Virginia's new Republican governor, Bob McDonnell, has ambitious plans for his state. He wants to put young Virginians back to work, make Virginia the first East Coast state to drill offshore, and to compete with California to become the wine capital of the United States.
McDonnell made these points in his keynote address to the inaugural conference of the American Action Forum
, which its Web site calls a new voice for "center-right ideas and action."
With jobs as the focus of the conference, the governor said that "the scariest unemployment statistic we face" is the hidden unemployment that is masked by Virginia's official jobless rate. According to the Bureau of Labor Statistics
, Virginia's unemployment rate in 2009 was 6.6 percent. But taking into account discouraged, marginally attached, and underemployed workers, Virginia's overall unemployment rate was 12.1 percent, or nearly double the official rate last year.
The jobs problem goes deeper than many suspect. Nationwide a record 6.3 million Americans, or 41 percent of the unemployed, have been out of work for more than six months. "How many people have just given up looking for a job, especially those in the 18-24-year-old group," McDonnell asked. Unemployment among this group "creates particular problems for state's social safety networks and for public safety...Bringing jobs to the state is the way to cut spending on crime prevention and welfare programs," he said.
Although he did not elaborate on the link between unemployment and crime, a former senior Virginia official later clarified the statement. "In the past, there was a strong link between crime and unemployment among this group," the official said. "But, more recent data show that the link is not there in this recession." A recent report
by Heather MacDonald, a contributing editor at the Manhattan Institute's City Journal, supports this view. Her report shows that although unemployment has increased by more than 7 million since the recession began, U.S. crime rates have fallen to their lowest levels in 40 years.
McDonnell -- who won a landslide victory in November -- ran on the slogan "Bob's for Jobs." Compared with other states and foreign countries, he said, Virginia has relatively few incentives to attract business. "I support providing tax credits for new businesses, creating a one-stop shop for obtaining new business permits, and reducing the turnaround time to obtain a permit."
As for offshore drilling, McDonnell hopes that Virginia will become "the energy capital" of the United States. The federal government recently lifted a ban on offshore drilling that would allow Virginia to drill in 3 million acres
that might hold 130 million barrels of oil and 1.14 trillion cubic feet of natural gas. The Virginia Senate on Monday passed a measure that would allocate 80 percent of future offshore royalties and revenues to transportation and the remaining 20 percent to the Virginia Coastal Energy Research Consortium. The centerpiece of McDonnell's gubernatorial campaign was a plan to solve Virginia's job-crushing traffic and transportation problems.
McDonnell's most ambitious plan relates to Virginia's wine industry. "We are working to make Virginia wine better than California wine," he said. Virginia ranked seventh in the United States in wine production in 2008.
Speaking at the same conference, Jared Bernstein, chief economist and economic adviser to Vice President Joe Biden, addressed "Four Economic Policy Myths in 10 Minutes."
First, Bernstein asserted that the stimulus package "created or retained more than two million jobs and provided more than $120 billion in tax cuts."
Second, Bernstein denied that the American Recovery and Reinvestment Act just "shifted money around...there is no proof that government borrowing has crowded out private investment," Bernstein said. He illustrated his point with a chart showing that the collapse of household debt as a share of GDP has not been fully offset by increased government borrowing.
Third, Bernstein insisted that the Obama administration's policies have not created an "unsustainable fiscal outlook." Citing data from a report
by the Center on Budget and Policy Priorities, he laid the long-term fiscal deficit to the Afghanistan and Iraq wars, the two Bush tax cuts, the cost of the Troubled Asset Relief Program and the ongoing cost to support Fannie Mae and Freddie Mac, and the impact of the economic downturn.
Finally, Bernstein charged that it is a myth that "we can't afford to reform health care."
"The fact is that we cannot afford not to reform health care," he said. "If we do nothing, affordable, quality health care will be out of the reach of many Americans."
Finally, although most of the panelists warned about the ominous fiscal situation, only one panelist made a specific recommendation on how to reduce the deficit.
Stan Anders, senior counsel to the president and chief executive of the U.S. Chamber of Commerce, said that the U.S. Chamber supports an increase in the federal gas tax to pay for infrastructure investment. The 18.4 cents a gallon federal gas tax has not been increased in 17 years and is not indexed for inflation.