Dear President Obama:
There is a simple and easy way for you to take a giant step toward solving one of the major problems facing the country and your administration. End the war. I’m not referring to the wars you inherited—the war in Iraq, the war in Afghanistan, or the war against terrorism. These wars cannot easily be ended. I am referring to your war—the war you started on the campaign trail and have fought aggressively since becoming our President. I am referring, of course, to your war against business.
During the last month or so, you have finally turned your focus to the country’s high unemployment rate and to the country’s need for new jobs. You have announced plans for yet another stimulus program to address this problem. Of course, you are not referring to your new stimulus program as a stimulus program, but that’s what it is.
The problem is that jobs cannot be created without capital investment. There is only so much the government can do to encourage capital investment, but there is a lot it can do to discourage it. Since you became President, you have constantly castigated businesses and investors and threatened to impose new taxes and regulations on them. By doing so, you have discouraged capital investment by creating uncertainty about the rules, regulations, and taxes to which businesses and investors will be subject. Uncertainty is the enemy of capital investment. Businesses and investors are not willing to make new investments when they don’t know the rules of the game. It should come as no surprise, therefore, that businesses and investors have retreated to the sidelines.
The United States of America has prospered and has created the highest standard of living in the history of the world because it has a free market economy. I don’t believe you understand or appreciate the free market economy. In fact, it is fairly clear you want to change the free market economy. Your pledge to transform America and to change virtually everything about our economy may have sounded good on the campaign trial, but it hasn’t worked out so well in real life.
The private sector—not the government—is what makes our country tick. The government does not create wealth. It consumes wealth created by the private sector. Thomas Sowell, a senior fellow at the Hoover Institution, recently wrote, “Since the only resources the government has are the resources it takes from the private sector, using those resources to create jobs means reducing the resources available to create jobs in the private sector.”
Since you became President, the number of government jobs has been increasing during a time when the private sector has lost millions of jobs. There are fewer people in the private sector supporting more people on the public payroll. It doesn’t take a rocket scientist to realize this is a recipe for disaster.
Many of your proposals have had a chilling effect on the private sector and thus on the private sector’s ability to create jobs. These proposals include your health care reform legislation, your cap-and-trade energy tax, your various ideas to make it easier for unions to organize and to exercise more influence over businesses, your plans to increase taxes on the wealthiest Americans, who happen to be the ones who have the resources and are most likely to invest in new or existing businesses, and your general desire to impose more costs and red tape on businesses. All of these proposals in the aggregate have made it virtually impossible for investors to evaluate the risks of potential investments. The uncertainty created by these proposals has resulted in paralysis, and the paralysis has resulted in higher unemployment.
I have many friends who have been very successful in the private sector. Some are executives in large companies, and some own small businesses. I have a few friends who in the past have provided small businesses with the capital they needed to grow and expand. I also know some financial planners. I enjoy talking with my friends about their feelings about the current economy and their outlook for the future. Almost all of my friends tell me they are holding back on making major new investments in their businesses because they are concerned about the impact of future government policies.
The comments I am hearing from my friends are consistent with what I am reading. In the January 18, 2010 issue of Barron’s, for example, Meryl Witmer, General Partner of Eagle Capital Partners, was quoted as saying, “In the past six months, whenever I have talked to a company I asked the chief executive or chief financial officer what it would take to bring jobs here. They said, ‘You know, the workforce isn’t that good, and there is so much regulation. I’m moving jobs out of the U.S.’ The government needs to cut back on regulation and taxes and open things up for business, or the jobs will continue to leave.” Mr. Witmer also said, “If we don’t cut taxes—corporate taxes—jobs will keep moving away. So take the hit now and grow from that new base.”
I agree with a recent editorial in The Wall Street Journal, which said, “We can’t blame employers for their caution. With so much policy uncertainty out of Washington and the state capitols, no one can be sure what they will pay for energy (rising oil prices, cap and trade) or new regulation (antitrust), how high their taxes will rise, and how much each new employee will cost (health care). In this kind of world, employers will wait as long as possible to add new workers.”
The U.S. economy needs consumption for growth. We cannot have consumption without jobs. We cannot have jobs without capital spending and investment. We will not have adequate capital spending and investment as long as there is constant and significant uncertainty about how government policies will affect businesses.
Regardless of what you do, I believe the U.S. economy will improve over time, and the private sector will eventually begin to create new jobs again. This will happen much sooner, however, if you end your war against business and get out of the way. By doing so, you’ll be able to take credit for an improved economy and lower unemployment simply by letting the private sector do what it does best without government interference. You might even win re-election in 2012.
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