Obama Misery Index hits a record high
The unemployment rate has just fallen one-tenth of a percent, from 9 percent to 8.9 percent. Of course, it is indeed progress, and it is being celebrated in the White House as such. But the celebrations bring to mind what a wit once said: An “acceptable” level of unemployment means that the government economist to whom it is acceptable still has a job. Today, as we move into the third year of the Obama administration, we do not have anything resembling even such an “acceptable” level of unemployment. Far from it. As of this month, 14 million Americans can’t find work.
When Ronald Reagan ran for president in 1980, he hung the Misery Index around Jimmy Carter’s neck. It consisted of the sum total of unemployment and inflation. Today, we have a different set of ailments. Instead of unemployment coupled with inflation, we have a toxic blend of unemployment, debt, home foreclosures, and bankruptcies. Their sum total is what we can call the Obama Misery Index. It is at a record high; indeed, it makes even the malaise of the Carter years look like a boom. Unemployment has fallen, but it’s fallen to a level that is still, by any historical marker, a national disaster. To suggest it as an achievement is to engage in what Daniel Patrick Moynihan famously called “defining deviancy down.”
Where should we go from here? Having spent my career in the private sector, I know a thing or two about how jobs are created and how they are lost. The most important lesson I learned is that there are three rules of every successful turnaround: focus, focus, and focus. Turnarounds work when the leader focuses on what’s most important. President Obama did just the opposite: he delegated the jobs crisis to Nancy Pelosi and Harry Reid and he went to work on his own priorities, like cap and trade and government-run health care.
I hope we don’t have to wait two years for a new president to fix things, but I fear we might. What the occupant of the Oval Office needs to do, and do now, is focus on getting Americans back to work.
Take taxes. Our employers pay the highest rates in the world, tied with Japan, and higher than such societies top-heavy with government as Italy and France. Our small companies are hit particularly hard. If employers are going to start investing and hiring, we must reduce the burden. We can offset the lost revenue by ruthlessly eliminating corporate loopholes and the special deals that reward political influence and punish productivity. We also need to stop taxing companies that make money overseas if they want to bring it home. Encouraging companies to keep money abroad makes zero sense. As much as one trillion dollars kept abroad may be at stake; a sum that size invested here would create hundreds of thousands — or even millions — of good, permanent, private-sector jobs.
Our out-of-control fiscal policies are also impinging directly on the labor market. The failed stimulus program cost around $800 billion. Obamacare is going to cost another trillion. The denizens of the White House appear not to know it, but employers and entrepreneurs worry a good deal about the federal deficit and the federal debt. They look at the future and see that the government’s spending binge will mean higher taxes, higher interest rates, and a much weaker dollar.
All these things are the direct enemy of long-term investment. The climate of uncertainty they create has an indirect but no less damaging effect on confidence. Historically, federal spending has ranged between 18 and 20 percent of GDP. Today it has soared to near 25 percent. If we want our politicians to end their free-spending ways, we need to establish an iron-clad ceiling on federal spending, setting it at a fixed percent of the GDP.
These proposals may sound wonkish, but let’s keep in mind what is at stake. Behind the unemployment statistics is a lot of heartbreak. Unemployment means children who can’t go to college; marriages that break up under the financial strain; young people who can’t find jobs and start their lives; and men and women in their fifties, in the prime of their lives, who fear they will never work again. Then there are the job fairs where thousands of people are showing up to compete for a few openings that probably are not as good as the jobs they held two years ago.
Unless President Obama changes course, these job fairs, with their day-long lines of unemployed seeking nothing more than a chance to earn a living, are going to be seen as his Hoovervilles. “I’m the only person of distinction who has ever had a depression named for him,” President Hoover once ruefully complained. Obamanomics, which at extraordinary cost has accomplished extraordinarily little, is earning our president his own dubious place in our history books.