COMMENTARY | For President Barack Obama to win his re-election, a boom in job creation is critical. Unfortunately, he has not gotten much help from the private sector. Despite sitting on record cash reserves totaling over $1.5 trillion, the private sector has shown very little willingness to expand and hire more workers. Since corporate profits have been massive for several years now, the bad economy is no longer a valid excuse to not increase hiring. We have clearly passed the stage where big cost-cutting measures are needed to shore up corporate profits.
Businesses often cite weak demand as a reason why they are not investing and hiring new workers. However, consumer demand in 2011 has actually recovered quite nicely from the recession. According NPR, retail sales enjoyed strong gains in July continuing a healthy trend. Furthermore, the extension of the Bush tax cuts, enacted in late 2010, should keep consumer spending on the upward path. Even with weak economic conditions, these factors are clearly conducive to increased investment and employment. Unfortunately, the private sector seems content to stay on the sidelines, at least on the hiring front.
There is no question that Barack Obama and Corporate America are not on good terms. By political necessities, the president often vilifies big corporations as well as wealthy Americans in many of his speeches. As words do matter, there is clearly an irreconcilable mistrust between Barack Obama and businesses. His controversial health care legislation certainly did not win him friends in the business community. The president is generally viewed by people on Wall Street as anti-business and regulations-loving.
Ironically, President Obama has actually done a lot for big businesses in his three years in office. He did go through with the TARP program, which was created by the Bush administration to bail out financial firms and auto companies. Obama also authorized an $800 billion stimulus program in 2009 and is set to propose another $300 billion in stimulus, both of which had and will benefit U.S. companies. Lastly, the president signed into law in late 2010 an extension of the Bush tax cuts benefiting top income earners.
The lack of trust is what prevents the president from mending fences with Corporate America. Apparently, businesses have little confidence in Barack Obama's leadership in regards to the economy. The perceived philosophical differences are just too great to overcome.
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