But in many ways, federal policy is driving us in the wrong direction. Nobody knows what the tax rates will be in two years. ObamaCare may impose massive costs on American businesses, or it may be thrown out by the courts. Federal regulators want to increase their oversight of the internet and may even define carbon dioxide -- which we all exhale every day -- as a pollutant.
No wonder many businesses aren’t hiring.
Instead, they’re holding on to some $1.8 trillion in cash, about 25 percent more than they had on hand at the beginning of the recession. They’ll only start investing when they have a better idea what the future will hold.
And the sooner the better, because until private companies start hiring, folks on the left will keep calling for more federal “investment” in boondoggles such as “green jobs.”
For example, the Wall Street Journal reports that in 2007 Congress mandated our country would use 100 million gallons of cellulosic ethanol by 2010 and 250 million gallons this year. Sounds great, except that no facilities then existed to create this wonder fuel. So the government poured tens of millions in subsidies into “green companies,” with nothing to show for the “investment.” Lawmakers eventually reduced their 2010 target to 6.6 million gallons. Of course, this gets things exactly backward.
Instead of demanding that companies come up with a particular type of fuel and paying them subsidies to try (and in this case fail), lawmakers should allow the market to create incentives. As gasoline prices rise during the worldwide economic recovery, inventers will eventually develop a viable alternative to gasoline. But it will come from entrepreneurs, not legislators.
The best steps Washington could take? Set stable, sensible policies. And stay out of the way.