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early 100 prominent U.S. economists including former CBO Director Douglas Holtz-Eakin, Ohio University’s Richard Vedder, and James C. Miller, III, who headed up the White House Office of Management and Budget under Ronald Reagan, are telling President Barack Obama that his economic stimulus has failed and that “immediate action is needed to rein in federal spending.”
In a letter to the president in which they refer to the latest jobs figures as “a source of disappointment and alarm,” the distinguished economists who signed it echo the concerns of others that the predominant share of the jobs created in May 2010 were temporary government jobs while the civilian labor force shrank by 322,000. “In addition,” they write, “46 percent of those out of work have been jobless for six months or longer--the first time in history that such a dire statistic has been recorded for the American economy.”
There are, they say, a series of hurdles ahead on the road to economic recovery including the new burdens being placed on small business by the federal government, the threat of tax hikes, and the newly-enacted healthcare law, which will discourage hiring, increase the deficit and, the chief actuary of the U.S. Department of Health and Human Services recently concluded, raise healthcare costs.
Obama is not alone in being singled out for criticism of his handling of the economy. The letter also references Congress's failure to propose a budget for “the first time in modern history.”
“Such a failure will mark a massive missed opportunity to help our economy grow and create private-sector jobs. Failing to restrict spending growth will further balloon the national debt, impede economic growth, and threaten our nation's long-term economic health,” they write.
What is needed, they say, is a new direction for U.S. economic policy.
“To support real economic growth and provide the spark needed to support creation of private-sector jobs,” the letter, which was made public Thursday by House Republican Leader John Boehner, says “immediate action is needed to rein in federal spending, prevent job-killing tax hikes through the expiration of current tax rates, and reverse the harmful effects of the health care law on small businesses, the engine of job creation in our economy.” [See which industries donated the most to Boehner.
There is one word being mentioned by business leaders and economists more frequently when the conversation turns to why jobs are not returning more quickly to the U.S. economy: uncertainty.
“By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses,” said Verizon CEO Ivan Seidenberg at a speech in Washington in late June.
Federal Reserve Governor Kevin Warsh said in a recent speech in Atlanta: “Owing to a less-than-assured economic outlook and broad uncertainty about public policy, employers appear quite reluctant to add to payrolls.”
Roberton Williams, senior fellow at the Tax Policy Center, said in an interview, “The whole tax situation is very much in flux, very uncertain. It makes it hard to plan.”
“It’s clear that firms are not yet hiring. A lot of them are sitting on big bundles of cash,” Williams said, citing the examples of Google and Apple, which are both hoarding about $30 billion in cash instead of investing it or using it to expand.
The essence of the uncertainty argument is that businesses won’t expand or hire because Obama’s policies – particularly the health care bill and the financial regulation bill that is poised to pass – have created too many unknown unknowns, as conservative author Amity Shlaes put it.
“We don’t know what to expect from Washington. That’s essentially what Seidenberg is saying,” said Shlaes, author of the influential book “The Forgotten Man,” which argues that President Franklin Delano Roosevelt’s punitive and unpredictable policies toward business prolonged, rather than solved, the Great Depression.
Ross Perot was correct in 1992 when he was running for president. He said NAFTA would be the downfall of America. He was laughed at and rebuked and called a nut. Who's calling him a nut now ???? He warned us. Nullify NAFTA IMMEDIATELY Expel all illegal immigrants Secure the border Promote US Manufacturing again and we might have a chance. Else, current path = Epic Fail
Truly, we live in a time of mass delusion — or maybe make that elite delusion — where there are lots of things that everyone believes, without a shred of evidence to back that belief. Here’s one more: everywhere you go, you encounter the claim that businesses aren’t investing, they’re just sitting on piles of cash, because they’re worried about future government policies.
There is, of course, a much more prosaic alternative: businesses aren’t investing because they have lots of excess capacity. Why build new structures and buy new machines when you’re not using the ones you already have?
So is there anything in the data suggesting that we need to invoke fear of government to explain low investment? Not a bit.
Republicans have made the cynical calculation that blocking anything President Obama tries to do — including, or perhaps especially, anything that might alleviate the nation’s economic pain — improves their chances in the midterm elections.
as I and others have been arguing at length, penny-pinching in the midst of a severely depressed economy is no way to deal with our long-run budget problems.