Obama Promises to Put Economy Into Overdrive

by John M. Curtis
(310) 204-8700

Copyright January 22, 2011
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           Watching his approval ratings climb over 50%, President Barack Obama promised to put the economy into “overdrive.”  Barack realized, more than any legislative achievement, the economic recovery has helped boost his otherwise sluggish approval ratings.  Seen more frequently making speeches, the president has begun a new strategy marking the halfway point in his presidency:  Get out on the stump and make more speeches.  Speaking on the 50th anniversary of President John F. Kennedy’s inauguration, Obama reminded a national audience why he’s the talker-in-chief, a deft public speaker, among the best orators in U.S. history.  Only a week earlier Barack delivered an impassioned speech marking the Tucson massacre, where a 22-year-old deranged gunman killed six, injured 16, including likeable, attractive and bubbly Rep. Gabrielle Giffords (D-Ariz.).

            Spending the better part of the week with Chinese President Hu Jintao, Obama tried to influence China to inflate its currency, giving other industrialized powers a shot to share of China’s export business.  Standing at around 16 cents, the Yuan or Renmibi currently offers a bargain to foreign manufacturers outsourcing work to China.  While there’s problems with outsourcing, including, for instance, losing jobs and poor quality control, most foreign manufacturers gladly take their lumps with respect to losing jobs and quality to the Chinese.  Instead of lecturing Hu on inflating the Yuan, Obama should focus on what can be done to keep U.S. companies manufacturing inside the U.S.  Any Economics 101 class tells the president that the economy can’t function without creating more jobs.  So-called jobless recoveries are a non sequitur because the economy can’t really grow without creating jobs.

            Strong rallies in the stock market can’t last without major sell-offs or sideways movement, reflecting the disparity between stock market growth and poor jobs picture.  Only by using the carrot and the stick can Obama encourage domestic companies to stop outsourcing and set up shop again in the U.S.  Foreign exporters selling products in the states must also do their part, like the auto industry, building plants and manufacturing domestically.  Applying strong tariffs to cheap foreign imports sounds initially like it punishes foreign exporters or domestic retailers but it actually helps to deal with the long-term jobs picture.  Most economists know the difference between a secular bear market and a true bull market.  Only in a real bull market do you see robust jobs growth over multiple economic sectors.  Growth in one area must also translate and multiply growth to other sectors.

            Obama gets the picture but hasn’t called a White House economic summit to deal with sluggish jobs growth.  “We’re going to build stuff, invent stuff,” said Obama, lamenting the Yuan’s artificially low value, hurting U.S. exports.  “That’s where the customers are.  It’s that simple,” said Obama, ignoring more realistically what the U.S. can do to create jobs.  Pressuring China to inflate its currency won’t fix the tendency of global companies to outsource manufacturing in cheap labor markets. While it’s China today, it could be Bangladesh or Sri Lanka tomorrow, not dealing with the basic question of how to keep profit-drive companies from manufacturing abroad.  Hosting a White House summit, including key members of Congress and the business community, would begin the serious dialogue needed to start the painful process of shifting manufacturing back to the states.

            U.S. officials know that China, a developing country, has its own problems feeding its population and building out its archaic infrastructure.  Increasing the Yuan would paralyze China’s long-range plans of providing for its 1.4 billion population.  With the U.S. Treasury running massive deficits of more than 10% of Gross Domestic Product, or about $1.7 trillion, there’s only one way out for the U.S. economy:  Jobs growth.  Obama no longer has the same luxury as other presidents kicking the can down the road.  His presidency hangs on the performance of the U.S. economy.  Without shifting manufacturing back to the U.S., there’s little hope of dealing with today’s massive federal deficits and national debt   Keeping the stock market rising depends on real jobs growth, something only accomplished by encouraging foreign and domestic companies to build plants in the U.S.

            Obama must put American workers first by insisting that domestic and foreign companies continue to manufacturer in the U.S.  Pounding on Hu to inflate the Yuan only boomerangs by antagonizing Chinese officials.  If Barack wants more jobs growth and manufacturing in the U.S. he must do something about it.  Apple Computer or Wall-Mart won’t stop manufacturing abroad unless the government puts down the hammer.  Cheap foreign labor provides affordable products at home but hurts American jobs.  Most Americans would be willing to pay more for home electronics, including big ticket items like flat-screen TVs, as long as they see domestic jobs growth.  Today’s whopping deficits and national debt have more to do with poor jobs growth and high unemployment than excessive government spending.  More jobs only add to the U.S. Treasury and helps finance great national goals.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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