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Obama’s 4-4-4

Four Million more working people.
Four Million FEWER Working.
Four Trillion more in Debt

Four more years?

In 2008, there were 146 Million people working. Today, there are only 142 Million. Yet the 18-64 age population has increased by 4 million people ( from 188 Million to 192 Million (Bureau of Labor Statistics)). The national debt increased from 10.6 Trillion to 16 Trillion today. OK this is really 5 Trillion more than when Obama took office. But will round down to 4 trillion.

So given that almost 75% of this age population historically has worked, that means that our economy is missing 7 Million jobs. Why?

#1 Federal Reserve Policy: The Fed instead of focusing their attention on helping restore bank and housing market, they have engaged in accommodating Obama’s tremendous increase in government spending by buying government debt. These actions have created doubt about the value of the US $ and created incredible distortions in commodity prices in the economy. These distortions have harmed the economy in three ways:

First, higher commodity prices make it more expensive for businesses to produce goods so if there is not also an increase in demand in the economy, firms will be forced to reduce output.

Second, the increases in commodity prices have also made it more difficult for businesses to make decisions because they do not know whether these prices will continue to rise and or by how much.

Third, even if firms see an increase in demand for their products, they do not know if the higher demand will be maintained or is it just a temporary spike caused by the Fed increasing the money supply. Firms will not engage in long-term projects in this uncertainty and will even be reluctant to hire new workers given the cost of training and the desire not to “hire and then immediately fire” workers if the increased sales do not continue.

#2 ObamaCare has made the cost of health care expenses very uncertain. Contrary to Obama’s claims, ObamaCare has increased the cost of private health care at an even faster rate. The problem is that many small businesses hire people in anticipation of future business opportunities. They fund these current labor expenses from their retained earnings. (unlike larger firms, small businesses do not have as much access to credit markets to borrow money in the expectation of future profits) Therefore, any increase in health care costs reduces the pool of money they have to hire additional workers–job growth is harmed.

#3 Regulations. Yes regulations make doing business more difficult so some businesses reduce their output and hence hire fewer people. In a growing economy the impact of regulations is hidden because firms may even increase hiring–even with the increased cost of regulations because sales are strong enough to justify increasing output even with the increased costs. In a stagnant economy, the impact of regulations is more severe. (some would say more obvious)

#4 Tax Expectations. Firms and corporations are not stupid. They see the massive US spending and deficits and they know eventually these debts will have to be paid for by higher taxes. Firms who may have decided to locate in the US may locate elsewhere given the likelihood of future tax increases.

So there you have it. Four reasons why even though 4 million more people could work, 4 million fewer people have jobs and we have 4 Trillion (actually 5.5 Trillion) more in debt. Do these fours justify four more years?

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