More mixed signals from the Obama administration on jobs: A craven capitulation on regulation in the name of job-creation, and a surprisingly good speech by a top official on the importance of American manufacturing.
President Barack Obama will shortly sign the so-called bipartisan “JOBS” Act. The law is neither about creating jobs, nor is it bipartisan. The law exempts an estimated 80 percent of new publicly traded corporations from the Securities and Exchange Commission’s (SEC) usual disclosure requirements for up to five years after their initial public offering (IPO).
The law was promoted by investment bankers, venture-capital firms, and the Republican leadership, who were all alarmed that IPOs (not surprisingly) have declined in today’s distressed economy. The remedy? Gut investor protections, the better to promote new stocks.
The premise is that by facilitating new stock offerings, the law will create jobs. Mainly, it will create jobs for one set of lawyers working to exploit the loopholes and another representing ripped-off investors.
The law is “bipartisan” only to the extent that the administration, despite the opposition of SEC Chair Mary Schapiro, didn’t have the nerve to oppose it. This is what today’s bipartisanship looks like—take-no-prisoners Republicans intimidating Wall Street-oriented Democrats.
That’s the bad news. The good news is a terrific, little-noticed speech by the administrations chief economic official, Gene Sperling, who heads the president’s National Economic Council.
In the speech, delivered Tuesday at the National Press Club to a conference on the Renaissance of American Manufacturing, Sperling made arguments that are standard in circles to the Administration’s left, but are rarely embraced by centrist Democrats:
We do believe that even if today only 12 percent of the U.S. private-sector workforce is employed in manufacturing, it is a sector that punches above its weight. When you take into account the outsized role that manufacturing plays in innovation through:
- R&D investment and patents;
- The tight linkage between innovation and manufacturing production;
- The higher-wage jobs it produces;
- Its importance for exports;
- The spillover benefits that manufacturing facilities have on firms and communities around them, and
- The deeper economic harm that comes from allowing our manufacturing production capacity to be hollowed out.”
Well put! Citing a number of studies that justify these conclusions, Sperling added “More than any other industry, manufacturing firms account for a disproportionate share of innovative activity in the U.S.—70 percent of private sector R&D and over 90 percent of patents issued. As a country, it matters where these benefits occur.”
So what, exactly, is the administration doing to promote U.S. manufacturing, big time?
Well, Sperling touted the few billion dollars the administration has spent on advanced manufacturing initiatives, its support for clean energy and related technologies, its efforts to give manufacturing firms tax breaks, its proposal for an $8 billion “Community to Career Fund” to train workers for high skill manufacturing jobs, and recent complaints against China’s protectionism when it comes to export of “rare earths.” The Administration also plans a new Interagency Trade Enforcement Center (to do what the office of the U.S. Trade Representative should have been doing all along.)
It’s a start--and an excellent case for a bolder industrial policy and a much tougher trade strategy against foreign mercantilism—neither of which the White House is pursuing. For the most part, our trade policy is on auto-pilot, promoting “free trade” deals that turn a blind eye to foreign subsidies and promote outsourcing of U.S. manufacturing jobs. The administration’s late manufacturing czar, Ron Bloom, got no staff and was not permitted to utter the words “industrial” and “policy” in the same sentence.
The challenge for Sperling is to persuade his boss to turn the welcome words of this fine speech into national policy. And to stop backing totally phony Republican “jobs” measures like the JOBS Act.
Ah, Barack, you raise our hopes and break our heart.