Unemployment is High. The Fix? Keep Doing the Same Things

The unemployment rate stands at 9.5% – still much higher the President Obama or his group of economists could predict.  What’s even worse is that they can’t figure out why people aren’t finding jobs.  It’s your economy Stupid.

Joe Biden was out hailing the stimulus package as a giant job creation machine while simultaneously blaming Republicans for it’s failure.  Not only can the administration not figure out what’s wrong with the job situation, they seem somewhat confused over whether what they have done has worked or failed.  A bloomberg.com article shows how confused they are:

“By this estimate, the Recovery Act has met the president’s goal of saving or creating 3.5 million jobs — two quarters earlier than anticipated,” Romer said with a straight face. (More than 2.5 million non-farm jobs have been lost since ARRA was enacted in February 2009, all of them in the private sector, according to the Bureau of Labor Statistics.)

Why the discrepency?

These numbers might just as well have been pulled out of a hat. Recall that it was the same model and method the administration used in January 2009 to predict an unemployment rate of 7 percent in the fourth quarter of 2010 with the enactment of the fiscal stimulus and 8.8 percent without. The unemployment rate now stands at 9.5 percent.

This same model convinced policy makers that the subprime crisis was contained, encouraged the rating companies to slap AAA ratings on collateralized garbage, and led banks to believe they had adequately managed their risks and reserved for potential losses.

So what’s their answer at this point?  According to a Wall Street Journal post, do more of everything they’ve been doing.

This week the White House says we need even more stimulus, in the form of jobless checks, to make up for the jobs his original spending stimulus didn’t create.

So almost two years of jobless benefits didn’t create the jobs Obama thought it would.  Certainly adding in a few more weeks of benefit checks will fix it – uh .. not so fast

The economic consensus—which includes Obama Administration economists in their previous lives—couldn’t be clearer on this. In a 1990 study for the National Bureau of Economic Research, labor economist Lawrence Katz found that “The results indicate that a one week increase in potential benefit duration increases the average duration of the unemployment spells of UI recipients by 0.16 to 0.20 weeks.

With the increase, the total amount of money infused into the economy is a lousy $130 Billion.  The stimulus actions last year totaled over $800 Billion and had little to no effect.  How exactly will this make a dent?

So if simply handing out more cash to the unemployed is ineffective, what else could be done?  How about threatening small and medium businesses with an oppressive increase in taxation?  Democrats have become the party of no when it comes to helping out small business.  By allowing the Bush era tax cuts to expire, small businesses have lest money to invest, grow, expand .. hire.  Accoring to this article, as the current administration has made more business-strangling decisions, people are just deciding that the risks that come with starting a business aren’t worth it anymore.

The report says that only 3.7% of unemployed workers are starting their own businesses rather than looking for a job. This figure is down from 7.6% in the first half of 2009 and down from 9.6% in the second half of 2009. The previous low was 4.4%, during the second half of 2008 … While new companies create an average of 3 million jobs, existing firms lose about one million jobs a year. The Kauffman study also suggests that startups continue to create jobs, even during recessions.

If that’s the case, where is the small business and entrepreneur package.  It’s the cheapest and least complex thing the government could put together – get out of their way.  Start-ups need investment and loans.  Investment comes from all those wealthy people the liberals are trying to relieve of their property and loans come from banks that are being hit with so many new regulations that they aren’t lending.

Obama’s highly-educated academic economists can’t seem to figure out why the jobless numbers aren’t improving because they based their estimates, actions and analysis on a flawed ideology – Keynesian economics.  Until they realize that the real economic engine in this country is small business, we’re stuck with this mess.

Obama keeps telling us that things would have been much worse without his flawed philosophy.  With that line of thinking, I guess we could make the case that things would have been even worse if he had grabbed the White House four years earlier.