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Green or Shovel Ready – Government Fails to Create Jobs

By: John Golnik – September, 2011

In mid August, Representative Tsongas was in Lawrence to present a $300,000 grant to the Workforce Investment Board, federal monies from the EPA, for ‘green’ jobs training. A few days later Evergreen Solar, Inc. declared bankruptcy with nearly half a billion dollars in debt. This is the same Evergreen Solar that received state ‘green’ stimulus funds only to move its facilities from Devens to China back in March causing the loss of 800 ‘‘green’’ jobs. And just last week, Solyndra, a California company, that President Obama touted as a success story from the government’s $787 billion economic stimulus package filed for bankruptcy after receiving $475 million from the Federal government.

I was struck by the contrast. On one hand, we see Federal monies being spent to train people for ‘green’ jobs to work in the ‘green’ economy, and on the other, we see a state and federally subsidized ‘green’ companies file for bankruptcy resulting in the loss of ‘green’ jobs. Continuing education and training are important; however I asked myself, in light of the Evergreen and Solyndra chapter 11s, what good is ‘green’ job training, if there are no ‘green’ jobs for people to be ultimately placed?

Much has been made about the ‘green’ economy and the ‘green’ jobs it would create. In fact, President Obama set a goal to create 5 million ‘green’ jobs in 10 years. Don’t get me wrong, I believe in any new technologies, be they ‘green’ or otherwise’. I believe that ‘green’ technology has something for everyone; investment opportunities, preserving our environment, job creation and in my opinion, most important, helping to wean our country off of foreign sources of energy (which is a national security issue).

However, forcing people to use technology before it is market ready and efficient and giving subsidies to national champions (companies state and federal bureaucrats believe will succeed) is not the proper route to take. Stand back, let the market decide. As a country we have always been on the cutting edge of technology, and ‘green’ technology should be no different. I would gladly trade in my gas powered Ford Explorer for one that runs on electricity if the electric version had the same capabilities as my fossil fuel version.

On August 18, the New York Times weighed in on the ‘green’ jobs debate. Here is what they said, “…the ‘green’ economy is not proving to be the job-creation engine that many politicians envisioned….Federal and state efforts to stimulate creation of ‘green’ jobs have largely failed, …” And a non partisan Brookings Institute study found that rather than adding jobs, the ‘green’ sector lost positions. As for ‘green’ subsidies, California paints a bleak picture. The $59 million that was used for ‘green’ job training has only led to 719 job placements or $89,000 subsidy per job. And because the largest component of the ‘green’ economy is ‘‘green’’ construction, the sector has been weighed upon even more than most.

California serves as a good example of what happens when the government is charged with creating jobs, be it ‘green’ or otherwise. While the California example of $89,000 subsidy per job seems expensive, it is nothing when compared to the Federal Government’s other larger experiment at job creation, the American Recovery and Reinvestment Act of 2009 a.k.a The Stimulus cost. The price tag of this stimulus package was $787 billion. The Whitehouse contends that the package either ‘saved ‘(whatever that means) or created 3.5 million jobs. The math is straight forward and the cost per job created and/or ‘saved’ is $225,000. Again, I have yet to have a ‘saved job’ defined to me but it is no wonder it is included in the calculation otherwise the price tag per job would be that much higher.

Just as the government has failed to produce ‘green’ jobs so too has it failed to create ‘shovel ready’ jobs. At best, the government’s attempt at job creation has been inefficient (from a cost perspective) and unsuccessful. Despite the government’s best efforts and high price tag, last quarter’s economic growth was 0.3% and unemployment stands at 9.1%.

Yet despite these stark numbers, Representative Tsongas believes we need yet another government jobs program; a ‘21st Century New Deal’. Where was she more than 12 months ago? When all that time and money was wasted on a healthcare reform bill that increases the cost of doing business for companies (as best illustrated by the more than 2000 companies that have ‘opted out’ of implementation) and a plan whose constitutionality is under judicial review.

No, Representative Tsongas supported that legislation and has voted for every piece of job killing legislation to come out of Washington DC in the past three years; starting with the stimulus package soon to be followed by the healthcare bill. Now, she believes we need jobs legislation and what does she propose? Another big government direct hire public works initiative. What these workers be paid? How will the public unions feel about these new government employees? Representative Tsongas ‘doesn’t know’. But the biggest question remains unanswered – Where will the money come from?

From us, by either ‘raising revenue’–the latest Washington code word for increasing our taxes–or printing money and putting us further in debt. Does she still believe despite the failed $797 billion government stimulus plan that the government does a better at creating jobs than the private sector? Obviously she does.

Historically, the most sustainable jobs are created in the private sector. With the economy stagnating, ‘green’ companies are struggling with credit and balance sheet problems just like their gray peers. But their biggest challenge is uncertainly. The private sector is not creating jobs because of the uncertain environment created by the politicians and bureaucrats in Washington, DC. We need certainty. We need an environment where business can feel comfortable about making long term hiring decisions.

It may have been summer recess but shouldn’t Congress have been called back into session to begin the process of fixing what they have broken? They could have started by extending the Bush tax cuts through 2012 for everyone. Next, the payroll tax holiday for employees should be extended through 2012 and include the employers as well. Then they should allow companies to write off 100% of their capital expenditures annual through 2012 instead of depreciating them over 5 years. They should lower the punitive corporate tax rate which at 35% is now the highest in the world! (Imagine the world’s leading industrial and economic power having a higher corporate tax rate than France. You don’t need to imagine it because it is reality!) Finally, close the tax loopholes that allow large corporations to escape without paying a portion of their taxes.

This sounds like a lot of work, but we send our elected officials to DC to lead not to follow. Critics will argue that the Bush tax cuts should not be extended or at the very least not for the very rich. Unfortunately, the ‘rich’ get a very small amount of their annual incomes from salaries, in fact, most it comes from investment income. The expected tax revenue windfall would not materialize. Critics will also argue that our taxes are already historically too low and need to be raised. I agree. They are too low for our bloated federal government. However, instead of raising taxes to pay for an oversized ever expanding activist government I say keep taxes low and cut the size of government. Lastly, the naysayers will further argue that such tax cuts will cause the deficit to increase. Maybe, for the very short term, but it will be balanced by increased tax revenue from a growing economy and the newly hired.

These job creation prescriptions are not ideas you will hear from Representative Tsongas. She still believes in the power of a large and growing activist government, not the power of the individual. Her faith is in a government that she believes knows better than we do what is best for us. She believes her constituents are the Federal government’s ATMs who can be accessed to pay whenever another expanding government program is proposed.

Our Representatives were not elected to raise taxes and take more money out of the pockets of hardworking families and business people. We cannot let Washington, DC or Representative Tsongas fool us again. We have tried it her way and all it has gotten us is 0.3% economic growth, 9.1% unemployment (over 8.8% for more that 28 months) and deficit and debt levels that will burden our children and grandchildren.

Whether they are jobs that are ‘shovel ready’ or ‘green’, the government effort to create sustainable employment has been pathetic and expensive. It is time for a comprehensive jobs program but not one that is driven by the government; one that is empowers the private sector. Let’s end the uncertainty so our economy can once again begin to grow. This way, as a country, we can begin managing a growing pie rather than fighting for the scraps of a shrinking one.

Email Jon at:

jonathan@redrivertradingco.com

ValleyPatriot

ValleyPatriot

The Valley Patriot is a free monthly journal of news, commentary, and events, serving Northern Massachusetts and Southern New Hampshire.

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