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April 20th, 2024

Insight

Obama and his apologists are having a hard time getting their spin straight

Robert Robb

By Robert Robb

Published Jan.26, 2015

There was a telling and instructive juxtaposition in President Barack Obama's State of the Union address.

Early in the speech, Obama noted, accusingly, that: "Today, we are the only advanced country on Earth that doesn't guarantee paid sick leave or paid maternity leave to our workers."

Later, Obama bragged: "Since 2010, America has put more people back to work than Europe, Japan and all advanced economies combined."

Obama didn't offer an explanation for why job creation in a sluggish world economy has been markedly better in the United States than in other industrialized countries. The implication was that the United States has been blessed with Obama's enlightened leadership while other countries have not.

The real reason is that the United States has a much more flexible labor market than other industrialized democracies. Employers are able to more easily dismiss workers, so they are more willing to hire them to begin with. There aren't governmental policies that lock current workers in and job seekers, particularly the young, out.

Moreover, the cost of providing a job in the United States is lower than in other developed countries because we load up employers with fewer social obligations. Such as government mandated sick leave or maternity leave. Or, before Obamacare, a mandate to pay for the health care of their workers.

Flexible labor markets and a light burden of social obligations are particularly important to the ability of small and medium businesses to create jobs, which is where the energy is in the American economy.

In short, Obama proposes to make the U.S. labor market more like that of Europe, whose job creation record he derides.

This is not the only source of economic confusion from the president these days. He and his apologists are having a difficult time getting their message straight.

Until recently, the story was that the economy stank because obstructionist Republicans were blocking Obama's policies.

Now, it seems to be that the economy is humming because of Obama's policies. Except for the middle class, for whom the economy still stinks.

Obama has a new rallying cry: middle-class economics. Obama is going to tax the rich to pay for new federal middle-class entitlements, such as free community college, universal preschool and childcare.

This ignores that the finances of the existing Entitlement State are cracking up, and will start to do so on Obama's watch.

The Social Security disability trust fund is expected to go broke in 2016. The IOUs from the federal treasury will be all cashed out and dedicated payroll taxes will be insufficient to pay benefits. The Medicare hospitalization trust fund is projected to be in a similar fix by 2030 and the Social Security retirement fund by 2034.

This would seem to be a big problem. Yet not a word about it in the president's State of Union address.

Obama's middle-class economics supposedly puts Republicans in a political pickle, making their opposition seem to be protecting the rich at the expense of the middle class.

Perhaps. But I doubt it. I think the steam has gone out of that particular train. After all, Obama's call for free community college has been a dud, even in liberal circles.

Community college is an affordable bargain for many students. Why make it free for everyone? That makes no financial sense.

While Americans don't want income to be a barrier to higher education, they sense that something you pay for is valued more than something you get for free. So, there is also concern about the effect making community colleges free would have on the quality of education they provide.

Republicans should be content being the party known to want to expand the economy, while the Democrats are the party that wants to redistribute the benefits. And the party that wants to fix the finances of the federal government, rather than the party that wants to increase its obligations.

The American people may not know why the performance of our labor market, while still unsatisfactory, is markedly better than that of other developed countries. But I suspect that they intuit that their path to improved prosperity doesn't run through a bigger and more expensive federal government, irrespective of who nominally is supposedly paying for it.

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