Obama Tried (and Failed) to Fix the Economy
This economy sucks.
We all know it. We see the horrible numbers every day; unemployment is back up to 9.1% and inflation is on the rise. Banks are not lending, people are not buying homes, and gas prices do not stop climbing. Everybody is broke.
Well, not everybody.
Six months ago, the Federal Reserve stated that nonfinancial U.S. companies were sitting on $1.93 trillion in cash and other liquid assets. Cash reserves accounted for 7.4% of companies’ total assets last year, the largest since 1959.
So why are companies just sitting on this money? Why aren’t they using it to build infrastructure, create new jobs, and expand businesses?
One word: uncertainty. That is all President Barack Obama and the Democrats have created in the last 2.5 years: uncertainty.
If you want the private sector to spend and expand, you must create a long-term, predictable, consistent, and business-friendly environment. But businesses, creditors, and employers are feeling uncertainty instead. And who can blame them?
Obama and the Democrats enacted policies that have led to nothing but a stubbornly unpredictable business environment. They constantly harp on raising taxes for anyone who has money; historically, high debt levels always led to higher taxes. The U.S. debt level is at an all-time high at $14.3 trillion, and with Democrats’ rhetoric constantly reinforcing a repeat of history, the private sector is naturally anticipating record tax hikes.
The uncertainty of Obamacare has also taken its toll on businesses and employers. To this day, no one knows everything in the healthcare legislation, meaning no one knows what healthcare coverage is going to cost businesses and employers for every employee they potentially hire.
The biggest problem is that Democrats and Republicans have fundamentally different visions of what they want the economy to be and how to achieve these ends. Republicans believe in free market principles and liberty-based solutions; they are trying to utilize these forces to incentivize the private sector to spend, expand, and grow to turn this economy and job market around. These ideas include lowering the U.S.’s $14.3 trillion debt, allowing spending cuts and entitlement reform, keeping tax rates down, and opening up America’s energy sector.
Democrats, on the other hand, have very little faith in capitalism and free markets. They believe the public sector is the key to salvation, and want to exercise government-based solutions to build infrastructure, grow government-based programs, and expand state-sponsored welfare. The fuel that will power this big government engine is taxpayer money.
Obama has exhausted almost every government-based solution to fix the economy, and they have all failed. The stimulus failed, the omnibus failed, the “jobs bill” failed, and quantitative easing (printing more money) failed. The only government-based solution left is to raise taxes.
We gave the government a chance, many chances in fact. It is already $14.3 trillion in debt, why should we allow them to waste another $1.93 trillion?
Unfortunately for everyone, especially the private sector and job seekers, this uncertainty will only continue. The deadline to raise the U.S. debt ceiling (again) is August 2. Failure to raise the nation’s debt ceiling this time could lead to a first-ever U.S. default on its obligations, sure to rattle stock markets and, some economists warn, possibly risk pushing the teetering economy back into another recession.
But as far as Washington is concerned, nobody knows what to expect out of a possible deal to avoid default. Republicans insist they will not raise the debt ceiling again without cutting $2.5 trillion in spending and reforming entitlement programs such as Medicare, Medicaid, and Social Security. Vice President Joe Biden and the Senate Democrats persist that they will not agree to more than $150 billion in spending cuts or even touch entitlements unless tax increases are included in the deal. Republicans resolutely oppose anything that could be called a tax increase; rep. Eric Cantor of Virginia, who’s representing House Republicans in the talks, has repeatedly told the Obama administration that tax increases cannot pass in the GOP-controlled House.
The one person who has lacked true leadership in this dilemma is the president himself. Recent polls from CBS News, Quinnipiac, and Washington Post-ABC News show that 56%, 58%, and 59%, respectively, of Americans disapprove of how Obama has handled the economy.
It seems this economy is going to suck for a while longer.
Photo Credit: Brooklyn Bridge Baby