New Castle News

January 9, 2013

Our Opinion: Washington’s inability to act takes toll on the economy

By Staff
New Castle News

NEW CASTLE — What do businesses want from government?

Pretty much what the average individual wants. Businesses want reliable services, ranging from plowed streets in the winter to functioning sewer lines.

And they want taxes that are reasonable and don’t take a big bite out of budgets. Money that doesn’t go to government is available for other purposes.

But there’s something else business needs from Washington. And that’s a measure of predictability. They need to know what government has in mind in a variety of areas, not only in terms of what taxes are imposed, but what government intends to buy and programs it intends to pursue.

Plus, businesses need a sense of what sort of rules and regulations will be in place. They need to know the financial and staffing resources they will need to remain compliant with the law.

And that has been a big problem lately. In many ways, businesses are stuck in neutral, unable to properly plan for the future because they aren’t certain of the direction Washington intends to go with taxing and spending policies.

This is a problem for individuals too; we don’t mean to minimize that. But we think it’s safe to say that government fiscal policies have a broader impact on businesses and what they do, compared to the average individual.

Much has been made of the fact the current economic recovery has been anemic. Yes, the unemployment rate is dropping and things are starting to pick up here and there.

And various factors explain this slow growth, including serious economic problems overseas. But one key issue is the listing ship of state directed by the politicians in Washington.

You may have noticed that the stock market reacted favorably to last week’s agreement on tax rates. The Dow Jones Industrial Average jumped more than 300 points in a single day.

That was because an element of uncertainty was eliminated. Unfortunately, plenty of other question marks linger into the future. Some are literally weeks away, as Congress still must deal with spending issues. Others involve longer-term questions of the national debt and the health of programs such as Social Security and Medicare.

The benefits of resolving uncertainty in constructive fashion are self evident. Yet Washington appears to be utterly incapable of doing so. Virtually every move Congress makes is steeped in ideological division. Last week’s agreement on taxes ultimately was a relatively straightforward matter that could have been achieved months ago. But political posturing and head butting were deemed to be more important.

Why? One big reason is the way members of Congress are elected today. More on that tomorrow.