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  • Federal Reserve Bank Presidents: Washington is Killing Business

    Want to know why the economy is still dragging along with stagnant growth and 9.1 percent unemployment? Travel back in time over the past 18 months and listen to what some Federal Reserve Bank presidents predicted would result from the Obama Administration’s public policy path.

    In short, they come to one salient point: Washington has created a great deal of uncertainty and hostility among private enterprise. It’s a message White House Chief of Staff Bill Daley heard last week when he met with manufacturing executives who complained of the Obama Administration’s roadblocks to their business growth. To one he replied, “Sometimes you can’t defend the indefensible.”

    Had the White House opened its ears to any of the following choice observations from these Federal Reserve Bank presidents, the economy just might be on a different path:

    1) It’s the regulations, debt, and uncertainty, Uncle Sam — Jeffrey Lacker, President Federal Reserve Bank of Richmond, Oct 2010:

    In West Virginia, for example, the federal government’s wholesale withdrawal of previously issued coal mining permits has led many businesses to suspend investment plans, and there are no doubt numerous other regulatory actions around the country that have reduced production and employment.

    Part of the negative sentiment likely reflects the explosion of federal debt and uncertainty about how a sustainable fiscal policy will be achieved. More broadly, people may be having difficulty absorbing and adjusting to three separate 2000-page pieces of federal legislation that have been passed in the last two years.

    Add to that the continuing uncertainty about tax rates for 2011 (now less than three months away), business planners may be finding it more difficult than usual to project economic conditions or the financial implications of prospective hiring and investment commitments. While it is hard to estimate the magnitude of the effects of these fears, or to disentangle them from general expectations of weak demand growth, they are too broad and deep for me to dismiss as implausible the notion that they have significantly dampened consumer and business spending of late.

    2.) Obamacare’s uncertainty has businesses in a holding pattern — Dennis Lockhart, President, Federal Reserve Bank of Atlanta, November 2010:

    We’ve frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.

    3.) Uncertainty over major policies has left businesses and banks in a risk-averse gridlock — Narayana Kocherlakota, President of the Federal Reserve Bank of Minneapolis, February 2010:

    [T]here is a great deal of uncertainty related to major policy initiatives under consideration in Washington. Congress is considering proposals for enormous changes in health care and in the structure of financial regulation. These proposals have generated a great deal of uncertainty, for the capricious winds of politics seem to change them on a near-daily basis. As bankers, you know that too much uncertainty in a business plan makes for a risky loan. The same is true for the economy as a whole. I see this kind of political uncertainty as problematic for the prospects of rapid recovery.

    4.) Washington has created a “fiscal sinkhole” that has tremendous implications for policy and the economy — Richard Fisher, President of the Federal Reserve Bank of Dallas, April 2011:

    Under both Republican and Democratic leadership, past Congresses have created a fiscal sinkhole that is so deep and so wide, it threatens to swallow up our prosperity and render our economy an abattoir. They have forsaken the most sacred responsibility they have to successor generations of Americans: Instead of passing the torch to our children, they have passed them the bill.

    Past Congresses have made promises they cannot keep. Now, the new Congress is embarking on a corrective course. This is just the beginning of what I expect to be a long, arduous exercise. Here I evoke St. Peter: Congress, “be serious and discipline yourselves.” You have no choice but to go through a painful and gut-wrenching rehabilitation and begin leading a sober life of living within your means. You must press on with getting your accounts in order, however politically unpleasant it may be to do so.

    5) And more from Fisher in February 2011 He says the President and Congress are all but unaware of what bolsters businesses:

    Before the recent mid-term election, most all of my business contacts claimed that taxes, regulatory burdens and the lack of understanding in Washington of what incentivizes private-sector job creation were inhibiting the expansion of their payrolls. They felt stymied by a Congress and an executive branch that have appeared to them to be unaware of, if not outright opposed to, what fires the entrepreneurial spirit. Many felt that opportunities for earning a better and more secure return on investment are larger elsewhere than here at home.

    Posted in Economics [slideshow_deploy]

    10 Responses to Federal Reserve Bank Presidents: Washington is Killing Business

    1. cejkn says:

      Folks! As you can see…. Socialism just doesn't work.

    2. Bobbie says:

      Stop it! The actions of government are over the line and need to be corrected immediately. There has to be discipline when American government policies is abusing the purpose of government, wasting America's time and America's money to collapse America! Stop it!

      Let the American Constitution be the guide.

    3. Major Johnson says:

      It's not just socialism that doesn't work, it's also centralized economic planning. The republicans are as guilty as the democrats of using the tax code, regulations and laws to push business where the government wants it to go instead of where the free market wants it. It's also social engineering, and the republicans are just as guilty as the dems there as well, considering it of national importance that the federal government decide who can marry, who can have sex in what position, what you can smoke or not smoke and what vegetation you're allowed to grow in your own home. Walk into your local plumbing store, you can't buy a pot to poop in unless it's federally approved, or a shower head, or a water heater. Your knives all come in federally mandated wrappers warning you that they're sharp, and your vacuum cleaner has a federally mandated warning not to use it in the bathtub. These things cost money, either through higher taxes or higher prices, and the republicans are just as guilty of pushing this centralized power play. The only difference between them is one of degree, one side is waving the communist manifesto and the other is waving a bible, and if either is waving the constitution it's only because the other side is doing exactly what they would be doing if they were the ones with the majority at the moment.

      A pox on both their houses.

    4. Frances Daley says:

      The American public is to blame. We keep voting for the same people expecting different results. We don't research what a candidate has done, but believe what he says. A pox on all our houses

    5. Rick Williams says:

      What we need is to get rid of all the powerfull lobbyists,they have influence, influence they should not have been given. It's sending the country down the wrong path then either vote out those politicians that go against the will of the people, maybe term limits, will ease the log jam in Washington. It seems the longer they stay, the better they get at manipulating the system to keep getting re-elected, drop the backroom deals YES, real transparency, restore the popular vote and repeal the amendment prohibiting the president from serving more than two terms.

    6. Susan Wilshusen says:

      I ask you to return to gold standard safely and soo. to avoid further erosion in the value of dollar invesed wealth with the accompanying economic and social disruption uncluding the potential for riots and runs on banks.

    7. Susan Wilshusen says:

      We need the gold standard for the dollar and to repeal unconstitutional legislation before it accumulates and changes the very tenor of our system of government. We need to make our education competitive with the very best educational systems of other nations to remain competitive in the world economy. We need to participate in a respectful way in our democratic system of government instead of letting bad things happen and reacting in an anarchist, destructive way. What would the signers of the Declaration of Independence and the Constitution say if they could see Americans today? We need to add systemic supports to our legal system to avoid the subversion of the legal system and the miscarriage of justice. We need to specify the job responsibilites of elected officials with when they are to be accomplished, and of public safety, economic and other personnel so there is timely accountability of them to American voters. We need a system of international barter and job creation with long term wealth creating employment to pay off the astounding debt to China and other nations before they show up on our shores.

    8. Susan Wilshusen says:

      As a nation the US is flirting with disaster. We are at a once in a lifetime precipice. We need the gold standard for the dollar to avoid futher loss of value in dollar invested wealth and the potential for riots and runs on banks. We need to repeal unconstitutional legislation before it accumulates and changes the very tenor of our system of government. We need to make our education competitive with the very best educational systems of other nations to remain competitive in the world economy. We need to participate in a respectful way in our democratic system of government instead of letting bad things happen and reacting in an anarchist, destructive way. What would the signers of the Declaration of Independence and the Constitution say if they could see Americans today? We need to add systemic supports to our legal system to avoid the subversion of the legal system and the miscarriage of justice.

    9. Susan Wilshusen says:

      continued We need to specify the job responsibilites of elected officials with the who what when where and why and how they are to be accomplished, and of public safety, economic and other personnel so there is timely accountability of them to American voters. We need a system of international barter and wealth creating long term job creation to pay off the astounding debt to China and other nations before they show up on our shores.

    10. Susan Wilshusen says:

      continued such dissonance in economic policy as stated as compared to the actions of those repsonsible for safety, economy, as well as they can be verified by voters and the actual results voters experience financially, where is a respectful call for accountability in the form of a grand jury investigation and Senate inquiry as to how these officials are spending their time during the work day? And the pundits that present solutions diverting the attention of millions while doing nothing to accomplish the objectives they are loved for espousing, when will voters realize nobody is minding the proverbial store and they need to act like a winning, respectful team within their democratic system to pull things back from the brink of disaster by working with ther greatest resource each other. Then there is the matter of safety from terror attack and of safety of public officials that need to be effective 100% of the time.

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