Growing an Economy

COMMENTARY Jobs and Labor

Growing an Economy

Jun 3, 2004 2 min read
Edwin J. Feulner, PhD

Founder and Former President

Heritage Trustee since 1973 | Heritage President from 1977 to 2013

Governing can be like gardening. If you do it correctly, the investment in time and energy is worthwhile -- even though it takes a while to reap the benefits.

The "garden" known as the U.S. economy is producing more jobs than ever before. Unemployment is 5.6 percent, below the average rates of the 1980s and 1990s. The Labor Department's household survey shows that 2.2 million more Americans are working now than were working just two and a half years ago. An all-time record number of Americans, 138.6 million, now have jobs.

How is this like gardening? Simple. Nature will grow by itself, but plants grow better if a gardener weeds carefully and protects them from storms. Plants, of course, also suffer if subjected to overprotection, sloppy gardening or excess fertilizer.

We're getting these good employment numbers now because of the sensible "supply-side" tax cuts enacted over the last three years. Those cuts have allowed businesses both large and small to plant even more seeds of growth. Lawmakers water the garden by keeping those cuts in place.

For example, last year lawmakers cut the tax rates on dividend and investment income almost in half. It's now more profitable to save and invest -- and more people and businesses are doing so. Over time, that helps explain why we have a roaring economy and a steadily increasing stream of jobs.

Of course, job creation, like gardening, takes patience. You won't see a healthy harvest a week, or even a month, after you plant the seeds. And so it has taken months for the tax cuts to work.

But, as in a garden, all that hard work can be undone quickly if the wrong policies are pursued. If you stop watering the plants, they wither and die. And if we suddenly raised taxes by repealing the tax cuts, the economic growth we're enjoying (gross domestic product increased 4.2 percent in the first quarter of this year, 4.1 percent in the quarter before that and an amazing 8.2 percent in the quarter before that) also could go away.

Still, despite the fact we're clearly on the right path, some liberal economists want to change course. On May 25, Princeton economics professor and New York Times columnist Paul Krugman tried to downplay our growth.

"The job forecast in the 2002 Economic Report of the President assumed that by 2004 the economy would have fully recovered from the 2001 recession," Krugman wrote. "That recovery, according to the official projection, would lead to average payroll employment of 138 million this year -- 7 million more than the actual number. So we have a gap of 7 million jobs to make up."

Well, as cited above, Krugman's wrong about the jobs number. The household survey has our economy at 138 million jobs today -- right where we were supposed to be. He's getting his number by using the less reliable payroll survey, which has been presenting a gloomier jobs picture for some time.

As far as blaming the president for a "jobs gap," well, that assumes there's a magic button somewhere that the president can push to instantly create jobs. There isn't.

Now, the government could increase short-term employment by launching some make-work building programs or by increasing the size of the federal government even further. But this won't create jobs. It's sort of like diverting water from farmland and using it to make concrete. Yes, you'll create a few jobs building a road. But you'll lose all the produce that would have grown on the farm.

Our economy is strong and improving every month. The president can speed that growth by plucking out some of the weeds that still exist. That means repealing excessive government regulations and eliminating the double taxation of savings.

By staying the low-tax course and making the cuts permanent, the government can ensure a good jobs harvest -- and healthy growth -- for years to come.

Ed Feulner is the president of The Heritage Foundation (, a Washington-based public policy research institute.