and hope that the creation of “Green Jobs” will at least partially offset this loss or he can choose to use his influence to eliminate the more draconian aspects of the legislation and offend the left.
I am sure that President Obama is aware that Energy use is the direct correlate of a vibrant economy – in the United States for example; we consume 24% of the world’s oil and are responsible for approximately 28% of global GDP. We cannot just reduce our energy consumption, we have to replace it with new cleaner sources or the economy will suffer. It should also be clear that when the economy is weak it is the poor and the less educated that bear the brunt of the burden. For example, the current 9.4% unemployment rate is not equally distributed: the unemployment rate for college graduates is 4.8%, for those who have not graduated high school 15.5%, African American men 16.8% and for African American men and women under 20 it is a whopping 39.4%. As the old song says you always hurt the one you love -especially if you cater to your elite base.
We often appear to ignore the intrinsic reality that all life is carbon based and that at the moment all accessible large-scale sources of energy save nuclear and hydroelectric, are correspondingly carbon based. As a World Street Journal Editorial on August 5, 2008 pointed out, “The U.S. has a great deal invested in fossil fuels not because of a political conspiracy or because anyone worships carbon but because other sources of energy are, right now, inferior”.
In time-honored political tradition Obama has taken advantage of the economic crisis and selected an unpopular target: Greedy Wall Street bankers! Hedge fund moneylenders! Speculators! Shameful profiteers! It is so ever so tempting to fall back on classic stereotyping. Appealing to innate prejudice is like taking candy from a baby for an articulate politician who wants his way. Ultimately, Obama has to placate these “devils” because they are the ones that create 85% of America’s jobs. If they have no confidence in the future and believe that the current administration is anti-business they will be very slow to expand and create new jobs.
The reality… For the unemployment rate to fall, we must not only increase the number of jobs, but that increase must exceed the expected increase in the size of the labor force. In other words, merely increasing the number of Americans working will not necessarily decrease the unemployment rate. Today there are 154 million Americans in the labor force and just to maintain the status quo, 2.0 million new jobs must be created annually (a 1.3% increase). Just to stand still, we need 167,000 new jobs every single month.
Obama will have to make amends for his bombastic rhetoric if he hopes to gain the support of American business and create the jobs that America needs to reduce the unemployment rate.