The Obama Administration has seen its fair share of milestones this month. Yesterday marked the first anniversary of the Dodd Frank Wall Street Reform and Protection Act, Obamacare is just over one year old, it has been more than 800 days since the Democrat-controlled Senate passed a budget, and the Consumer Financial Protection Bureau opened its doors on Thursday--the first new federal agency in nearly a decade. You'll notice that no one is celebrating any of them.
Perhaps it's because those milestones have led to an even more ignominious one that the White House achieved in June. As of last month, 30 percent of the 14.1 million unemployed Americans have been out of work for more than a year. The average length of unemployment is now 39.7 weeks, the longest since the Department of Labor began tracking it.
Those unemployed Americans help comprise President Obama's 9.2 percent unemployment rate, and they are suffering from stagnant job growth that hit new depths last month. The Wall Street Journal reports on what the long-term unemployment news means for the unemployed, the economy, and the government:
Elevated long-term unemployment is likely to be a persistent problem. Americans who are sidelined for protracted periods often see their skills depreciate. The longer they are out of work, the harder it is for them to find jobs. Some end up dropping out of the labor market altogether and, in those cases, they rarely re-enter the work force. For the government, that translates into a permanent productivity loss and higher expenses if jobless workers turn to Social Security disability for income.
The persistent unemployment and stagnant job growth are the result of an economy stuck in neutral, dragged down by a series of policies that have inhibited its growth. Take the 2,300-page, one-year-old Dodd Frank bill for starters, along with its 243 separate rulemakings (by 11 different agencies), costly regulations and ensuing audits and litigation. In a new paper, Heritage's Diane Katz explains that the bill (and its spawn, the Consumer Financial Protection Bureau), was intended to prevent another financial meltdown and protect consumers. Instead, it has served only to introduce uncertainty into the marketplace, impose new costs on consumers, and stifle economic growth. Katz writes:
Dodd Frank’s results to date have been less than stellar to say the least. With few of the rules actually finalized, financial firms now inhabit a regulatory purgatory of sorts, while billions of dollars are funneled into expanding the size of government.
Ironically, Dodd–Frank supporters claim the monstrous regulatory rollout was intended to inject certainty into a market made jittery by the 2008 crisis. The uncertainty is now worse than ever—and nothing beats uncertainty for inhibiting investment and job growth.
Dodd Frank, though, isn't the only piece of legislation that has constrained economic growth. Obamacare, what many on the left see as the President's crowning achievement, has discouraged hiring in several ways, says Heritage's James Sherk. Smaller businesses have an incentive to stay small (in order to avoid having to provide government-approved health insurance or pay a penalty), larger businesses are facing increased health care costs, and employers are facing uncertainty over what health care costs will be in the future. All of those factors discourage growth. It's no wonder that, as Sherk writes, "within two months of the passage of Obamacare, the job market stopped improving."
Then there's the President's National Labor Relations Board and the Department of Labor, both of which have taken action and proposed regulations that would strengthen and grow unionized labor, all at the expense of the economy. Those include a proposal to reduce the time it takes for union elections (known as "snap elections") and another to allow the creation of "micro unions" within businesses. The proposals would deny workers an informed choice, disenfranchise workers, prevent career advancement, redistribute wages to non-union employees, and increase burdens on business.
And finally, there is the uncertainty that has dominated the headlines for months. When and how will Washington address America's long-term spending problems? Will entitlements finally be reformed? Will Congress tackle spending? Will the President get his wish and raise taxes? No one seems to know. Meanwhile, job creators are left scratching their heads, not knowing what the future holds.
In an op-ed in this morning's USA Today, President Obama wrote, "In the short term, my No. 1 focus is getting our economy back to a place where businesses can grow and hire," while also saying that "the American people deserve the truth from their leaders." That truth is that President Obama's first focus when elected was on enacting policies that immediately halted business growth and scared employers away from hiring and growing. Those policies have left the economy in the lurch for the short term, the long term, and everywhere in between.