Richard Epstein: Read Obama's Jobs Bill and Weep

Richard Epstein in Hoover’s Defining Ideas:

What is so striking about Obama’s shopworn rhetoric is its juvenile intellectual quality. His explanation for how the AJA will create jobs is a non-starter because he does not explain how we get from here to there. As in so many other cases, the president thinks that waving a wand over a problem will make his most ardent wishes come true, even when similar earlier efforts have proved to be dismal failures. This dreadful hodgepodge of a bill will likely be dead-on-arrival in Congress, but it remains a patriotic duty to explicate some of its worst provisions.

The most evident feature of the AJA is that it is a combination of ill-conceived, disparate measures. The wandering quality of the bill makes it impossible to cover all of its silliness, but it is possible to focus on some of the core job provisions, all of which kill the very jobs that the AJA is supposed to create.

One does not have to dip very far into the bill to find trouble. Section 4 of the AJA imposes “Buy American” restrictions on the use of funds appropriated under this statute for work on public buildings. “[A]ll the iron, steel and manufactured goods” used on such projects are to be fabricated in the United States. There are obvious administrative difficulties in deciding what counts as a “manufactured good” for the purposes of the act. But don’t sweat the small stuff.

The fatal problem with this form of jingoism is that, in the name of economic efficiency, it forces American taxpayers to pay more for less. That upside down logic may seem sensible to a die-hard Keynesian, but not to ordinary people who realize that deliberate overpayment for inferior goods makes no more sense in the public sector than in the private one.

Obama’s latest economic fix will kill the very jobs it’s meant to create.

The universal statutory command to “Buy American” is not capable of rigorous enforcement, which brings us to another problem with the bill: It allows its legislative mandates to be waived when the head of the relevant federal agency finds that its enforcement is against the “public interest,” including in hard to calculate cases where such deliberations increase project costs by 25 percent. The basic structure of the AJA thus uses large doses of administrative discretion to defang some of its most unrealistic commands. In so doing, it introduces what I have termed elsewhere the vice of government by waiver, where unbridled discretion creates uncertainty and breeds favoritism.

This process only adds to the cost of legislative enforcement. The real jobs created are for government bureaucrats who determine, under rules to be promulgated later, whether the rule or exception applies. The provision has it exactly backwards. The correct piece of legislation should provide that no recipient of funds (assuming there are any) should be allowed to impose “Buy American” preferences–ever.

Read the whole thing here.