They are largely scared to death of the president's health care program that will drive employer and worker costs higher and higher, while bringing government bureaucrats into the doctor/patient relationship more than ever before.
Smaller employers, the backbone of the American economy, know they are not likely to receive a waiver from the health plan requirements, something already granted by Health and Human Services Secretary Kathleen Sebelius to more than 1,400 companies, including McDonald's — companies that threatened to drop all employee health care coverage, according to The Wall Street Journal.
The president's and the Senate's application of Keynesian economics — more and more and more government stimulus (spending) — has fallen victim to anxiety about such spending, and massive new debt levels, never ending.
A McClatchy Newspapers-Marist poll released on June 27 noted only 37 percent of registered voters approve of the president's handling of the economy, his lowest rating ever. Voters disapprove of the president's handling of the federal budget deficit by two to one. At the same time, no major Republican candidate for president has yet caught fire with the voters.
Fed … take a break
The Federal Reserve's monetarist approach — the creation of massive amounts of new "money" to stimulate economic output — has been overwhelmed in some circles by longer-term inflation fears (including those preaching the ownership of gold), some major financial institutions which have greatly slowed lending and a general hesitancy on the part of borrowers to incur new debt.
The vast majority of forecasting economists are fearful that sluggish U.S. economic growth could lead the Fed to institute a third quantitative easing program, a fancy term to explain the creation of hundreds of billions of dollars in additional "money" to stimulate the economy. The current QE2 program of $600 billion in money creation to buy bonds ends this week. Fed critics would suggest that QE2 merely weakened the dollar and boosted inflation, resulting in higher oil and food costs for American consumers, while providing little in the way of economic stimulus.
Most forecasting economists would prefer to see the Fed move to the sidelines. The Fed could then make it clear that no major moves in monetary policy will be considered unless and until the administration and the Congress reach a viable agreement to increase the debt ceiling and take the first credible steps toward longer-term deficit containment.
This nation is approaching a crossroads. We can get a firm handle on future government spending and bring annual budget deficits back to affordable levels. Or we can continue on the current path to financial ruin, face another self-induced financial crisis and deal with the same external control and external finance issues now being faced by Greece, by Ireland, and by Portugal.
Jeff Thredgold is the chief economist for Zions Bank and founder of Thredgold Economic Associates, a professional speaking and economic consulting firm. Visit www.thredgold.com.