Good article from Michael Barone at the New York Post:
Stalled by stimulus
Home mortgage-interest rates are the lowest in history, but house sales are plunging. Banks can make money easily because of the Federal Reserve's low interest rates, but they're not making many loans. Major corporations are sitting on something like $2 trillion in cash, but they're not investing.
Unemployment is running at 10 percent, rounded off, for the 11th straight month, but few employers are hiring; a million people have stopped looking for work in the last year. Small-business hiring is at a nine-month low, and retail sales are tailing off.
Government policies designed to stimulate the economy seem to be having the opposite effect. Consumers aren't buying, businesses aren't hiring, and those fortunate enough to have some cash on hand don't seem to be investing.
I call it the mattress economy. People seem to be following this investment strategy: 1) Go to Mattress Discounters and buy the biggest mattress you can find. 2) Take it home, and stuff all your money in it. 3) Lie down, and get some rest.
This hurts the economy, but it's a rational response to the Obama Democrats' public policies. And that's not just the view of their political opponents.
Consider the plaint of Verizon CEO Ivan Seidenberg, head of the Business Roundtable, which has played footsie with the Obama administration for most of the last 18 months: "By reaching into virtually every sector of economic life," Seidenberg recently wrote, "government is injecting uncertainty into the marketplace and making it harder to raise new capital and create new businesses."
Or take a look at Obama backer Nate Silver's fivethirtyeight.com Web site. "Why aren't businesses hiring?" asks tax lawyer Hale "Bonddad" Stewart. "Uncertainty: There has been a tremendous amount of change over the last 12 months. Businesses are still trying to figure out what this means for their bottom line.."
In other words, the Obama Democrats' vast expansion of the size and scope of government -- and the threat that they may pass even more such legislation -- has chilled the animal spirits that John Maynard Keynes said were the driving force for economic growth.
Instead of stimulating the economy, the Democrats' policies have shocked it into immobility. People are lying on their mattresses, waiting for the next shock. At least one is definitely coming: The Bush tax cuts expire at the end of the year, which means that high earners can be sure they'll soon keep less of what they make.
And to make matters worse, there are all of the feel-good programs for employees but nothing for the employer. There are a bunch of drop-dead bored teenagers in our town who are getting into trouble. I would love to hire them at the store but I cannot afford the $7.50 minimum wage for the work that they would do (cleaning and stocking). We have hired one of them (an employees daughter) at $8/hour but our payroll is already too high for our kind of business. These kids would jump at the chance to make $5/hour but we cannot pay them that. Right now, all of our businesses are going Galt -- all of the proceeds are being rolled right back into building the business...
A big tip 'o the hat to Speranza writing at The Blogmocracy
