Climate of economic uncertainty is killing job creation

Gretchen Hamel is Executive Director of Public Notice, an independent, nonpartisan, non-profit dedicated to providing facts and insight on the economy and how government policy affects Americans’ financial well being. For more information please visit www.thepublicnotice.org.

In the last few weeks, President Obama has offered two major speeches chock full of his ideas for stimulating the economy. On September 8, the President stood before Congress to pitch his plan to create American jobs; 11 days later, he followed with an address focused on deficit reduction through spending cuts and tax hikes. Boehner responded with his own speech and brought his ideas for job creation and what is needed to spur job creation.

Unsurprisingly, the markets responded to these speeches with a shrug. Why? Because business leaders increasingly are realizing that Washington doesn't have the answers when it comes to creating jobs or supporting economic growth. As a result, business leaders see uncertainty in the economy and decide not to invest. The sadly predictable result: a lack of business expansion and slow hiring.

A recent report on "CBS Sunday Morning" laid out the facts with clarity: Many American businesses are doing relatively well even in the economic downturn, with healthy corporate profits leading to large cash reserves on hand, totaling an estimated $1.2 trillion. So why don't they put that cash to work?

Simple--when smart investors have no idea what's going to happen next, and don't think they'll see a positive return on their investment, they sit on their cash. "They are looking around, and they're seeing there's so much uncertainty going forward that they're deciding they're going to be cautious and not invest," as Steven Neil Kaplan, an economist with the University of Chicago, explained to the "CBS Sunday Morning" reporters.

What's causing this phenomenon? Much of the uncertainty that now plagues our economy is the direct result of policy decisions stemming from the federal government. President Obama and Congress should consider how their actions are feeding anxiety among business leaders and investors.

Here's one highly publicized recent example: The National Labor Relations Board (NLRB) has attempted to block Boeing, the major aircraft manufacturer located in Washington state, from opening a new aircraft assembly facility in South Carolina. Boeing wants to ramp up production to meet demand for their popular 787 Dreamliner aircraft by creating some 5,000 jobs in South Carolina.

But the NLRB claims the company is running afoul of labor regulations. The impasse caused by the NLRB's action is making other business leaders wonder if their own decision-making will be second-guessed and vetoed by government bureaucrats. They're wondering if their companies will be the next to be targeted.

Business leaders are also rightly concerned about the ability of our nation's leaders to steer the economy. They're seen the reports from the nonpartisan Congressional Budget Office that the U.S. is "facing profound budgetary and economic challenges" and that any recovery would be "well below the economy's potential...for several years." They see the runaway national debt ($14.7 trillion as of this writing) and federal deficit spending ($1.3 trillion this year alone) and ask, is the U.S. on the path to becoming the next Greece or Ireland, unable to meet its fiscal obligations?

Is it any wonder business leaders, whether the CEO of a large corporate conglomerate or the proprietor of a small local manufacturing concern, are wary of expanding?

But if there's good news here, it's this: Some leading business figures are stepping up, emboldened, to tell elected officials that it's time to get serious. Starbucks CEO Howard Schultz, for example, called on the business community to send a message to Washington by cutting off all campaign contributions to D.C. incumbents. In the first few weeks alone, more than 100 business leaders signed on to Schultz's pledge to make no political contributions until Washington reins in deficit spending.

Schultz and his co-signers should be commended for taking a leading role in telling President Obama and Congress that they need to make a priority of putting the nation's fiscal house in order. Cutting off campaign contributions is one way to get their attention.

If the rest of our leaders in Washington really want to get the economy moving again, they'll heed that warning and focus on fostering a sense of confidence among business leaders. But our elected officials don't seem to grasp that reckless spending, mountains of debt and job-killing regulations are creating this climate of uncertainty and hurting our chance for recovery. It's up to business leaders and taxpayers to let Washington know that it's time to get serious about encouraging economic growth, so Americans can get back to work.

Gretchen Hamel is Executive Director of Public Notice, an independent, nonpartisan, non-profit dedicated to providing facts and insight on the economy and how government policy affects Americans' financial well being.