Uncertainty Inhibits Job Growth

As President Obama hosted 130 business and labor leaders at the White House for a jobs summit today, Federal Reserve Chairman Ben Bernanke did what he needed to do on Capitol Hill to make sure he doesn’t join the ranks of the unemployed.

First, the jobs summit. Obama, in his opening remarks to his guests, acknowledged there is “extraordinary skepticism that any discussions like this can actually produce results.”

No argument there—there may be a shortage of jobs in this country, but there is no shortage of ideas on how to create more jobs. Pick an interest group, and you’ll find a list of industry-specific suggestions on what the government could do to help businesses grow and hire more people.

Obama, however, said he is confident that his invited guests could “come up with additional good ideas on how to create jobs” in the breakout sessions that followed his remarks.

The president said he has been “working continuously” on this issue and will be “speaking in greater detail about several ideas that have already surfaced early next week.”

“What I’m interested in is taking action right now to help businesses create jobs right now, in the near term,” Obama said. “That’s why we made more credit available to small banks that provide loans to small businesses.”

Excuse me, Mr. President, that hasn’t happened yet. You announced that plan back in October, but this Treasury Department program isn’t up and running. (FYI: Giving a speech isn’t the same as taking action.)

Following the breakout sessions, a corporate CEO told Obama that many business executives are hesitant about hiring more workers because of Washington’s “aggressive legislative agenda”—a complaint that also was raised at a competing jobs summit held by House Minority Leader John Boehner, an Ohio Republican.

“I actually think this is a legitimate concern,” Obama replied.

Because the nation faced two wars, a financial crisis, and massive job losses when he took office, Obama said he considered postponing big initiatives like health care reform and caps on carbon emissions until the economy stabilized. But he decided that if addressing those issues kept getting put off, “we’ll never get to the point where there’s a lot of appetite for that.”

At Bernanke’s confirmation hearing, the Fed chief also was asked about whether legislative uncertainty was inhibiting job growth.

“It is an issue,” Bernanke said. “We’ve heard the same thing in our discussions” with business executives.

The uncertainty over Bernanke’s future at the Fed was eased at the beginning of his five-hour hearing when Senator Chris Dodd, the chairman of the Senate Banking Committee, said he would vote for Bernanke’s confirmation.

“I believe that you are the right leader for this moment in our nation’s economic history, and I believe your reappointment sends the right signal to the markets,” said Dodd, who praised the Fed for taking “extraordinary actions to right the economy.”

The Connecticut Democrat then went on to criticize the Fed for falling short on consumer protections, mortgage regulations, and reining in “excessive risk taking” by large financial holding companies.

Senator Jim Bunning, a Kentucky Republican and the only senator to vote against Bernanke’s confirmation the first time around, blasted the Fed chairman for his role in last year’s bailouts of financial firms like American International Group.

“Rather than making management, shareholders, and debt holders feel the consequences of their risk taking, you bailed them out,” Bunning said. “In short, you are the definition of moral hazard.”

Bunning said he would “do everything I can to stop your nomination.”

Most senators, however, appeared ready to give Bernanke another term, despite reservations about some of his actions.

Bernanke helped his case with his low-key, analytical answers to their questions. The Fed chief also displayed some political savvy. After Senator Bob Corker criticized Bernanke for making statements that seemed like an endorsement of the past two economic-stimulus packages, the Fed chief told the Tennessee Republican he has “tried to stay out of fiscal policy. I will be more vigilant in the future.”

Later, he was asked by another senator what he thought about giving tax credits to businesses that hire new workers.

“I just promised Senator Corker I wasn’t going to make fiscal policy recommendations,” Bernanke replied.

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Kent Hoover is the Washington bureau chief for bizjournals.