Barack Obama took questions from the media in a surprise appearance at the White House media briefing on Tuesday … and proved why presidential drop-ins are rare occasions indeed. Jake Tapper asked Obama how his “bold agenda” might get interpreted by business owners looking at cost increases in health insurance and energy and how that might impact employment. Obama answered with a revealing look at how he sees the world — through the eyes of a government expansionist:
TAPPER: But just to play devil’s advocate on that, a small business, let’s say — not somebody who’s going to be affected by the regulatory reform, a small business — you have proposed, you would acknowledge, a bold agenda, and a small business might wonder, “I don’t know how the energy bill is going to affect me. I don’t know how the health care reform bill is going to affect me. I better hold off on hiring.”
PRESIDENT OBAMA: Yes, the small businesses that I talk to — and I’ve been talking to a lot of them as I’ve been traveling around the country over the last several months — their biggest problem is right now they can’t get credit out of their banks, so they’re uncertain about that. And they’re still uncertain about orders. You know, do they just have enough customers to justify them doing more? It’s looking better at this point, but that’s not the rationale for people saying, “I’m not hiring.” Let me put it this way. Most small businesses, right now — if they’ve got enough customers to make a profit and they can get the bank loans required to boost their payroll, boost their inventory and sell to the customers, they will do so, OK?
Er, no. While businesses use loans to bridge gaps between purchasing inventory and sales, and to ensure continuity of payroll in some instances, they don’t buy extra inventory and hire extra people unless they know that the demand will meet the supply. Given the state of the economy, no sane businessman would take out bank loans to expand inventory and personnel — a very expensive proposition — without having made certain that those costs will get recouped in the short term. Even at the peak of the most recent expansion, most companies wouldn’t commit to any capital expenses without showing a cost recovery in the same fiscal year, and we are most certainly not in an expanding economy now.
But give Obama a break on this one. In his entire adult life, the only business model he has known in any depth is the public sector. Government is the only business model that borrows money to hire more people, which is why the only real growth industry now is the public sector. Government doesn’t have to worry about making a profit, or even breaking even. If governments come up short of case, they simply keep borrowing … and let the next set of leaders deal with the consequences.
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