Businesses faced with uncertainty of new laws

August 19 was not a good day for President Obama, the Democrats fighting to keep their majorities in Congress, or workers and businesses in America. Some troubling economic figures came out that day indicating that “Recovery Summer” is not going very well.

Unemployment claims shot up unexpectedly to the highest levels since last November. A key manufacturing index declined for the first time in a year. The stock market reacted as one would expect to the news that recovery at this juncture is not imminent at all.

In order to comprehend why the economy is reluctant to improve, it isn’t necessary to get bogged down in arcane economic reports and data. There is a simpler answer: businesses are hoarding cash and spurning hiring and investments because they are very concerned about the economic policies being put forth by the Obama administration and the majorities in Congress.

One little-noticed bit of news that came out in the past few days had to do with new health care regulations that were finalized-a product of the recently enacted legislation in Congress. These anxiously awaited regulations spelled out which plans could be considered to be “grandfathered” and not subject to the massive requirements in the new law. The regulations greatly restrict employer flexibility in providing and maintaining health care benefits for their employees. This is just another symptom of the great uncertainty employers’ face in trying to plan for the future in the rapidly changing economic, legal, and legislative landscape in America.

Congress is passing laws that contain thousands of pages and give broad, unspecified powers to regulators. Businesses are faced with the uncertainty of not knowing how the laws and regulations will impact their bottom line going forward. Tax changes and energy legislation that could significantly impact businesses in the U.S. have been put off in all likelihood until after the November elections.

When entrepreneurs are in the dark, they are hesitant to invest.

What businesses do see clearly emerging from the Obama administration and Congressional leadership are policies that promote unionization; drive up taxes and the national debt; increase the cost of hiring and maintaining employees; encourage litigation; and establish barriers to free trade. That is anything but a recipe for businesses to take the actions necessary to kick-start the economic recovery that Americans are demanding.

Unfortunately, the folks in power in Washington seem trapped in their own ideology. Their “stimulus” attempts have been geared largely to the public sector to save public employee union jobs. Little has been proposed to help cab drivers, dry cleaners, and workers who don’t belong to unions. Either the power players on the Potomac have no clue about how the economy really works or-most ominously-they don’t care.
As the early November election approaches, the President continues to slump in the polls and endangered incumbents-mostly Democrats-are in a panic. In the real world, when faced with life- or career-threatening situations, rational individuals try to change what is causing problems. That obviously is an alien concept in Washington-regardless of which political party is in power.

If this political and economic train wreck unfolds as is apparent at the moment, it will be interesting to see if the President learns from the disaster and moves toward policies that are more business-friendly and pro-growth. That is what a wise man would do. The President is very smart. The jury is still out on whether or not he is wise.


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