The purpose of this blog is to get readers to think about the complex (or perhaps simple) issues I write about.

The primary topics will revolve around politics and society as a whole, but a mixture of sports opinion may be thrown in from time to time.

Tuesday, June 7, 2011

Some Reasons We Aren't Seeing Recovery

The United States, much like other leading nations around the world has seen the global economic crisis strike her hard.

The unemployment rate for May moved up a tenth of a percentage point to 9.1 percent. That mark has been at or around the 9 percent mark for months, yet President Obama remains optimistic, calling the up-tick a "bump in the road to recovery."

Ok, Mr. President. Regardless of the unemployment rate, the so easily labeled, yet hard to discern "recovery" looks more like we're putting band-aids on gaping wounds, rather than poking the area with an anesthetic, and closing it up.

When the economy is only producing 54,000 jobs a month, in a nation where 17 million unemployed have simply stopped looking for work, there is no such thing as recovery.

In my estimation, a double-dip recession may not occur by definition, but it will certainly feel like one on main street.

So why aren't we seeing recovery?

It's simple really. It has to do with the perception the business community has with the President. That perception, has everything to do with reality.

So long as President Obama is in the White House, we will not see private sector growth--which is the only way we will be getting out of this mess.

That is, unless the President drastically changes his rhetoric, or the way he does things.

While the private sector sits on wads of cash, it simply refuses to hire for several reasons. There is so much uncertainty surrounding the President and what he really believes, and what he is doing.

First and foremost is the uncertainty of tax hikes. Obama was dragged, kicking and screaming into extending the current tax rates in December, and only signed a two year extension of those rates.

He has since said boldly that those rates will expire, and the US will be going back to the rates of the Clinton era. (39.6% on top earners, which includes millions of small business owners).

Businesses don't want to go on a hiring spree if they know that in just a year and a half, they may have to lay people off because of what paying 5% more might do to their bottom lines.

Another glaring uncertainty hindering our recovery is what the healthcare law will do to businesses.

Business owners are afraid, because all signs point to Obamacare increasing their healthcare costs. Healthcare already consumes a huge percentage of employers' bottom line, with the uncertainty surrounding Obamacare, hiring new people doesn't seem like a wise business decision at the moment.

Finally, there is uncertainty about where this President stands on all of the other liberal pieces of legislation on his agenda.

The Congress couldn't pass Cap and Trade, but Obama's administration is trying to give the EPA unchecked power to regulate carbon emissions as an independent entity.

The Congress couldn't pass Card Check, which essentially eliminates the democratic process in forming a union, but the President still would like it to.

One could lead to so many regulations that businesses would have no choice but to cut jobs. The other would also only serve to increase a company's bottom line by forced increases in salaries and benefits for its employees.

This goes without mentioning the continued decline in home values, which is playing a large role in our "two steps back" economy. Certainly Obama cannot be blamed for this, but he certainly has not done much in the way of trying to fix the problem. Who knows, maybe he's forming another one of his patented "commissions" to help him with suggestions to which he'll inevitably do the opposite.

The uncertainty in all these areas is keeping businesses from hiring new employees, and when the private sector isn't hiring, you cannot get unemployment numbers where they need to be.

I am no economist, but something tells me that if you can get the employment back into the high sixes, or low sevens, you might start to see signs of a real recovery. After all, less people employed means less taxes are being paid to the government.

Make no mistake though, 9.1 percent is a result of trepidation from the business community in reaction to the current President still occupying the Oval Office.

We know how they'll be voting come November 2012, but the real question is whether or not the general public understands the relationship between an Obama presidency and the possibility of real economic recovery.

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