All the buzz lately is that the Obama administration is "antibusiness". And there are widespread claims that fears about taxes, regulation and budget deficits are holding down business spending and blocking economic recovery.
How much truth is there to these claims None. Business spending is indeed low, but no lower than one would have expected given widespread overcapacity and weak consumer spending.
Ask the Obama-is-scaring-business crowd for some actual evidence supporting their claim, and they’ll tell you that business spending on plant and equipment is at its lowest level, as a share of G.D.P., in 40 years. What they don’t mention is the fact that business investment always falls sharply when the economy is depressed. After all, why should businesses expand their production capacity when they’re not selling enough to use the capacity they already have And in case you haven’t noticed, we still have a deeply depressed economy.
So where’s the evidence that an antibusiness climate is depressing spending The Obama’s-socialist-policies-are-wrecking-the-economy chorus isn’t coming from businesses; it’s coming from business lobbyists, which isn’t at all the same thing. Read through the latest survey of small business trends by the National Federation for Independent Business, an advocacy group. The commentary at the front of the report is largely a diatribe against government — "Washington is applying leeches and performing blood-letting as a cure" — and you might naively imagine that this diatribe reflects what the surveyed businesses said. But while a few businesses declared that the political climate was deterring expansion, they were vastly outnumbered by those citing a poor economy.
The charts at the back of the report, showing trends in business perceptions of their "most important problem," are even more revealing. It turns out that business is less concerned about taxes and regulations than during the 1990s, an era of booming investment. Concerns about poor sales, on the other hand, have surged. The weak economy, not fear about government actions, is what’s holding investment down.
So why are we hearing so much about the alleged harm being inflicted by an antibusiness climate For the most part it’s the same old, same old: lobbyists trying to bully Washington into cutting taxes and dismantling regulations, while extracting bigger fees from their clients along the way. Beyond that, business leaders are, as I said, feeling unloved: the financial crisis, health insurance scandals, and the catastrophe in the Gulf of Mexico have taken a toll on their reputation. Somehow, however, rather than blaming their peers for bad behavior, C.E.O.’s blame Mr Obama for "demonizing" business — by which they apparently mean speaking frankly about the culpability of the guilty parties.
Well, C.E.O.’s are people, too — but soothing their hurt feelings isn’t a priority fight now, and it has nothing at all to do with promoting economic recovery. If we want stronger business spending, we need to give businesses a reason to spend. And to do that, the government needs to start doing more, not less, to promote overall economic recovery. The author introduces his topic of argument by