The Jobs Council, or more formally the Presidents Council on Jobs and Competitiveness, has published its report, closed up shop and faded into history. President Obama created the council and tasked its members to create jobs in the short term and improve our nations competitiveness over the long term. Presumably, the short term meant before the November 2012 elections.
To lead this effort, the President called on his very favorite chief executive officer, General Electric Co.s Jeffrey R. Immelt. As a first observation, the makeup of the council had to raise eyebrows, given its specific mission. Of the 27 identified members, eight were bankers or in financial-related activity. (Including the chairman, as General Electric is really an unregulated bank.) Two were academics, two were trade union executives, four were manufacturing chief executive officers and the remaining 11 were in transportation or services industries. Notable by their absence were any steel, aluminum, energy, auto or construction equipment executives. Well, these might be minor league industries. Or maybe they are all Republicans.
In diagnosing all the pathologies that have afflicted the United States, the council started off on education. Teacher selection, compensation, etc., were enumerated as basic causes of poor results, and we were urged to invest more in education. At the college level, only 14 percent of undergraduates are studying science, technology, engineering and mathematics. Of entering students in these fields, 40 percent default and change majors after the first academic year. These kids are not dumb; they just recognize that a liberal arts education is a much less demanding route to a college degree. Although the council didnt touch on it, certainly grade inflation in liberal arts contributes to this discovery that art and literature is a much more pleasant route to a bachelors degree than wrestling with physics, inorganic chemistry and thermodynamics.
After education, the council came out foursquare in favor of innovation. Somehow, they equated innovation to research and development (R&D), and that led to the sweeping recommendation that the government and the private sector should commit more money to R&D. It was even suggested that a permanent R&D tax credit would drive us toward the desired result: spend more. There was nothing said about wasteful R&D spending by the government; apparently, all R&D is suffused with a heavenly light that defies criticism.
An important segment of the report is entitled energy. The recommendation here includes an all in approach that translates to federal spending for wind and solar, and private spending for oil and natural gas. We are implored to catch up in spending on clean energy so that China and Germany wont outspend us. Once again, we are urged to support more federal R&D and the use of tax credits to stimulate private R&D for clean energy. One amusing suggestion would require real estate agents to include an energy audit in every transaction.
A full section of the report is devoted to regulatory reform, and that was a hot prima facie beginning. The public acknowledgement that the current regulatory regime requires reform is an encouraging finding. However, after that beginning it was hard to find the beef. Regulations should maximize net benefits. Who could argue with that? The treatment of regulatory reform was very much like the rest of the paper. It was warm beer and careful generalities that would offend no one.
And then a crescendo introducing the final act: tax reform. This was handled mainly by endorsing the previous Simpson-Bowles recommendations on taxes, which so far have aroused enthusiasm with no-one except Alan Simpson and Erskine Bowles, co-chairmen of the National Commission on Fiscal Responsibility and Reform.
According to Commerce Department data released in late January, 5.8 million fewer Americans were working than when the recession started and real gross domestic product per person is down $1,112. These are the hard facts that help to explain the anxiety being experienced by the American public. Meanwhile, the President is defining a new economy with his campaign of an America Built to Last, including more investment in green jobs like solar energy company Solyndra LLC, more subsidies for favored higher education and mortgage relief, etc. Spend, spend, spend.
In summary, an unemployment rate of more than 8 percent is threatening Obamas re-election to a second term. Solution: appoint a Jobs Council that tours the country, listens and writes a report that offends no one and stirs up no controversy. Mission accomplished! Oh, really?
Thomas C. Graham is a founding member of T.C. Graham Associates. He is a former chairman and chief executive officer of AK Steel Corp., president and chief executive officer of Armco Steel Co. LP, chairman and chief executive officer of Washington Steel Co., president of the U.S. Steel Group of USX Corp. and president and chief executive officer of Jones & Laughlin Steel Co. His column appears monthly. He invites readers comments and can be contacted at email@example.com.