Obama's Secret Jobs Plan

Image: Chip Somodevilla/Getty Images

President Obama said Friday that his economic team is looking at additional steps that can be taken to grow jobs in the United States.

Some might say it’s about time. The Bureau of Labor Statistics reported that the unemployment rate in October climbed to 10.2 percent—its highest level in more than 26 years. Others would say please, no more help. They contend the federal government is doing more to stifle job creation than spur it, because of policies that will lead to higher taxes, higher health care costs, and higher energy prices.

Economists agree that job growth tends to lag overall economic growth, so a little patience is in order. Gross domestic product increased by 3.5 percent last quarter—the largest quarterly increase in two years—so jobs should follow, eventually.

“I am confident that our economy will recover,” Obama said. “I'm confident that we're moving in the right direction. And I promise that I won't rest until America prospers once again.”

To speed job growth, the president said his economic team “is looking at ideas such as additional investments in our aging roads and bridges, incentives to encourage families and businesses to make buildings more energy efficient, additional tax cuts for businesses to create jobs, additional steps to increase the flow of credit to small businesses, and an aggressive agenda to promote exports and help American manufacturers sell their products around the world.”

Sounds like another stimulus package. No, don’t call it that, said Alan Krueger, the chief economist for the Treasury Department. Stimulus signifies a general increase in economic activity. These ideas, he said, are specifically about speeding up job growth.

OK, then, what specifically is the administration looking at?

Krueger wouldn’t say—talking about specifics would “not be helpful at this stage,” he said.

So, we’ll have to wait to see what Obama’s plan is. It may not even be a new plan—most of the ideas the president mentioned already have been tried in some form, either in the economic stimulus package or through Treasury Department initiatives.

For example, the Obama administration has been tinkering with ways to increase lending to small businesses all year, to mixed success. The economic stimulus bill increased the government guarantee on the Small Business Administration’s main loan program to 90 percent, and eliminated or reduced fees on SBA loans. That sparked a rebound in SBA lending, but those stimulus funds are about to run out.

Small-business groups have urged Congress to find money to keep these enhancements going, but the housing industry apparently pulls more weight on Capitol Hill. Legislation signed Friday by Obama extends and expands a tax credit for home purchases, but doesn’t include an extension of these SBA loan breaks.

The president also recently endorsed an increase in the maximum size of SBA loans, which would help healthy businesses take advantage of the slowly recovering economy. Congress hasn’t managed to get that through its sausage-making factory either. Plus, the president’s proposal to use the Troubled Asset Relief Program to provide cheap capital to community banks so they can increase lending to small businesses may be stymied by the restrictions Congress has imposed on TARP recipients.

Inaction may not be such a bad thing—despite the higher unemployment rate, the rate of job loss is slowing. By the time Obama has decided on his jobs plan—or at least by the time Congress has enacted it—the private sector may have taken care of the unemployment problem on its own.

So the best jobs plan may be the simplest jobs plan: First, do no harm.