James Pethokoukis

Politics and policy from inside Washington

Small business to Washington: Stop confusing us

Dec 9, 2009 14:30 UTC

If you listen to the National Federal of Independent Business, the anemic recovery and weak consumer spending are its biggest concerns. But there is something else:

But the other major concern is the level of uncertainty being created by government, the usually source of uncertainty for the economy. The “turbulence” created when Congress is in session is often debilitating, this year being one of the worst. Themes including “tax more,” “tax the rich even more,” “VAT taxes,” higher energy costs due to Cap and Trade, mandates and taxes for health care, threats of “stimulus II,” incomprehensible deficits, and a huge pool of liquidity created by the Federal Reserve Bank that threatens price stability and higher interest rates. The list goes on and on. There is not much to look forward to here and good reason to “keep your powder dry.” Uncertainly is the enemy of the real economy as well as financial markets. …

But there are still many uncertainties ahead (most in Congress) that need to be resolved and plenty of “income redistribution” yet to come as we continue to clean up our financial system – all which creates major headwinds for the economy.

COMMENT

Government has always been – and always will be – the problem. I cringe when I hear people talk about the gov’mint. Hopefully all those voters who bought into Mr. Obama’s ‘change we can believe in’ will kick some Democratic butt next November, but I’m not holding my breath. Obama is a master of form over substance and there is apparently no lack of willing buyers.

Posted by gotthardbahn | Report as abusive

The massacre of small business

Nov 6, 2009 14:26 UTC

Good point from David Goldman:

The big issue in the US economy is the massacre of small business. That’s why the household survey shows that 558,000 Americans “became unemployed” during October, while the establishment survey of payrolls shows a decline of only 190,000 jobs. The establishment data, which are collected from larger businesses, are more reliable; the household survey is based on telephone interviews with randomly-selected households. But the numbers are so large as to make clear that small businesses are shutting down.

With commercial and industrial lending by American banks down 13% since September 2008, and most banks continuing to “tighten lending standards” in the Fed’s official poll, this is not surprising. Wal-Mart will make it through a recession; not the tea-cozy shop down the mall corridor, much less the real-estate agency in the half-abandoned exurb. The global speculative grade default rate, as Moody’s reported this week, has risen to a post-Great Depression high of 12%. Credit lines for small businesses (including home equity, credit cards, and all the other devices entrepreneurs use to fund themselves) will continue to shrink.

Me: By the way, one-third of the revenue from the surtax in the House healthcare bill would come from small business.

COMMENT

You got it right James, and DC doesn’t, still.

Posted by yr | Report as abusive
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