President Barack Obama didn't use the S-word even once Thursday evening, but his American Jobs Act proposals to grow U.S. employment fully qualify as another stimulus package. Noble as his intent, we don't see a bright future for his plan. More Americans today realize what was gauzier in 2008, when President George W. Bush passed a $152 billion stimulus, and in 2009, when Obama passed a $787 million stimulus: Given this nation's enormous debt, every cent of the spending and tax breaks he suggests would have to be borrowed.
Problem already. Creating jobs at a time of 9.1 percent unemployment and zero job creation is a crucial priority for Americans, and for America. That said, the latest Wall Street Journal/NBC poll surprised us with this finding: Fifty-six percent of respondents prioritize reducing the federal deficit ahead of boosting the economy — even if that means recovery will take longer. Only 38 percent rank stimulating the economy first.
In Obama's mind, here's how that invigoration works: The government directly spends billions and essentially subsidizes private-sector employment by lowering payroll taxes and giving companies rewards for hiring. If that subsidy approach worked, our employment numbers would be a lot better today.
Instead, three years of stimulus spending by two presidents has shown that the United States cannot spend its way back to prosperity. The deficit cost of that lesson has been enormous — and probably explains last week's Gallup finding that the government's approval rating has plunged to a record low 17 percent.
We wish the president instead would have government stop trying to be the answer and instead have it step back and help the private sector achieve the growth that will demand job creation. On Thursday evening, Americans heard much about jobs, less about growth.
Arguably the least expensive, least divisive way to encourage that growth is with a strategy he hasn't wholeheartedly embraced: tax reform that slashes deductions, reduces tax rates — and yields some new revenue to attack looming deficits. Growth and jobs would follow, in that order. Obama did give a nod to corporate tax reform, suggesting that it will be part of a deficit reduction plan he will deliver Sept. 19. Permanent reform, as opposed to tax breaks that sunset in a year or three, would say to job creators: This is it, the simplified tax scheme that stabilizes what Washington expects of you.
We view as sincere — and not just self-protection — Obama's effort to help those who are out of work. But we've witnessed the failure of Keynesian stimulus programs to dent this nation's jobs crisis. This is the wrong time for a president to tell Americans, "I'm from the government and I'm here to spend."