Last Updated Dec 2, 2009 7:33 AM EST
Obama's initial effort was an $787 billion stimulus package that undoubtedly created new jobs, but not nearly as many as the administration predicted. Unemployment is still over 10 percent.
One problem: American job losses from this recession are unlike those that have occurred in previous downturns because employers can now easily tap into a cheap global labor market for replacements. How then to create permanent jobs in the U.S.?
My message to the man in the Oval Office would be to forget propping up failed businesses, no matter how big they are. Instead focus your attention on the sector where the most jobs have always been created, in new businesses.
I like Harvard Business School professor Bill George's suggestions, which offer ideas associated both with Democrats (government investment) and Republicans (tax breaks). Writing in the New York Times, George's suggestions include:
- Reduce the capital gains tax on investments in new companies to zero to stimulate new company formation.
- Increase the investment tax credit to motivate investment in manufacturing, buildings and infrastructure.
- Establish a jobs credit for small businesses for the next three years.
- Offer credits to employers that expand their exports, using American workers, thereby reducing America's trade deficit.
Another HBS faculty member, Josh Lerner, has a new book that makes the controversial case for a greater government role in boosting entrepreneurship and the foundering venture capital industry. The book, Boulevard of Broken Dreams, shows that a careful government presence can help tie together the many elements needed to attract and launch new ventures.
As you sit down at the White House tomorrow next to the likes of Eric Schmidt, Paul Krugman and Brian Roberts, what would you advise the president?