It’s the third year of the Obama presidency, and Americans want to see new ideas and fast action for adding more jobs to the economy. The problem is that President Barack Obama’s idea of job creation largely revolves around public works and infrastructure projects that are rooted in Keynesian economics and driven by government funding and political payoffs. That hasn’t worked.
What’s really needed now is a blood transfusion of self-funding jobs in the private sector that will enlarge the tax base and begin shrinking the deficit. Fortunately, there are four action initiatives already in motion that could quickly create jobs and have a ripple effect throughout the economy.
First, the president could support the Freedom to Invest Act of 2011 (H.R. 1834), which allows American multinational corporations to bring back to the United States some of the $1 trillion in cash that they are hoarding offshore to avoid onerous U.S. corporate tax rates. Those funds can be used to support overseas operations or be invested in the U.S. Why not allow those funds to be repatriated at greatly reduced tax rates, provided the money is invested in jobs, plants and equipment in the U.S.?
Second, the president can request his National Labor Relations Board appointees to fast-track the hearings and decision-making that would allow Boeing to open its 787 Dreamliner assembly plant in South Carolina, provided the company demonstrates that union jobs in its home state of Washington are unaffected.
Third, Obama can direct his Interior Department to cut through the red tape and renew the permit granted to ExxonMobil to develop the largest oil discovery in a decade. It is located in the Julia Field in the Gulf of Mexico. That discovery — a deep reservoir of about 1 billion barrels of oil — would reduce America’s dependence on foreign oil and create thousands of jobs. According to the American Petroleum Institute, by 2013 the ripple effects of this discovery and the lifting of the drilling moratorium imposed after the BP oil spill would cause “total employment supported by the Gulf of Mexico oil and natural gas industry to [approach] 430,000 jobs or a 77 percent increase.”
Fourth, jobs are just waiting to be created by American companies eager to help tap the third-largest proven oil reserve in the world, located in Alberta, Canada. These oil sands are now technologically and economically viable, provided that the heavy crude oil can be transported by a new pipeline to refineries on the Texas Gulf Coast. Eighty percent of that 1,660-mile pipeline would be in the U.S. and put 20,000 people to work in construction and manufacturing.
Most of the planning and permitting for the proposed Keystone XL pipeline has been done. The major holdup now is that Obama needs to approve the project and shepherd it through final State Department formalities.
So far, Obama’s jobs initiatives have relied on stimulus spending of public funds — money that is largely borrowed. The debt ceiling debate and S&P downgrade shocked the nation into facing the fact that we must reduce the trajectory of borrowing and spending. The virtue of private-sector job creation is that it is largely self-funding and that it provides a return on investment, which in turn generates new tax revenues.
We don’t need another speech on job creation extolling Keynesian government investment after that theory’s recently demonstrated failure. We need action that puts people to work in real jobs, helps the economy grow, broadens the tax base and takes steps toward shrinking our deficit and debt.
Scott S. Powell is a director of RemingtonRand and AlphaQuest and a visiting fellow at Stanford University’s Hoover Institution.