Job creation is the number one priority in the election and one of several issues in which President Barack Obama and presumed presidential candidate Mitt Romney hold more contrasting positions.
The meager employment numbers released last week provide a new opportunity to highlight the differences between Obama, who began with a federal stimulus and sought to continue with a government-driven jobs plan (which has been stalled in Congress thanks to the GOP), and Romney, whose plan focuses on decreasing taxes and repealing the health care reform.
What both proposals have in common is the need for government intervention, whether to decrease taxes or finance jobs, increasing the federal deficit. For all intents and purposes, in both cases the government gives away money that would otherwise belong to it. One path is lowering taxes on the business sector-supply-and the other creating jobs and paying those workers-demand.
Politicians and economists can continue to debate the theories, but there is an undeniable reality in the balance between supply and demand. If money is provided to workers, they will use it to buy products, and if the business selling them has sustainable demand, it will create new jobs to address it. That is the White House’s theory.
The Republican idea is that giving tax cuts to businesses will result in those businesses using the money to grow and create jobs. It is very hard to believe that a business will hire employees and increase its payroll expenses just because its taxes are lowered, and not because it has higher revenue thanks to increased demand.
It is worth mentioning that in this debate, it makes little sense to claim-as Romney has-that jobs will be created by repealing the health care reform that recently began being implemented.
To sum up, the difference between stimulating supply or demand in order to create jobs is what separates Democrats and Republicans. These are options that the voters should choose between in November.