To Fix the Economy - Government Must Take Less

This president just does not get it. Washington does not create jobs. In fact it competes against the private sector for jobs. If the central government could create (and sustain) jobs, the old Soviet Union would be a world power.

There is no doubt the economy is reeling. The defining contribution of the Clinton presidency may well be his campaign axiom “it’s the economy, stupid.” After a year in office, President Obama is beginning to recognize this truism. The only problem is he and his team has no idea how to fix the economy.

The US economy is driven in large part by two fundamentally related drivers – consumer spending and employment. When Americans are employed they spend money. It really is that simple. The question is – what can we do to get more people employed?

Small businesses are the backbone of our economy. Small business employs 50 percent of all private sector employees. More importantly, they create 68% of all new jobs. The key to any recovery is a thriving small business economy.

Now back to my statement the president does not have a clue. He and his congressional wunderkinds (Pelosi and Reid) are trying to pass a “jobs” bill. The problem is not one of them has ever created a private sector job. This issue is made worse because Obama’s entire cabinet lacks significant private sector experience. Forbes magazine recently reported that Obama’s cabinet has the least private sector experience of any administration since 1900. According to Forbes.com only 20 percent of Obama’s cabinet has private sector experience. This compares to an average of 44 percent since the Teddy Roosevelt administration.

Why does that matter? According to Forbes, this trend demonstrates that this marks a departure from the traditional reliance on a balance of public and private sector experiences. The Obama cabinet and his Democratic allies have railed against the private sector. This sentiment is best demonstrated by Barney Frank’s statement “The private sector got us into this mess. The government has to get us out of it.” This belief system is disastrous.

This kind of thinking explains why President Obama and Congress are proposing a government solution and/or intrusion for everything, including healthcare. After the public thoroughly rejected ObamaCare, he had a chance to reset and try a new approach. After weeks of analysis he decided to double down and continue with a 2000 plus page plan, 35 government agency healthcare bureaucracy. Why does this both me so much?

Let’s look at two of the federal governments biggest “solutions” to the crisis of their time. I am talking about the Department of Education and the Department of Energy. Both departments were created by Jimmy Carter to bring the full weight and power of the federal government to address the pressing issue of their day.

The Department of Energy was created in 1977 to reduce America’s dependence on foreign oil. Since then the government has spent hundreds and hundreds of billions of dollars and our dependence on foreign oil has risen from 28 percent in the late 70’s to 57 percent today. It is projected to be in excess of 75 percent in the next 20 years.

The federal government again came to the rescue to save America’s education system in 1979. At the time the United States ranked first among industrialized nations. Since then, the federal government has spent in excess of $1.5 trillion dollars and our standing is now 18 out of 36 among our peers. Another smashing federal success.

First it was education, then energy and now healthcare. Why am I so skeptical?

People whose entire careers have been in academia or the public sector do not understand what it takes to be small business owner. They have been insulated from the do or die pressures of starting a business, making payroll and supporting their employees and their families.

They are incapable of understanding what drives someone to risk everything to start a new business. An entrepreneur has to have the arrogance or naiveté to think they can create a business and do it better than everyone else before them. They have to commit everything - the house, the credit cards, the family savings, everything. They then take on the responsibility of hiring employees to grow their business. They risk everything for a dream.

There is only one way to fix our economy. The government must take less. It must empower the entrepreneur, the small business owner and yes even the big businesses of America. Every dollar the federal government takes from its citizen is a dollar unavailable to grow a business and in turn hire an employee.

The best stimulus would be for the government to get out of the way and trust its citizens. The federal government is incapable of investing as astutely and flexibly as the private sector. It is time for some humility from our leaders in Washington. Sometimes government is not the solution, it is the problem.

Published in LDN - 2/25/10