The main focus of the 2012 presidential race has been jobs, much as it was 3 years ago in 2008 when we had our last presidential hullabaloo(so glad I got to use that word). Republicans are certain that cutting government spending and reneging on a variety of new federal regulations of businesses and banks will free up capital for businesses to start hiring again which will invigorate the economy. But as this article in the Economist points out much of the Republican's economic plan seems somewhat iffy. Though long term private business growth is much preferable to government created jobs, we cannot forget that government spending does in fact create jobs and contributes to GDP. In August, the private sector barely created any new net jobs and most job growth came from the public sector. While this is problematic, we cannot forget that those are jobs that are employing what would have been otherwise unemployed or underemployed persons. Next year's fiscal cuts are expected to contract GDP growth by 2% of our total GDP. We need a economic growth plan now that accounts for this contraction and addresses short term and most importantly MEDIUM-term issues rather than long term deficit spending/long term debt.
This is where I must agree with the majority of President Obama's jobs plan. I find that his payroll tax cut would help shore up business confidence and free up some capital for new hiring. I also agree with more government spending on short term construction and road-building projects that would help employ many in the short term. However my main concern is with our medium term fiscal sustainability. Most Republican plans, with the exception of Mitt Romney's job plan, merely promise large scale cuts to government spending with tax cuts to help with short term woes and address longer term fiscal issues. In order to make our long term fiscal goals possible (i.e. reducing our deficit and national debt) it is essential that we tackle some of the intrinsic problems with our national budget. That is, entitlement reform. Romney's economic plan does plan on raising the retirement age for government pensions but fails to address any of the bigger national entitlements like Social Security or MEdicare. Democrats and Republicans (maybe a job for the super-committee?) need to finally take the political hit and raise the retirement age for Social Security to help alleviate some of our medium to long-term fiscal woes.
We are far from out of the woods in terms of our economic recovery, but I believe our economy can take a few more billion in government spending, gov't spending has saved us from the worst of the recession and a new payroll tax I think would go a long way to restoring confidence in the private sector. Too many Republicans have incorrectly blame regulations and new government oversight as the reason for the private sector's dismal growth. According to the Economist article, only 16% of businesses reported new regulations as being their primary reason for not hiring. 23% blame it on uncertainty, of which Washington's lack of consensus and consumer's subsequent lower demand play a big role. I hope that the Republican candidates for President will follow Romney's example and deliver economic plans based on fact rather than wishful thinking that merely plays to the public's current distaste for government spending.