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John E. Sununu

Whirling economics

As panic sets in, Obama spins from one vague idea to another

By John E. Sununu
June 20, 2011

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PANIC IS not a pretty thing. The Obama administration may not be there just yet, but a steady drumbeat of bad economic news pushes it closer every week. In Ohio the president talked about giving money to automakers, in North Carolina he talked about giving money to “green” companies, and recently he proposed yet another payroll tax holiday. Call it the “whirling dervish” approach to economic policy — frantically spinning from one constituency to another, dispensing subsidies, and hoping something works.

Adding to the frenzied activity, the President’s Jobs and Competitiveness Council recently released its initial recommendations after three months of work. Chairman Jeff Immelt, the CEO of General Electric, and member Ken Chenault, the CEO of American Express, described five proposals in a high-profile piece for The Wall Street Journal. The ideas ranged from woefully uninspiring to unhelpfully vague. Robert Reich, the liberal former labor secretary, called them “puff balls.”

It’s difficult to get excited about an economic program that contains proposals like “make it easier to visit the US through improved visa processes.” Expanding tourism is wonderful, but is this the best they can do? The banality of the recommendations only reinforces the view that, for the White House, this is an exercise in public relations.

Another idea was to “put construction workers back to work.” Why not just recommend “put everyone back to work” and be done with it? The only specific policy suggestion to jump-start construction was a reference to making buildings “more energy efficient.” The 2009 stimulus legislation included over $10 billion in energy-efficient construction spending. If that didn’t get it done, I don’t know what will.

A third idea, labeled “streamline permitting,” actually used the phrase “cut red tape.” Did it really take three months to come up with that? And would it be too much to ask for the council to say which pieces of red tape they wish to cut? When Republicans suggest cutting red tape, they are usually accused of wanting to poison children or resurrect the robber barons. Note to the council: a few specifics here would go a long way.

Part of this council’s problem is the inherent limit on the effectiveness of all government commissions and blue-ribbon panels. To start with, they are heavily staff-driven. Immelt and Chenault are busy people with limited experience in government. They rely heavily on a staff, assembled mostly from inside the White House. The staff puts a few ideas on the table, the council approves, and the staff fleshes out the details.

A second problem is that the council members, despite serving as big-company CEOs, still want to please the boss. No one wants to tell the president he’s wrong. So they step gingerly around touchy subjects like costly health care regulations, new EPA rules, and the administration’s restrictions on domestic oil and gas production.

Lastly, both the staff and their CEO leaders fall back on what they know politicians want to hear. So we get recommendations like “facilitate small business loans” and “train workers for today’s jobs.” Members of Congress use these phrases every day. Repeating them over and over won’t turn the economy around; the federal government already has over 40 different job-training and employment programs.

The truth is that the role of government isn’t to create jobs; it’s to create an environment where entrepreneurs, businesses, and investors can make investments that create new opportunities for others. Yet elected officials, most with little private-sector experience, have a hard time seeing the difference between policy that creates a good environment and policy that simply subsidizes a particular behavior. The two are not created equal.

But the very changes that would promote a more competitive environment — tax reform that widens the tax base and eliminates deductions and credits, more restraint in promoting new regulations, and reform of the legal system — are not presidential priorities. In a sad irony, any meaningful tax reform would almost certainly raise the tax bill for Immelt’s GE.

Instead, the Jobs and Competiveness Council gives us mealy, hackneyed recommendations for things like tourist visas. The White House arranges a press release and a factory photo op. And we’re left with the spectacle of the president whirling like a dervish all summer long, trying in vain to reach that transcendent state where voters applaud the marvel of the dance even if they recognize it has achieved nothing.

John E. Sununu, a regular Globe contributor, is a former US senator from New Hampshire.