UNCERTAINTY IS ENEMY NO. 1
Published on TheHill.com on September 6, 2011
All who realize how disastrous Obama’s economic policies have been and what a terrible effect they are having on our economy expected August’s net job-creation numbers to be low. Few thought they would be nil.
Buried within the data is a micro-statistic symptomatic of what is happening in all sectors of the economy. In August, the economy lost 30,000 healthcare jobs, a drop from its recent monthly increments of 10,000 to 15,000 and well down from historical norms of 30,000 new healthcare jobs each month.
Why should healthcare jobs be down? It cannot be due to lax consumer demand. People are still getting sick and most healthcare is funded by third-party reimbursement: half from the government and half from private health insurance companies. Weak personal income, the unavailability of credit or a lack of confidence in the economy’s future — the usual suspects when a sector loses jobs — are not relevant to this industry. People are still getting sick and needing care, and government cutbacks in reimbursement have yet really to set in. So why are jobs down?
It is simply because the industry is traumatized and terrified by the impact of ObamaCare. No one knows what the reimbursement rates will be or what restrictions will be imposed on facility construction or utilization. Nobody can plan ahead. This regulatory nightmare is the direct result of the ambitious scope of ObamaCare. So no new jobs are being created, and 30,000 were lost last month.
Healthcare is but a microcosm of what is happening throughout the economy.
Manufacturing is not hiring because of the threat of EPA regulation.
The energy sector is paralyzed by federal restrictions on drilling, looming federal regulation of fracking and possible restrictions on the pipeline for tar sand oil.
The small-business sector can’t get credit because community and small banks are afraid to lend. With the FDIC closing these banks at the rate of over 200 a year and forcing their merger into larger institutions, local bankers are fearful of lending to local businesses. Ten percent of the nation’s community banks are on the FDIC watch list waiting for their turn at the financial guillotine. This is no environment for encouraging lending.
Businesses of all stripes live in fear of unionization. With 93 percent of the private sector union-free, the new rules being imposed by the National Labor Relations Board induce hesitancy and great trepidation among private employers in all sectors.
And consumers, particularly those in upper brackets, are afraid of possible federal tax increases once the Bush tax cuts expire in December 2012. With the top 2 percent of earners accounting for one-third of consumer demand, their insecurity is a significant drag on the economy.
In area after area, the efforts at social reform this administration has undertaken are blocking recovery from the recession. And at the same time, the macro policies of the Obama presidency are getting in the way of micro stimulus programs. He may propose, in Thursday’s speech, incentives to small-business lending, but the Dodd-Frank regulatory environment will stop businesses from taking advantage of it. He might offer favorable tax treatment to manufacturers, but fear of the EPA and the NLRB will force employers to remain on the sidelines.
Particularly worrying is Obama’s coming proposal for an infrastructure bank that would be able to borrow money without congressional approval to fund allegedly revenue-producing road and bridge construction. Even though these bonds would not be federally guaranteed legally, they will live in the in-between netherworld that Fannie Mae pioneered. But with highway mileage down and gas prices up, toll revenues are not likely to keep pace with construction activity. So defaults on the debt of the new agency are likely and, again, as with Fannie Mae and Freddie Mac, the taxpayers will end up paying off the debt.
In each sector of the economy, Obama’s policies are contradicting one another and vitiating any effort at economic recovery.