All the candidates have been talking a lot about creating jobs for Americans. But that isn’t really what a president does. The number of government jobs is decided by Congress. The president does have some power over the economy, but it seems to go in boom/bust cycles no matter what anyone does. There are many conditions the president can’t control. In my state, unemployment levels have plummeted and many businesses are desperate for workers. This is a good thing for workers, but Obama and Gov. Lepage shouldn’t take too much credit for it. It is happening mostly because we have an older population and many people are retiring.
The President is the Head of State. While he has no direct legislative powers, he has a lot of influence over government activity. (Granted, at the moment the President’s influence over Congress seems low.)
As for the government, there are two main ways it can directly create jobs. One is through government work programs. Start a new government project, like building a highway or staffing a new infantry division or expanding public education, and you put people on the government payroll.
The second way is through economic incentives. The government can offer tax breaks or some other incentive to private businesses that expand their work forces.
The crux of my OP is, this is all up to Congress. Look at what obstructionism did to Obama’s proposals. A president can talk about all kinds of great thins, but no matter how much he or she wants them to happen, Congress can block them.
The president has several important ways to influence the economy - vetoing legislation, appointing members of the Federal Reserve Board, and - as the leader of his or her party - directing the introduction and negotiation of legislation (this is not a power, but a role the president can serve or be denied at the whim of congress).
Yes, as I said we’re currently on the low side of Presidential influence over Congress. But this isn’t the historic norm.
I think it’s a misnomer to say that tax breaks create jobs. Taxes on business and labor are an obstacle to job creation. Removing the obstacle can certainly lead to more jobs-that’s why unemployment is lower in Texas than California, and lower in Switzerland than France. But it doesn’t mean that the government deserves credit for creating jobs.
Look at it this way. Suppose a lumberjack knocks a tree down across a road. Then, after a while, he chops up the tree so that the road can be used again. It’s a good thing that the lumberjack removed the obstacle that he was at fault for, but it doesn’t mean that he deserves credit for creating the road.
I think it’s just that the number of jobs created is a good indicator of the strength of the economy in general. If the country prospers, more people are working - and vice versa. So if the President has any impact on the state of the economy, he or she also has an impact on the number of jobs.
I take issue with the building highways putting people on the government payroll. If you have a massive highway stimulus, perhaps the state DOTs would ramp up staff a bit but mostly they’d contract out the preliminary engineering and construction engineering. A ballpark rule of thumb is about 10% PE and 15% CE. So at least 3/4 of the money goes directly to contractors, who pay the suppliers and hire the workers, all of whom pay taxes on what they make some of the money winds up back where it came from.
I agree that a new infantry puts more people on the payroll. expanding education may put some on the payroll but some of that money may also go to school infrastructure and supplies.
A President can only destroy jobs, but if he destroys fewer jobs than most, then he’ll “create” more than most. See; Bill Clinton, whose extremely pro-growth policies enacted in partnership with the GOP Congress led to the greatest job boom in history. Yeah, I know it was the internet revolution but it didn’t have to be centered in the US. Those jobs could have just as easily gone to bright Japanese or German kids.
That’s the crux of the OP. Do they have a (measurable and predictable) impact on the economy? I think far less than the media leads most people to believe. Presidents basically wait for the wind to blow and then take credit for someone else’s kite flying.
I think most people really have no idea how the economy works or the government and private sector’s role in it.
Trump supporters (and Trump himself for that matter), for example, seem to think the President is like the CEO of a corporation. Like he can negotiate deals with other countries like they are monolithic entities or that he can order companies to do business (or not) with this country or that. Unless there is some law in place to restrict the sale of particular products (like weapons or uranium or whatnot), the private sector is largely free to trade with whoever they want, within the legal and regulatory framework of the country. So it’s not like Trump can come in and tell companies to stop outsourcing or to be more competitive with Japan or China.
That would include politicians, almost all of whom are law or political science majors.
Even among economists, macroeconomics is controversial. No one claims to understand well enough how the macroeconomy works well enough to make policy with confidence.
I know how it is; the government always deserves the blame but never deserves the credit.
But I was referring to a tax break specifically tied to job creation not just a general tax break. A company which is given a general tax break may just decide to give its board of directors bonus checks and no new jobs would result. But if there was a program that said that a company that expanded its work force by X% could reduce its tax payments by X% in turn, you’d see companies hiring new workers.
I’ll also note that Texas has more government employees per capita than California has, which is part of the reason why unemployment is lower there. And of course those jobs are paid for by taxes.
I think that lowering the employee’s portion of SSI/Medicare for a few years around 2010 helped to create jobs/slow job loss because it put a little more spending money in the pockets of people who spent it on survival, and kept some local businesses alive or prevented layoffs in the poorest areas.
A bunch of grants to bio - science colleges would have saved my job in 09, since my company sold used lab equipment to colleges. Emergency funds for states and school districts could have prevented a lot of layoffs. There are always streets that need to be repaved, the government could fund that and similar maintenance projects. There are lots of ways to pump up employment levels if congress wants to.
Pumping up employment is something government can always do, and economic growth as a result, but having a private sector that grows and provides employment is harder. And there’s no guarantee that even if you get 3% growth based off government spending that the private sector is benefiting. Have any studies been done about the Big Recession determining how well companies not receiving direct assistance did due to stimulus measures?
There is an argument to be made that very high marginal tax rates (say 80% on income above $10,000,000) would encourage people with very high incomes to spend more of it on things that reduce their tax load. That could change the math on expanding a factory, and make it so that, after taxes, it is better to expand, while the answer under our current tax rates would be to keep the money in securities (for example).
Also, since giving away securities allows one to deduct the current market value (not the original cost basis) someone with very high stock gains would be even more encouraged to give stocks to charities. (the gift can be used to balance the capital gains from stock sold to help bring taxable income closer to $0*). More charitable giving should eventually lead to more employment, somewhere, right?
*It is more complicated than this, I am not giving you tax advise. Yes, this is one of the ways people with very high income avoid taxes.
THe problem with using tax policy like that is that Congressmen, being rich, and also having ideas, tend to always leave loopholes that are not really advantageous for the economy. Such as the municipal bond exemption. Arguably, this creates a double whammy, pushing a lot of wealth into money that doesn’t usually promote economic growth, and also encouraging states and cities to borrow more than is wise due to artificially low interest rates.
But as long as the muni exemption exists, rich people will just put their money there rather than in things like expanding factories or spending money on durable goods.
Sure but what they know is that people care about jobs. So candidates must say they will create jobs or that their opponent will not. For a candidate to say “actually even if I’m elected I won’t be able to much influence this subject” just sounds like an admission of weakness or an uncaring attitude.
There’s always a catch.
There are ways you can spend taxpayer dollars that will tend to increase employment. However to have the dollars to spend you need to raise taxes, either now or at some point in the future, and of course raising taxes may tend to reduce employment. Conversely there are ways you can cut taxes that will tend to increase employment (though not every tax cut does this). But cutting taxes means cutting expenditure, either now or in the future, and that may tend to reduce employment.
I’m not saying it’s a zero-sum game; some combinations of taxation and spending policies will produce better employment outcomes than others. But identifying the optimal combination is not always easy. Plus, if you assign a high priority in framing your taxation and spending policies to maximising employment, you’ll have to assign a relatively lower priority to other goals, however desirable they might be.