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e-News August 20, 2010

An Economic Recovery’s “Mortal Enemy” – Uncertainty
NY Times Op-Ed: Misled on Medicare
Department of Energy Fumbles as Venture Capitalist
NY Times Front Page Article on School Funding—“Worth a Read”!

An Economic Recovery’s “Mortal Enemy” - Uncertainty

“Is the U.S. on the right economic track?  

“Ask that question these days and the reply will depend on who’s answering.

“President Obama will tell you ‘Our economy is growing, instead of shrinking. We have gained private sector jobs.’

“What the President does not acknowledge is that hiring of federal government employees has far outstripped hiring of workers in the private sector who, in turn, pay the salaries of those federal bureaucrats.   

“When asked the same question, economists deliver a mixed assessment.  Some will report a ‘choppy and uneven’ recovery is underway. Others publicly voice their fear of a ‘double-dip’ recession. 

“However, the most important answer is provided by those individuals who will be ultimately responsible for the direction of our economy.  The businessmen and women of northern New Jersey—most of them running small businesses—I listen to every week say emphatically that the economy is NOT recovering and the reason is the actions and potential future actions of the government itself.   Uncertainty, they say, is the mortal enemy of private sector job creation.   
“Whether the federal government believes it or not, small businesses are the job creators in our economy.  They feel threatened with elevated taxes and more bureaucratic red-tape and additional government mandates. 

“For example, the new health care law, with its individual insurance mandate, higher taxes and increased regulation, is proving to be a genuine barrier to business growth and job creation.  What business would not think twice before bringing on new employees in the face of such ‘reforms’ as Section 9006 of ObamaCare which will require business owners to submit a separate 1099 form to the IRS and to every company with whom they do business valued over $600 in any given year!  This reporting burden is especially oppressive for small business owners who outsource their accounting services and creates privacy concerns for sole proprietors whose employer tax ID number is their Social Security number. 

“Likewise, this summer’s 2,300 page financial sector regulatory ‘reform’ bill went simply too far and will have damaging effects on our fragile economic recovery. Instead of rejecting the practices and policies that led to the current economic turmoil which has resulted in record unemployment and deficits, this so-called “reform” bill fundamentally restructures the nation’s free market system, placing it firmly within the government’s control.  In the process, the bill restricts access to credit and increases the costs of credit used by small businesses on ‘Main Street.’

“With the stimulus package, ‘cap and trade,’ ObamaCare, Financial Regulatory Reform, the union ‘card check’ bill — not to mention record deficits, borrowing and the clear intent to raise taxes at year’s end—the White House has produced a jumbled mass of uncertainty and disincentives for American business to overcome, all at a time of persistent economic uncertainty.

“On top of all these legitimate concerns, business owners are increasingly worried about a post-election ‘lame duck’ Congressional session during which Speaker Nancy Pelosi and Senate Leader Harry Reid attempt to muscle through bills in December they don't want to defend before November. Retiring or defeated members of Congress would be able to vote for sweeping legislation damaging to taxpayers without fear of voter retaliation.
  
“The federal government needs to ‘get out of the way’ and let New Jersey’s talented businessmen and women grow their enterprises.  The role of government, especially in difficult times like these, is to break down barriers that are standing in the way of innovation and hard work.

“We should publicly swear off increasing taxes, bring federal spending under control by returning unspent ‘stimulus’ funds to the U.S. Treasury and freeze non-security spending.  Further, Congress should use federal funds more efficiently by suspending the Depression-era ‘Davis-Bacon’ law which requires federal construction contractors to pay ‘prevailing wage’ rates that are so far above market rates that the government hires four construction workers for the price of five. Does it make sense to pay some workers inflated wages while many other workers remain unemployed? 

“Finally, the Port of New Jersey and all export producers in New Jersey would welcome Congressional passage of the languishing free trade agreements with South Korea, Panama, and Colombia.  By some estimates, these trade agreements would boost the U.S. economy by over $14 billion and create thousands of import/export-related jobs across our state and beyond.  In lieu of these agreements, our foreign competitors in China, India, the EU and even Canada fill the vacuum.

“Only when these steps are implemented can we all say with confidence that the economic recovery is indeed taking hold.”

Rodney Frelinghuysen

Recommended Reading I: A thoughtful analysis from two well respected former Medicare trustees, “Misled on Medicare” from last Sunday’s New York Times.

Department of Energy Fumbles as Venture Capitalist

The Wall Street Journal’s editorial from this past Tuesday noted more evidence, admittedly anecdotal, that the nearly $40 billion, repeat $40 billion, of "stimulus" money shoveled into the Department of Energy was spent with little or no oversight. 

Speaker Pelosi deliberately made sure that the House Appropriations Committee rubber stamped the stimulus package with no public hearings before it was passed on January 28, 2009.

NY Times Front Page Article on School Funding—“Worth a Read”!

Recommended Reading III: Wednesday’s New York Times front page article on the “school bail-out” funds being held by school districts instead of immediately hiring more teachers.

Recommended Reading IV: Max Boot's op-ed in today's Wall Street Journal, "Winning the Peace in Iraq."