Two recent articles provide more evidence that Washington’s failure to put forth a sustainable fiscal and economic plan (or any plan, for that matter) is itself hampering the nation’s economic recovery. (For our previous posts on this issue, go here and here.)
USA Today reported yesterday that non-financial companies in the Standard & Poor’s 500 Index have more cash on hand than ever before ($837 billion), but are still not hiring. The newspaper explains, “[C]ompanies are piling up cash and collecting practically zero interest on the money, hoping there will be a better time to invest later.”
When will there be a better time?
Barron’s Randall Forsyth suggests it’ll be when Washington provides a little certainty. Forsyth wrote Tuesday: “Confronted with incredible uncertainty about the future business climate brought about by massive regulatory and tax changes, [businesses] are sitting on cash instead of investing in capital equipment and, especially, hiring new workers. … [T]he policy changes on health-care and financial services that have emerged from the current crisis, plus the largest tax increase in history that will hit Jan. 1 without Congressional action, are restraining companies, especially mid-to-small-sized ones.”
USA Today also points out the money those S&P companies have saved could fund 2.4 million jobs with salaries of $70,000 each. Unfortunately, because Washington keeps kicking the can down the road on things like deficit reduction and tax policy, it’s just too risky for these businesses to commit to hiring until they see what Washington will do next.
Tags: Standard & Poor's, uncertainty, unemployment, unemployment rates, usa today
