Between December 2007 and February 2010, the United States' domestic economy shed more than 8.5 million jobs. Since then, we've added nearly 1.8 million jobs, but the pace of job creation is much too slow. Many are asking what Congress can do to improve the prospects for millions who are still seeking work.
The truth is that government doesn't create jobs -- that's the work of the private economy. Government can play a role by creating the economic conditions conducive to the private business investment which drives economic growth and generates the need to increase payrolls.
At first glance, it appears that the conditions are ripe for an expansion in hiring. The economy has begun to grow. While slow, this is a move in the right direction. Private businesses are reported to have $2 trillion in cash reserves, and the nation's banks have another trillion dollars in excess capital available for business lending. Why isn't this capital being invested?
In the months before November 2010, our government was taking the wrong course -- a course which created uncertainty and discouraged private sector investment. For example, the new health care law and the Dodd-Frank financial regulatory overhaul ordered extensive regulatory changes. Higher taxes were threatened by inaction, and environmental legislation was considered without regard to its impact on domestic employment. In the face of this regulatory uncertainty, capital stays on the sidelines and small businesses have not created jobs at the expected pace.
In order to reverse this course, Congress needs to cut spending and reduce borrowing to keep both taxes and interest rates low. Policymakers need to reexamine the health care law, to reduce spending but also to prevent an excessively high government role in this industry.
Already, there has been some progress in the House. On February 11, 2011, the House voted 391 - 28 to approve H.Res. 72, a resolution directing ten House committees to review existing and pending regulations with a particular emphasis on their impact on job creation. On March 3, 2011, the House voted 314 - 112 to repeal the burdensome 1099 reporting rules, a repeal which President Obama has signed into law. Congress has also begun the difficult task of reducing federal spending by cutting nearly $40 billion from the 2011 budget and by passing in the House a ten-year budget plan to cut long-term deficits by $4 trillion. Rep. Petri supported each of these efforts.
There remains much more to do. Congress must continue to address the regulatory and economic uncertainty. In order for Congress to remove this uncertainty, it's imperative that a reexamination of the flurry of ill-conceived legislation passed during the previous two years continue.
Beyond that, the new House leadership team has identified a a number of opportunities to promote job creation by empowering families, small business, and entrepreneurs:
* Require congressional review and approval of any new federal regulation which would have a significant impact on the economy.
* Tax reform for both individuals and corporations. Such reform would feature lower rates and fewer deductions and would limit economic distortions through a more efficient tax code.
* Consider three pending trade agreements (Colombia, Panama, and Korea) to determine whether they will open new markets and foster job creation at home.
* Modernize the legal framework governing the granting of patents to limit litigation and encourage protection of U.S. inventors overseas. More domestic innovation will lead to more domestic employment.
* Encourage all forms of energy production, with an emphasis on domestic production of readily available resources.
* Continue efforts to reduce federal deficits. Rising debt and continued borrowing threaten to bring higher interest rates and lower growth. Progress in addressing our deficits will help reverse these trends.
Each of these initiatives has the potential of strengthening our economy and promoting continued job growth. For this reason, they deserve careful consideration and respectful debate by the full House of Representatives. The U.S. economy has long depended on the productive investment of private capital to fuel economic growth. Rep. Petri believes strongly that it's time for government to end the uncertainty and remove obstacles to job creation.