In his State of the Union speech, President Obama acknowledged the need to focus more on job creation. Unfortunately, rather than turning to true pro-growth policies, he is, with few exceptions, doubling down on failure.

Flawed Premise:

“Because of the steps we took [AKA the “stimulus], there are about two million Americans working right now who would otherwise be unemployed.

The President continued to tout the “stimulus” as a job creation engine. His numbers are based on the bogus and entirely arbitrary metric of counting jobs “saved or created.” Even Obama’s chief economist Christina Romer had admitted the questionable nature of the job creation numbers saying: “It’s very hard to say exactly because you don’t know what the baseline is, right, because you don’t know what the economy would have done without it.”

Nonetheless, against the background of an unemployment rate standing at 10%, far higher than the Administration had claimed it would go once the “stimulus” came to the rescue, the President defended his Administration’s fuzzy math and even one-upped it arguing the package would “add another one and a half million jobs to this total by the end of the year.”

Flawed Conclusions:

Passing Healthcare Bill for Job Creation:

At last count, the Senate-passed healthcare bill contained eighteen separate tax hikes. It increased government spending by nearly $1 trillion over the next decade. In what universe does raising taxes and increasing the size of government “create jobs?” Raising taxes takes money out of the hands of job creators and consumers, and puts them in the government’s hands. Raising government spending crowds out vital capital from the private sector—capital which is the very seed corn of economic growth and job creation.

The healthcare mess also creates uncertainly for job creators. If they don’t know what regulatory compliance and higher taxes they will face, how are they to plan for the future? Chaos invites petrification.

“Slash the tax breaks for companies that ship our jobs overseas”:

Obama is no doubt referring to his tax hikes from last year’s budget. ATR has compiled a series of one-pagers detailing his $210 billion in proposed tax hikes on American companies who have overseas income. How raising taxes on American companies will incent them to remain in the United States is a mystery. The reason these tax breaks are in place is to avoid double taxation of international corporate income. To take away these tax breaks is to tell an American company that they will potentially have to pay taxes twice on the same income.

The best solution is to transition the U.S. tax code toward a territorial system (which most of the developed world has done), but getting rid of these tax breaks without doing that reform is foolish. There’s no reason that an American company with an Irish subsidiary cannot become an Irish company with an American subsidiary—and take the American jobs with them to Ireland. America has a 39 percent “all-in” corporate rate. Ireland’s is 12.5 percent.

More “Stimulus” for High-Speed Rail, Research Funding:

The president is looking to double down spending on pet projects such as high-speed rail and investing more in research. The problem with high speed rail (or high and moderate speed rail, which might be more accurate) is that based on our experience with Amtrak, these types of projects lead to many subsidizing transportation for only a small segment of the population – at high cost and only negligible benefit in terms of reduced congestion or pollution.

As for research funding, the first “stimulus” has brought us a myriad of research projects that are questionable at best already. The National Science Foundation, for example is doling out funding for projects ranging from the search for fossils in Argentina, over studying the learning patterns of honey bees, to developing the next generation of football gloves.

Agencies and projects should be subjected to a comprehensive review à la BRAC commission rather than doling out more taxpayer dollars to fund more dubious “research” pet projects, the job-creation benefits of which are more than questionable.

More “Clean Energy” jobs:

They may not be called “green jobs” any longer, the President now refers to them as “clean energy jobs. However, the premise remains: So called “green jobs” do not work in any country. Since 2000, Spain has spent €571,138 ($753,778) to create each “green job,” including subsidies of more than €1 million ($1,319,783) per wind industry job. Those programs resulted in the destruction of nearly 113,000 jobs elsewhere in the economy. Each “green” megawatt installed destroyed 5.39 jobs in non-energy sectors of the Spanish economy.

Pass “comprehensive energy and climate bill” AKA Cap-and-Trade:

The Heritage Foundation has predicted that cutting CO2 emissions will hurt manufacturing jobs as well. By 2029: durable-manufacturing employment will decrease by 28%; machinery-manufacturing job losses will exceed 57%; textile-mill employment will decrease by 27.6%; electrical-equipment and appliance-employment will decrease by 22%; paper and paper-product jobs will decrease by 36%; and plastic and rubber products employment drops 54%.


While his “conclusion” regarding the importance of trade and exports is not misguided, he fell short in defining a pro-trade agenda. Touting improving relations with foreign nations can mean anything. A strong statement would have been a direct commitment to continue to push for the pending free-trade agreements, yet the President failed to deliver on this aspect. What’s worse, his record so far does not instill much hope in his trade agenda. Case in point: the recent tariff hikes on Chinese tires. The tariff increase only applies to Chinese-made tires, which were generally cheaper to purchase at the retailer. As a result, families purchasing those lower-end tires are taking a hit to their wallet. But the tax hikes don’t stop there.

Obama also imposed higher tariffs on Chinese steel and pushed an isolationist agenda by requiring businesses to “Buy American” through his February stimulus bill. While the term “Buy American” sounds good in theory, the fact remains that it’s just another form of protectionism. Focusing solely on American goods creates a monopoly of sorts within our own borders. When American businesses face no competition from foreign companies, American consumers feel the impact. Additionally, if Americans stop importing goods from abroad, then foreign nations could also stop importing American products. According to a Reuters study, “About 6,500 U.S. jobs could be lost if countries shut off 1 percent of that market to U.S. exporters and about 65,000 U.S. jobs could be lost in the ‘extreme case’ that 10 percent was shut off.” Protectionism only begets protectionism.