As I watch Obama administration officials, and the President himself, talk on TV news about stimulating the economy, holding jobs summits and discussing techniques to motivate business to hire new employees, I can’t help but wonder if it were a Broadway production whether it would be classified as a comedy or a tragedy. Maybe a farce.
Ask yourself this question. Who do you know that remains cautious about major expenditures, like new appliances, a new car, a pricey vacation or maybe even a house? Your answer will likely confirm that concern about the future is widespread, whether that concern centers on job security or the economy as a whole. Now extend that thinking to how jobs are created.
Small business creates 80 percent of the jobs in America; the rest come from large business and government. Who owns small businesses? The successful people Democrats love to demonize.
This weekend, Treasury Secretary Timothy Geithner said on TV news programs that expiring Bush tax cuts should not be renewed for people earning over $200,000 as an individual, $250,000 as a family, but that they should be continued for people who earn less.
If you put on your thinking cap, you might recognize that every such tax benefit that is “phased out” at a certain level of income amounts to a transfer of wealth from the richer to the poorer, which is great, if that is your objective.
More telling, Geithner said he is not concerned that tax increases on the wealthy are a disincentive for them to invest, and he nearly floored me when he said about deficit spending that today is a great time to borrow because the interest rates are very low. Someone needs to remind him we are paying $100 million per day on our national debt.
But what motivates people with wealth to invest their money in a new venture or expansion, making it necessary to hire new workers? They are betting on the future when they do that, they are hoping for large profits from the risk they take, and there is one primary, essential ingredient necessary to the mix that can be described in one word: confidence. And there isn’t any.
In a speech last week President Obama observed that American businesses have many trillions of dollars in ready cash, available for new ventures, and he wants to motivate them to put that money to work. He seems not to realize that he is the very reason American business is on hold.
It isn’t surprising that the Obama administration is fairly blind when it comes to business. President Obama’s cabinet has far fewer people with any business experience at all than any administration since Teddy Roosevelt. Even Timothy Geithner, U.S. Treasury Secretary, is a career government employee.
The president has surrounded himself with people who believe that government is the solution to everything, and while unemployment has been soaring, government jobs have been growing at 12 percent. You and I get to pay those new government employees for the rest of their lives.
Meanwhile, the anti-business rhetoric and actions of this administration have been relentless. But let’s forget about the past and just look ahead.
There is much uncertainty, never mind worry, about the expense imposed on business by the coming changes mandated in the healthcare legislation. Hundreds of panels and commissions have yet to form in this gargantuan new patchwork of bureaucracy, and I believe a cautious “wait and see” attitude prevails in business on cost-per-employee.
The brand new financial “reform” 2,500-page bill is a monstrosity that will reach into every crevice of your financial life. It requires a number of agencies to create 243 new and complex regulations, each with its own and unknown pile of unintended consequences, and grabs a lot of power for the government to assume control of businesses deemed “too large to fail.”
That all sounds good if you believe government has the answers to everything, but maybe you should wonder why the two financial behemoths central to the financial meltdown, Fannie Mae and Freddie Mac, were specifically excluded from this regulatory squeeze.
Is it just coincidental that their best political friends, Democrats Chris Dodd in the Senate and Barney Frank in the House of Representatives, were in control of this “reform” package?
I know, I know, you’re going to tell me, “Well, we had to do SOMETHING!” Your Congress has just used your worry as a shield to cram through yet another government power grab when a far more limited and targeted list of changes was called for.
Now, on the completely laughable end of the spectrum, Democrats talked this weekend in the news about the Bush tax cuts set to expire the end of this year, and made the claim they had a sunset date because the cuts were “so expensive.” Well, no, there was a sunset date when these cuts were passed to get past Democratic opposition, and tax cuts, especially at a higher level, are generally thought to stimulate investment and therefore job growth.
So, business owners are wary of this administration in general, and specifically worried about new, oppressive and costly legislation, with new cap and trade carbon taxes threatening on the horizon once Democrats regain their muscle, with increases in income tax and capital gains tax and dividends tax, death taxes jumping from zero this year to 55 percent, and a hundred other kinds of taxes set to kick in the end of this year, businesses are not just on hold, they are hunkered down to weather the storm.
In this setting it is almost funny watching administration meetings and speeches about how to create jobs.
When will the business sector feel the confidence needed to bet on the future and thereby create jobs? Let me answer that by confessing that I believe their protective caution began when it became clear in 2008 that Obama had a good chance to win the presidency.
The Obama administration can hold jobs summits until the cows come home as they earnestly try to learn the unfamiliar language of business, but my guess is job creation will take off only when we elect a new president. Until then, the jobs machine will likely be on hold.
[Terry Garlock is a Certified Financial Planner. He lives in Peachtree City and writes columns occasionally for The Citizen. His email is [email protected].]
