The Great Recession: Government Killing Business

Government at all levels hurts the economic climate with threats to jobs, the media, and economic and political liberty.

December 7, 2009

As biz coach, I like to be a cheerleader and provide business-coaching tips. I like to talk about faith and hope, and maintaining a strong mental outlook for business success.

But recent developments are a major source of concern. The series of events prompt me on the anniversary of Pearl Harbor to urge business to speak out about the problems caused by government. That’s because America is not threatened externally as much as it is internally.

We’re regularly deluged with negative information about the high unemployment rate, which is merely a symptom of the problems that caused the downturn and continue to exacerbate the Great Recession.

The economic climate is polluted because of government that is inefficient and doing more than it should. The stimulus package was designed to get America rolling forward, but we’re going backwards.

“Meanwhile, Obama’s stimulus package, the mythical calculations of White House economists notwithstanding, has not created the millions of private sector jobs promised,” wrote Dr. Peter Morici, economist and professor at the University of Maryland School of Business. “Simply, the $789 billion has mostly been spent on temporary tax credits that failed to generate much additional spending, shortened furloughs for state and local government workers, and financial rewards for other campaign constituents.”

As a former Clinton Administration official, the renowned economist is widely quoted on news programs and in print. I regularly receive his forecasts and informative comments.

“Had $400 billion been properly spent on infrastructure projects, two million construction- related jobs would have been created. The stimulus program is slated to spend a paltry $100 billion, and those monies are being badly managed and will generate few jobs,” Dr. Morici recently asserted.”Now President Obama is convening a jobs summit. Attendees will include business leaders who have contributed to his campaign and labor-leaning economists.”

Many contend small business is the engine that can make or break job creation. I agree.

But a recent study, the Discover Small Business Watch in November, shows small business owners are in disarray. Conducted by Rasmussen Reports LLC, 62 percent of business respondents evaluate the economy as poor compared to 55 percent in October. Fifty-two percent complain about poor cash flow vis-à-vis the previous month.

The same survey indicated only 25 percent are able to extend credit and 73 percent of their customers are either slow in paying bills or are asking for more lenient terms.

And what is Congress doing to assist small business owners who want to pass their businesses to their heirs to keep their businesses going? The House recently extended the estate tax at 45 percent.  It may not be a problem for service businesses but it is a death threat to small manufacturers, farms and other small business with equipment assets.

Government actions continue to hurt economic and political liberty of businesses. Businesses are leery of hiring.

Although businesspeople need a tax break, we’re now hearing about tax increases in Washington state to offset the forecasted budget deficit of $2.6 billion and climbing.

Plus, in 2010, Washington workers’ compensation premiums will jump another 7.6 percent.

“It is troubling that the state continues to increase workers’ comp rates at a time when businesses can least afford to take the hit,” said Carl Gipson, small business research director for Washington Policy Center (WPC). “Claims are down 55 percent over the last 20 years but the department’s costs continue to increase.”

If claims are down 55 percent, what’s the biz coach conclusion about skyrocketing workers’ compensation rates? The high cost of government.

Ironically, governments complain about declining tax revenue, but data shows much of any increases in employment are in the public sector. It’s not a revenue problem but a spending problem.

In fact, WPC conducted its fall Statewide Small Business Conference at which small business owners responded to a survey. It’s a wish list with recurring themes from a weak environment for competitiveness to too-much government regulation (http://bit.ly/2xw4jS).

And public sector dysfunction isn’t just about Washington state or the federal government. Consider this typical article in the Miami Herald: “In hard times, stories on misspent taxes strike a nerve,” http://bit.ly/75tQ7R.

A symbol of America’s greatness is its media. But media companies are dropping like aircraft running out of fuel. American businesses, threatened by uncertainty and their lack of confidence, are spending too few dollars to market themselves.  

Further, fewer advertising dollars mean less journalism – a source of knowledge and watchdogs of government.

And now we have more indications of government dysfunction. Consider this Dec. 6, 2009 Associated Press (AP) headline: “PROMISES, PROMISES: A closed meeting on openness.”

Here’s why:

“It’s hardly the image of transparency the Obama administration wants to project: A workshop on government openness is closed to the public,” wrote AP reporter Sharon Theimer on a broken Obama campaign commitment regarding the Freedom of Information Act.

Further, note this paragraph by Ms. Theimer:

“The Freedom of Information Act should be administered with a clear presumption: In the face of doubt, openness prevails,” Obama told government offices on his first full day as president. “The government should not keep information confidential merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears.”

It’s worth noting AP provides an invaluable service for media outlets. But it needs economic and political liberty to report the news – AP generates income from the media – the financially suffering media.

My conclusion: Government needs to reform. The present situation in America warrants a healthy economic climate, transparency, a vibrant news media, and economic and political liberty for all.

The U.S. survived Pearl Harbor and World War II, the Cold War, 9/11 and countless other emergencies. But will it survive the economic chaos and inefficiency of government?