By Tom Pauken
The Texas unemployment rate jumped from 6.7 percent in April to 7.1 percent in May. While the
percentage of Texans out of work is much lower than the 9.4 percent national figure continued
unemployment claims for individuals out of work for more than a week are 175 percent higher than they were in our state a year ago.
The national jobless rate is the highest since July 1983 and this current economic environment has
a more worrisome feel to it than the recession back then. What is troubling is the sense that there is no
place to hide when it comes to loss of jobs in the private sector. The job losses are across the board with
the manufacturing sector being one of the hardest hit in terms of layoffs and plant closings. Moreover debt levels are much higher today than they were back in the early 1980s.
A major reason why this national recession appears worse -- and more persistentthan previous
recessions is the higher debt levels in the U.S.
During the go-go" years of what turned out to be a bubble economy consumers businesses and
most governmental entities (the Texas state government being a notable exception) went on spending
sprees as though there were no tomorrow and no day of reckoning.
The credit excesses beginning in the 1990s and continuing throughout this decade have
resulted in a mountain load of debt." John Riley of Cornerstone Investments has cited figures about
overall debt to GDP (gross domestic product) which should concern all of us. In 1981 when
President Reagan assumed office debt to GDP that is consumer debt corporate debt and
government was 91 percent. In 1930 at the time of the Great Depression it was 300 percent. At the
end of 2008 it was nearly 400 percent. That is way too much debt to get this economy moving again.
Moreover rather than reducing government debt the Obama Administration is piling on more
government debt with a stimulus package designed to get the American consumer to spend our way
out of this serious national economic recession. Our federal budget deficit is expected to be nearly $2
trillion this year. The Bush Administration tried to engineer a similar short term fix in early 2008
with a $168 billion package of tax rebates to individuals (including money to those who had never
paid taxes in the first place).
Are we setting ourselves up for a jobless recovery?
The Bush Plan didnt work; and I submit the Obama stimulus plan wont work either to get
our economy out of the ditch and growing again. Consumers arent going to spend if they are
worried as they are today about whether they will have a job tomorrow or about the very survival
of their businesses. Instead Americans are saving again putting money away for their own rainy
day" fund. Personal savings were at 4.5 percent in April and jumped to 5.7 percent in May.
Meanwhile however government spending at the national level is totally out of control.
With these massive budget deficits (and huge trade deficits as well) dont we run the risk of opening
the door to runaway inflation similar to what happened to Germany in the Weimer Republic after
World War I?
Government cannot create jobs only the private sector can. While the government may
seem to create jobs when it hires people or buys things it destroys at least as many jobs as it creates
when it does so. That is why you need a vibrant private sector to pay for and support the public
sector.
The number one economic issue facing us today is how do we encourage job creation in the
private sector particularly small businesses where most new jobs originate and put America back
to work?
The federal government does not have to spend trillions of dollars it doesnt have in a vain
attempt to stimulate the economy. Instead we need to reform our job-killing business tax system
which rewards debt while penalizing companies that save and invest in order to create jobs in the
United States. Under a proposal by Austin businessman David Hartman we would replace our
onerous business tax system with an 8-percent border-adjusted consumption tax. That would level
the playing field with our foreign competitors for U.S. businesses operating here at home. We need
to quit exporting prosperity abroad rebuild our manufacturing baselessen our dependence on foreign energy and bring good paying jobs home to America again.
The Hartman Plan would do just that.
The time for action along with a new direction in economic policy is now.
Lets put America back to work.
Tom Pauken is Chairman of the Texas Workforce Commission
By Tom Pauken
The Texas unemployment rate jumped from 6.7 percent in April to 7.1 percent in May. While the
percentage of Texans out of work is much lower than the 9.4 percent national figure continued
unemployment claims for individuals out of work for more than a week are 175 percent higher than they were in our state a year ago.
The national jobless rate is the highest since July 1983 and this current economic environment has
a more worrisome feel to it than the recession back then. What is troubling is the sense that there is no
place to hide when it comes to loss of jobs in the private sector. The job losses are across the board with
the manufacturing sector being one of the hardest hit in terms of layoffs and plant closings. Moreover debt levels are much higher today than they were back in the early 1980s.
A major reason why this national recession appears worse -- and more persistentthan previous
recessions is the higher debt levels in the U.S.
During the go-go" years of what turned out to be a bubble economy consumers businesses and
most governmental entities (the Texas state government being a notable exception) went on spending
sprees as though there were no tomorrow and no day of reckoning.
The credit excesses beginning in the 1990s and continuing throughout this decade have
resulted in a mountain load of debt." John Riley of Cornerstone Investments has cited figures about
overall debt to GDP (gross domestic product) which should concern all of us. In 1981 when
President Reagan assumed office debt to GDP that is consumer debt corporate debt and
government was 91 percent. In 1930 at the time of the Great Depression it was 300 percent. At the
end of 2008 it was nearly 400 percent. That is way too much debt to get this economy moving again.
Moreover rather than reducing government debt the Obama Administration is piling on more
government debt with a stimulus package designed to get the American consumer to spend our way
out of this serious national economic recession. Our federal budget deficit is expected to be nearly $2
trillion this year. The Bush Administration tried to engineer a similar short term fix in early 2008
with a $168 billion package of tax rebates to individuals (including money to those who had never
paid taxes in the first place).
Are we setting ourselves up for a jobless recovery?
The Bush Plan didnt work; and I submit the Obama stimulus plan wont work either to get
our economy out of the ditch and growing again. Consumers arent going to spend if they are
worried as they are today about whether they will have a job tomorrow or about the very survival
of their businesses. Instead Americans are saving again putting money away for their own rainy
day" fund. Personal savings were at 4.5 percent in April and jumped to 5.7 percent in May.
Meanwhile however government spending at the national level is totally out of control.
With these massive budget deficits (and huge trade deficits as well) dont we run the risk of opening
the door to runaway inflation similar to what happened to Germany in the Weimer Republic after
World War I?
Government cannot create jobs only the private sector can. While the government may
seem to create jobs when it hires people or buys things it destroys at least as many jobs as it creates
when it does so. That is why you need a vibrant private sector to pay for and support the public
sector.
The number one economic issue facing us today is how do we encourage job creation in the
private sector particularly small businesses where most new jobs originate and put America back
to work?
The federal government does not have to spend trillions of dollars it doesnt have in a vain
attempt to stimulate the economy. Instead we need to reform our job-killing business tax system
which rewards debt while penalizing companies that save and invest in order to create jobs in the
United States. Under a proposal by Austin businessman David Hartman we would replace our
onerous business tax system with an 8-percent border-adjusted consumption tax. That would level
the playing field with our foreign competitors for U.S. businesses operating here at home. We need
to quit exporting prosperity abroad rebuild our manufacturing baselessen our dependence on foreign energy and bring good paying jobs home to America again.
The Hartman Plan would do just that.
The time for action along with a new direction in economic policy is now.
Lets put America back to work.
Tom Pauken is Chairman of the Texas Workforce Commission
