Washington's Action (or Inaction) Speaks Louder Than Words

No matter where they sit on the political spectrum, politicians and voters can generally agree that the key to economic growth is in small business.   Throughout their campaigns last year, both Barack Obama and John McCain drove home this point all the time.  With politicians seemingly in agreement on the importance of small businesses to the economy, it is ironic that many small businesses are stuck in a holding pattern waiting to see how the actions of these politicians will impact their businesses.

As discussed in today's Wall Street Journal ("Political Uncertainty Puts Freeze on Small Businesses"), small businesses across the country are holding off on expansion or adding jobs due to "uncertainty created by Washington's bid to reorganize a wide swath of the U.S. economy."  Whether it's the health care debate, taxes, or the impact of climate change legislation on energy prices, business owners are finding it increasingly difficult to effectively plan for the future.  As a result, they are hunkering down and putting any plans for expansion on hold.  The end result is that the magnitude of any economic recovery will likely be muted.

The debates over health care, taxes, and climate change legislation have pros and cons on both sides.  There are certain aspects of the various plans that would be beneficial to small businesses and some that would be burdensome.  For many of them, however, even if the ultimate outcome is unfavorable, it's better the devil you know than the devil you don't.  The sooner the uncertainty becomes certain, the sooner small businesses (and all businesses) can move forward.  For now, it's still just watching and waiting, and it's a drag on the recovery.