ObamaCare: Dithering while the economy burns
posted at 12:52 am on November 9, 2009 by Karl
Obama’s focus on health care when the economy is still so fragile and unemployment moving toward double digits could make it appear that the administration has its priorities confused. While affordable health care is important to Americans, making a living is more immediately urgent. Yet the administration’s efforts to date on this more basic concern have been neither particularly visible nor coherent. It’s hard for most people to understand that unemployment would be worse were it not for the stimulus package; the much-flaunted new “green jobs” have not appeared yet, nor are they likely to for years. The White House has had equal difficulty explaining to Main Street why it would be far worse off today had Wall Street’s biggest banks not been bailed out. Almost nothing has trickled down. Small businesses still can’t get loans.
In reality, the stimulus has fallen well short of Obama’s promises and is filled with fraudulent numbers to boot. The stimulus argument does not even ask how adding $200 billion to one part of the economy created/saved 650,000 jobs, but removing $200 billion from another part of the economy has not cost a single job. And the “green jobs” claims are a scam. But Reich does grasp the basic political point that the US economy has shed about two million jobs since May, when Democrats started trying to take over the healthcare system in earnest. And it’s not a good look.
In this environment, it is not surprising that voters are not excited about ObamaCare mandates that will kill up to another 1.6 million jobs (according to the National Federation of Independent Businesses), with up to 5.2 million low-wage workers at risk of losing their jobs or having their hours of work reduced (according to the Heritage Foundation). That is not just a right-wing talking point; the lefty Center on Budget and Policy Priorities has expressed the same concerns.
There is little reliable data explaining why companies are retrenching despite signs of life in the economy, including recent increases in production in some industries and rises in housing prices and new home sales. However, a variety of organizations that monitor business behavior, including the NFIB, the Associated General Contractors of America and the National Small Business Association, say political uncertainty is a substantial factor, alongside other more typical problems, such as availability of credit.
“No question, this is a tough issue for a lot of these companies,” said David Wyss, chief economist at ratings firm Standard & Poor’s. “It’s all anecdotal, and it affects everybody differently, but the one common factor is people postpone decisions, and I’m afraid that’s going to slow us down coming out of the recession.”
Mr. Wyss said the resulting lack of hiring is one reason he’s forecasting just 1.5% growth in the economy for 2010. “It’s better than going down but it’s not going to be fun.”
Academic economists have long noted a link between economic growth and the political environment. Fed Chairman Ben Bernanke, in his 1979 Ph.D. thesis, wrote that “increased uncertainty provides an incentive to defer…investments in order to wait for new information.”
This uncertainty turns up in the forecasts from firms like Administaff, too.
Ironically completing the vicious cycle, rising unemployment is a primary driver of Obama’s declining popularity (and likely the GOP gains on the Congressional ballot). The economy and jobs were the issues that walloped Democrats in the bellwether of Virginia this past Election Day. And job growth may not turn around enough for voters to notice by next November. The more Dems dither and threaten the business climate, the more unemployment rises, and the harder it gets for Dems to pass their agenda. I think James Carville would have the appropriate advice.