The Daily Item, Sunbury, PA

September 4, 2011

Valley experts differ on ideas for job creation

By Rick Dandes
The Daily Item

SUNBURY — When President Barack Obama gives his jobs speech Thursday night before Congress and a nation facing a 9.1 unemployment rate, he should act to lower the minimum wage and taxes, target government investments wisely, spend on long-lasting projects, or cut spending, reduce regulations and trim the size of Washington, Valley experts suggested.

All while realizing there is only so much the government can do to stimulate long-term economic growth, that whatever he decides to advocate may be challenged by the Republican-led House, and that if he does nothing, the U.S. could have a second consecutive month of zero job gains.

No jobs were created in the United States in August, the Labor Department reported Friday in a report far weaker than analysts had expected and one that renewed fears that the U.S. might be sliding toward another slowdown or recession.

There is only so much a president can do, Valley economic experts said.

“First,” said Matthew Rousu, associate professor of economics at Susquehanna University in Selinsgrove, “to see long-term job growth, the government can’t be the one creating jobs. This has never worked for the U.S., and it won’t work now.”

For short-term growth, he said, the government can help, but the focus should be on jobs that employ lower-educated or blue-collar workers who have been disproportionately hurt by the recession.

“To make good use of tax dollars,” Rousu said, “the projects funded should give taxpayers something useful, preferably that lasts for many years. Once again, the Central Susquehanna Valley Thruway project seems like an ideal ‘stimulus’ project.”

An unconventional option would be to propose a decrease in the minimum wage, which, in Pennsylvania, is $7.25 an hour, Rousu said.

“The lowest-skilled workers have the highest unemployment rate,” he said. “A decrease in the minimum wage would make the lowest skilled workers, typically teenagers, more attractive to hire and would decrease the unemployment rate.”

Two Valley chamber of commerce leaders agree with Rousu that Obama, representing the federal government, cannot create jobs.

“Start with the premise that government cannot create a significant number of jobs, only businesses can,” said Charlie Ross, president and CEO of the Greater Susquehanna Valley Chamber of Commerce. “What the president can do is support job-training programs and ease regulations. Create a better atmosphere for businesses. And he doesn’t necessarily have to run all these programs through Congress, where there will likely be resistance in the House of Representatives.”

A number of programs already exist in departments like Housing and Urban Development, or the Department of Agriculture, that can stimulate hiring, Ross said.

Maria Culp, president and CEO of the Central Pennsylvania Chamber of Commerce, echoes Ross about creating an economic atmosphere more conducive to business expansion and hiring.

“We need a climate where entrepreneurs will start businesses and hire people,” she said.

It won’t take hundreds of millions of dollars in federal spending to jump start businesses, Culp said.

“Relatively small amounts of investment capital carefully targeted here and there can be extremely effective,” Culp said.

Obama should also consider the cost of deregulation versus the cost of businesses of having myriad rules, Culp said.

“That’s all a part of creating a better climate,” she said.

Chris Ellis, assistant professor of political science at Bucknell University in Lewisburg, noted the difficulty that Obama or any president has in actually managing the economy.

“As much as presidents talk about creating jobs,” Ellis said, “the reality is that their control over the private-sector economy is quite limited and indirect. And with the debt such a major issue, a significant expansion of government jobs simply isn’t going to happen.”

Obama’s biggest challenge will be finding common ground with House Republicans, Ellis said.

“In the debt ceiling debate,” Ellis said, “both the extreme left and extreme right referred to the compromise that was eventually struck as ‘surrender.’ The kinds of people that would say that are, unfortunately, becoming increasingly influential in shaping how party leaders think and act. So any policy that would allow mainstream leaders to come together to pass a piece of legislation that is economically sensible and representative of what most voters want will make these extreme elements very unhappy.”

Obama and House Speaker John Boehner even fought over when the jobs speech would take place, and these two were the adults in the room that eventually beat back the polarized bases of their parties to form a workable compromise on the debt, Ellis said.

“Not a good sign for workable compromise going forward,” Ellis said.

Within his own party, Obama will have to deal with the liberal left, which already thinks that he has given up too much and not fought hard enough for liberal ideals, Ellis said.

“From the Republicans, he will have to deal with not only a party that is philosophically opposed to government-based efforts to fix the economy, but a Tea Party that is adamant that any compromise is bad compromise.

“And it’s an election year, too, so they’ll be the typical posturing that comes with that. There are areas of common ground between the mainstream left and mainstream right, but it’s going to be extraordinarily difficult to get to.”

U.S. Rep. Tom Marino, R-10, Cogan Station, has his own opinion about how the president can jump-start the economy and create jobs.

“He calls it a trifecta,” Marino spokeswoman Renita Fennick said.

“Cut government spending, reduce the size and scope of Washington, D.C., and keep taxes low.”

As a freshman congressman, Fennick said, Marino has been frustrated by the Obama administration’s failure to lead when it comes to addressing the debt and deficit crisis.

“This administration and some in Congress have consistently chosen politics over the voice of the American people,” she said.

Marino believes the United States will not get on a path to economic recovery until the White House can rise above the partisan games and take a serious look at how badly the American people are suffering, Fennick said.

In the past few weeks at public meetings across the 10th District, Fennick said that “Marino has heard the same message: People want to see results. They want jobs and they understand that the best way for this to happen is for the federal government to get out of the way and let private industry expand.”

How likely is it Obama will achieve these goals?

Marino said Obama could very likely lead an economic recovery if he would only show a willingness to let go of the “tired old policy” of throwing more money at failed ideas.

“His stimulus failed,” Marino said. “The economy has only worsened under his tenure.”

Marino, according to Rennick, said: “It is time that he looks beyond the demagoguery and ideology and join the House efforts to balance the budget and address long-term fiscal challenges. The president will need to convince Republicans that he is actually interested in addressing this issue. His actions need to match his rhetoric and so far, that hasn’t happened.”

It is time for Obama to do what is best for the country and not what is best for his party, Marino said.

“He needs to lead,” Marino said. “A good leader is willing to rise above criticism, set aside ideology and make common-sense decisions.”