Why doesn’t Washington Get It?
News from Washington is somber. For those who do math on the recovery, it is a very weak recovery, say 2 percent. That means it will take YEARS to get unemployment back to 6 percent. Why? No expansion = no job growth. Why is this? Washington is doing nothing that reassures the job-creating companies – but is doing much to worry them.
Businessmen are cautious; they intend to survive. So they hold still and mark time. How much time before real improvement? Maybe 2015 … or maybe longer. Maybe 3 percent growth in GDP after two more years.
And there’s more: Obamacare goes into effect soon — a huge cold shower for businesses already struggling to survive this recession. MORE cost, but no more productivity, and soft markets
will not allow health costs to be passed through to consumers. That pushes the burden back on owners. If you owned a small business — where more expense means less for you and your family — would you want to take more risk and expand? Of course not! If anything, you will hunker down and sit on your cash! You will try to survive until times are better.
And there is more: the debt ceiling mess will be a BIG deal. Prognosticators are expecting a "shut-down" of many federal government functions in 90 days or so. Ultimately a patchwork deal will be agreed upon and the ceiling raised. But will there be real reform? Recognition of the nation’s fiscal problems? Not a chance!
Rather the blame game will take over the news cycle. Obama will use the presidential bully pulpit to tell us it is the Republican’s fault, that he is blameless, ignoring the obvious truth that it takes both sides working together to negotiate a deal. But blaming the opposition provides a distraction for side-stepping any substantive public discussion about the real problem: The Obama administration is running another trillion-dollar deficit and is spend-thrift. But his rhetoric will hide this truth.
There is a high probability the nation’s credit rating – which has long been the best in the world – will be downgraded this spring. And that means more than simply lower prestige: A lower rating means it costs more to borrow money! We will pay a lot more to use other people’s money!
In short: Overall, this administration is leading the nation in the wrong direction. One does not need to be a rocket scientist to think this through!
Could it be different? Of course! Good policy could re-assure business … but we will not see reassuring policy from this administration. It is entirely clear to anyone who looks at Mr Obama’s first four years and has listened to his plans for the next four years that he actively dislikes the business sector! The man is a socialist at heart!
So it is no surprise that the watchword for business becomes: Hunker down! Mark time! Try to survive! And the nation at large suffers.
