WP/ Obama's CEO problem -- and ours

[twa]

Interesting piece that goes along with my observation of small businesses

The uncertainty and perceived anti-business atmosphere has created gridlock.

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/04/AR2010070403856.html

The American economy is sputtering and we are running out of options. Interest rates can't go any lower. Another burst of government spending -- whether a good or bad idea -- looks politically impossible. Can anything protect us from the dangers of stagnation or a double dip? Actually, there is a second stimulus that could have a dramatic effect on the economy -- even more so than government spending. And it won't add to the deficit.

The Federal Reserve recently reported that America's 500 largest nonfinancial companies have accumulated an astonishing $1.8 trillion of cash on their balance sheets. By any calculation (for example, as a percentage of assets), this is higher than it has been in almost half a century. Yet most corporations are not spending this money on new plants, equipment or workers. Were they to loosen their purse strings, hundreds of billions of dollars would start pouring through the economy. These investments would probably have greater effect and staying power than a government stimulus.

To be clear: There is a strong case for a temporary and targeted government stimulus. Consumers and companies are being very cautious about spending. Right now, government spending is keeping the economy afloat. Without a second stimulus, state and local governments will have to slash spending and raise taxes, which will produce a downward spiral of higher unemployment, slower growth, lower tax revenue and a larger deficit. Joel Klein, the New York City schools chancellor, told me that when the stimulus money runs out at the end of this year, he will be forced to lay off 5,000 teachers. Multiply that example a thousand times to get a sense of what 2011 could look like.

But government spending can only be a bridge to private-sector investment. The key to a sustainable recovery and robust economic growth is to get companies investing in America. So why are they reluctant, despite having mounds of cash? I put this question to a series of business leaders, all of whom were expansive on the topic yet did not want to be quoted by name, for fear of offending people in Washington.

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Economic uncertainty was the primary cause of their caution. "We've just been through a tsunami and that produces caution," one told me. But in addition to economics, they kept talking about politics, about the uncertainty surrounding regulations and taxes. Some have even begun to speak out publicly. Jeffrey Immelt, chief executive of General Electric, complained Friday that government was not in sync with entrepreneurs. The Business Roundtable, which had supported the Obama administration, has begun to complain about the myriad laws and regulations being cooked up in Washington.

One CEO told me, "Almost every agency we deal with has announced some expansion of its authority, which naturally makes me concerned about what's in store for us for the future." Another pointed out that between the health-care bill, financial reform and possibly cap-and-trade, his company had lawyers working day and night to figure out the implications of all these new regulations. Lobbyists have been delighted by all this activity. "[Obama] exaggerates our power, but he increases demand for our services," superlobbyist Tony Podesta told the New York Times.

[Thiebear]

Didnt they say when the tax cuts run out small businesses will get hit once at the tax bracket and once at the medical?

[endzone_dave]

Companies have realized they can get more production with less employees. Our idiot government didn't understand that instead of pumping money into the economy, they would end up pumping money into companies cash reserves.

[twa]

Didnt they say when the tax cuts run out small businesses will get hit once at the tax bracket and once at the medical?

To be determined,but it is looking ugly

http://weaselzippers.us/2010/07/01/six-months-to-go-until-the-largest-tax-hikes-in-us-history-take-effect/

I can say expanding or hiring is on hold till it is determined

[HailGreen28]

Didn't we spend gazillions on stimulus recently? Has all that been paid out, yet?

[DCsportsfan53]

Didn't we spend gazillions on stimulus recently? Has all that been paid out, yet?

Yeah, it all went to large corporations and banks who are currently holding it for the better good of us all.

[twa]

Yeah, it all went to large corporations and banks who are currently holding it for the better good of us all.

Thought they staggered the disbursement over several yrs?

http://www.recovery.gov/Pages/home.aspx

Look Ma they are sitting on a about a Trillion;)

[TheGreatBuzz]

Everyone complaining about companies holding onto money? Wasn't one of the big problems that companies weren't keeping enough money in reserves to cover its losses?

I think a better way to fix this is start taxing the hell out of things made over seas. Make it more attractive for companies to have it's employees here. Make some kind of tax on the company everytime I call a help line and it gets routed to India. Make them want to open up shop here.