Obama's Up, But The Jobs Still Must Come Back

The President is slowly moving back up the ladder.

President Barack Obama's approval ratings are starting to rise after declining ever since his inauguration, new poll figures show as the country's mood begins to brighten. But concerns about the economy, health care and war persist, and support for the war in Afghanistan is falling.

An Associated Press-GfK poll says 56 percent of those surveyed in the past week approve of Obama's job performance, up from 50 percent in September. It's the first time since he took office in January that his rating has gone up.

People also feel better about his handling of the economy and his proposed health care overhaul.

The tea parties of August appeared to be a dead cat bounce. Obama still has problems on the war in Afghanistan, but otherwise he's slowly starting to come back. Perhaps it was his assumption of authority in the Congressional speech. Perhaps it's that things are moving forward, however glacially, on health care. Perhaps it's a recognition that he's one of the few adults in the room, as the right descends into madness and begins to scuffle amongst themselves. For whatever reason, he's getting some goodwill.

Again, I still believe that ultimately, his fate is inextricably tied to the economy. Perhaps we will see some job creation efforts, although I'm still wary of the job creation tax credit because it can be so easily gamed. I trust EPI to come up with a decent version, though.

One version of the approach, to be unveiled next week by the Economic Policy Institute, a labor-oriented research organization, would give employers a two-year tax credit if they increased the size of their work force or added significant hours of work (for example, making a part-time worker full time). Employers would receive a credit worth twice the first-year payroll tax for each new hire, amounting to several thousand dollars, depending on the new worker’s salary [...]

States have dabbled with similar tax credits in recent years, with mixed results. The federal government last tried this measure in 1977-78. During that period, employment — which had been soft from the 1973-75 recession — climbed at a record pace. The creation of one out of three jobs that was awarded the credit then was attributed directly to the policy. But the permanence of those jobs was less clear, and some dispute how many of those positions would have been created eventually anyway.

Supporters say that improvements upon the 1970s policy would increase its potency. These include better publicizing the credit; making it available even to concerns that are not making money, in the form of a direct payout to nonprofits and companies in the red; and distributing the credit quarterly so that companies see it sooner.

One thing this will do is just freeze the job market until the moment it passes. If you're a business and you're going to get a tax credit for hiring workers, of course you would lower your workforce as much as possible to qualify for the maximum credit. In that sense, it really is corporate welfare. Not to mention that corporations just aren't as likely to hire people they feel they don't need if there's no work for them to do.

You know what could really help hiring? Fixing the credit markets for small business in particular. Those markets are still tight, and just returning to the 2007 system of shadow banking, instead of having banks just make loans out of their capital, won't work. If that doesn't get done, this small Obama bounce won't last long.