Via LVCI, the US Chamber of Commerce and The Greater Lehigh Valley Chamber of Commerce say Charlie Dent voted with non-descript “business interests” 100% of the time last year.
But is what’s good for “business interests” good for businesses?
What are businesses saying they need? Sales!
The numbers for taxes and regulation are both within their historical range. Those citing regulations has ticked up about 2% from where it was in 2006. Businesses don’t think it’s a skills mismatch problem, and they’re not seeing any crowding out.
So basically everything Charlie Dent says he believes about what’s wrong with the economy is completely wrong. He’s fighting problems that businesses aren’t having.
Dent thinks slashing government spending in the middle of the slump will grow the economy, despite the overwhelming evidence that it will make things much worse. Even the Morning Call’s usually-cautious economics columnist Dr. Sam Laposata says cutting spending is going to hurt job growth.
How can it be that “business interests” would cheer on a Congressman for inflicting great pain on their small business members? The political economy here seems strange indeed until you think about it as an issue of rentiers vs. debtors. The financial services industry dominates the Chamber of Commerce, so what you have here is the rentiers thanking Dent for bleeding out debtors, even though it’s preventing the labor market from improving.
I attended the Chamber event with Dent the other day. Full room and only 1 banker there that I saw, the rest were people like me, people running small businesses.
The connection you're not making is why sales are down and what it will take to fix it. People aren't spending because they're still too leveraged from the binge days; they're still very worried about the next couple of years and are saving more to be ready for more job losses; food and fuel price increases really crimped already thin budgets; and people realized they don't need 6 flat screen TVs in a house with 4 people (a/k/a we don't need to buy all this shit to be happy).
Just announced this morning, consumer confidence dropped again in June with the index at 58.5.
The businesspeople I talk to point to Washington the problem. Deficit spending at levels that will crush us if left unattended; no one believes for a second that huge tax increases on the middle class aren't coming (they have to – that's where the $$ is to pay for this spending binge); a Fear that the true costs of Obamacare are hidden, and with Washington's bi-partisan track record for doing this, it's a very legitimate fear. These are just a few of the problems Washington is creating that weigh on people.
Here's a real example of regulation screwing small businesses – Dodd/Frank's requirement that small businesses post collateral on plain-vanilla hedge transactions like commodity futures. This makes it very expensive for me to manage basic business risks and puts that cost on me even though I did nothing wrong.
Short story, you've been ignoring the psychology of what's happened and operate under the belief that if you just keep shoving cash into the economy that eventually it will be spent and all will be well. I think you're wrong. People are not going to go back to spending like it was 2004 for a very long time, and to think Government spending can bridge this gap is folly.
Also, I have to point out that a chart of "The Single Most Important Problem" does not mean the other topics are not important.
To state or imply otherwise is pretty shallow hackery there Jon.
The point of the NFIB chart is that the taxes, regulations, and skills match have not increased. It isn't that they aren't problems, but businesses are always worried about taxes and regulations. There's nothing new happening on any of these issues. Your anecdote means nothing. It's not backed up by any data.
Here's the facts – maybe wealthy people aren't going to spend like it's 2004 again, but tens of millions of low-income people who are living hand to fist right now would absolutely spend more if you gave them more money. That's why things like food stamps, unemployment insurance and the payroll tax holiday are such effective stimulus – they go to people who are going to spend the money, passing it right through to the private sector businesses they shop at.
There is not an economist out there who denies that at some point peoples' appetite for cash will be satisfied and they will start spending. The only worry is that it would increase inflation. But with so much idle capacity, that's not going to happen until the unemployment rate gets down to 6.5% or so.
*living hand-to-mouth. Mixed up with making money hand-over-fist which is definitely not happening. Need more coffee…