Blame Obama for Sky-High Unemployment

This wasn't supposed to happen. At the end of February, after the $787 billion stimulus was approved, the Obama administration predicted that unemployment would average only 8.1 percent this year. Indeed, in February the unemployment rate stood at 8.1 percent. Yet, unemployment now stands at 10.2 percent and keeps rising.

There is also another, wider unemployment measure seldom mentioned. When you count the unemployed who have become so discouraged that they have given up looking for work or have only accepted a part-time job, our country now has an unemployment rate that stands at a staggering 17.5 percent. Confirming these other numbers, the Bureau of Labor Statistics Household Survey finds that 3.5 million jobs have been lost since February. And it is also worth noting that the nation's unemployment rate has also been rising much faster than in other countries.

On October 30, President Obama claimed that massive government spending programs had already created or saved 640,239 jobs. The spin the administration is putting on this is that the 3.5 million jobs lost would have been 4.1 million without any government intervention.

Not too surprisingly, Democrats have already started calling for another round of government spending to reduce unemployment. While the media has questioned how many jobs were actually created by the government spending, it has unquestioningly accepted the notion that government spending creates jobs in the first place. Take some of the discussions witnessed in the electronic media over the last week:

David Gregory, host of NBC's "Meet the Press," asked Pennsylvania's Democratic Governor Ed Rendell on Sunday: "You've got 7,000 new jobs in Pennsylvania because of the stimulus. Is that enough?"

Harry Smith, the co-host of "The Early Show," on CBS sounded a similar theme: "The stimulus has helped stabilize the economy to a degree, but it’s the public spigot that has helped, sort of, keep it afloat. At what point do you turn it off and say this economy’s got to live or die on its own?"

And William Cohan, a reporter with Bloomberg, asked about a second stimulus: "Can we afford to do it? Can we afford not to do it?" But Cohan's implication was clearly that the stimulus would help reduce unemployment.

Of course, it is not just the electronic media folks who accept that government spending creates jobs. An editorial in The New York Times claimed on Sunday: "But government spending, as large and as necessary as it has been, has not been enough to revive hiring." Also on Sunday, Washington Post columnist E.J. Dionne, appearing on ABC's "This Week" complained: "The problem is the stimulus was too small, and they compromised it down and so you had less effect. I mean, the fact is these numbers would be a lot worse without the stimulus."

They all accept the notion that the government really does create jobs. But the news media isn't asking the right questions: where is the money coming from? What jobs would those resources have created in the private sector? Government just doesn't create wealth by spending more money. Whether it gets the money from? Does it come from taxation, borrowing, or simply by printing up more money? Government spending moves real resources from where people would have spent their own money to where the government thinks that it should be spent.

As I warned in February, there were good reasons to believe that this massive government spending would increase unemployment. Any kind of spending change, good or bad, is usually associated with temporary unemployment as people move from their old to their new jobs. The jobs lost are greater than the number of jobs created and it explains why the unemployment rate has gone up so much faster this year than economic forecasters expected back in January.

It would have made sense to suffer through this temporary increase in unemployment if the new jobs had a future. But this is not the case. Most of these new jobs will only continue as long as the subsidies remain in place. When the increases in government debt become unsupportable and the spending spree is finally over these jobs will end and workers will have to search all over again for new jobs.

Government "job creation" programs will not only leave us with a massive debt, they will increase unemployment and leave us much poorer as a country.

John R. Lott, Jr. is a contributor. He is an economist and author of "Freedomnomics."