When President Obama> delivered a major speech on the economy from Cleveland Wednesday, he talked about how bad things used to be -- and how great they are now.
"Job growth between 2000 and 2008 was slower than it had been in any economic expansion since World War II -- slower than it s been over the last year," he said.
Being the suspicious type, I decided to check with the Bureau of Labor Statistics -- which reports to the President through the Department of Labor -- to see for myself. I found that there were 5,482,000 net job gains between 2000 and 2008, for an average growth rate of a little less than one half of one percent per month. This growth rate is more than three times more rapid than that of the last year, which was a bit more than one tenth of one percent per month, for net job gains of 229,000.
I don't mean to imply that President Obama doesn't always tell the truth when it comes to the economy. I mean to assert it boldly.
But there was one line in that Cleveland speech that was absolutely true.
"I ve never believed that government s role is to create jobs or prosperity," the President said. "I believe it s the drive and the ingenuity of our entrepreneurs, our small businesses; the skill and dedication of our workers -- that s made us the wealthiest nation on Earth. I believe it s the private sector that must be the main engine for our recovery."
Now that s the truth. Sure, it makes it a little strange that on the government web site Recovery.gov, Obama takes credit for having created exactly 749,779 jobs from April 1 to June 30, thanks to his stimulus bill last year.
And it makes it a bit odd that Democratic Senate Majority Leader Harry Reid, struggling to win re-election in Nevada, has attacked his opponent Sharon Angle for saying, "I'm not in the business of creating jobs." (I guess Reid will have to start attacking Obama now for having said the same thing.)
So let's take Obama -- and Angle -- at their words. If they both really believe that it's "the drive and the ingenuity of our entrepreneurs, our small businesses" that create jobs, then what should they do? Lord knows we could use a few jobs around here (in case you haven't heard, the unemployment rate is 9.6%).
That's simple. Just follow the economic policy platform of John Galt -- the hero of Ayn Rand's classic ode to capitalism, "Atlas Shrugged." It's just one sentence: "Get the hell out of my way!"
If entrepreneurs and small business create jobs, then just let them do it. Or at least stop making it difficult for them.
What's the thing that government does that makes it most difficult for entrepreneurs and small businesses? You know the answer. Taxes.
Why? Two reasons -- a politically correct one and a politically incorrect one.
The politically correct one is that if you tax away the profits of entrepreneurs and small businesses, you're taking away from the proven winners the economic resources they could use to expand their businesses and create jobs.
The politically incorrect one is that if you tax away the profits of entrepreneurs and small businesses, they won't have any incentive to work. That's right. Let's admit it. Most of us work to make money, and we'll work harder to make more money. Yes, it's good if we love our work and do it for its own sake. But come on money makes the world go 'round, like the song says.
Obama has the option now to act on these truths. Today's low tax rates, put in place in 2001 and 2003, expire at the end of the year. They will revert to higher levels that will impose hundreds of billions of dollars of new burdens on everyone in the economy.
The greatest burdens will be on those entrepreneurs and small businesses that Obama says create jobs. Yet his avowed policy is to let taxes go up for them, while keeping them low for everyone else by extending the old rates.
Yes, it's nothing short of breathtaking that the President of the United States would take the brazen risk of raising taxes -- on anyone or anything -- when the economy is so weak. And it's downright stupefying that he'd raise taxes on the very people he says in a speech are responsible for job creation.
The worst danger is that Obama will get into a deadlock with the Republican minority in Congress. What if the GOP insists that today s low expiring tax rates be extended for everyone, rich or poor -- while at the same time Obama insists on not extending them for the rich? If neither side will compromise, then the end of the year will come and the low rates will go away for everyone.
It's like a game of chicken. Two teenagers are headed straight for each other in hot-rods, neither one willing to lose the game by swerving aside. Great. Two winners. Two dead people.
Or in this case, one dead economy.
Watch this closely between now and election. If Obama and the Republicans can't come to terms, we'll head into a double-dip recession for sure. That's why stocks are acting so squirrely now. But let's say the president actually acts presidential and does what's right for the economy. Suppose today's low rates are extended for everyone -- including wealthy entrepreneurs and small businesses.
The market isn't expecting that, I guarantee you. It would be one big upside surprise, and it could launch stocks on the next leg up.